Private equity fund Fusion Capital says it is in advanced plans to list on the Nairobi Securities Exchange (NSE), as well as seek to raise Sh100 billion over five years.
The fund said its expansion will tap the high demand for PE funds arising from high domestic interest rates.
The PE fund is also sourcing for financing from high net worth individuals in the United Kingdom and Kenya to the tune of Sh6.7 billion by March next year which will see its current capital rise from Sh15 billion to Sh21 billion.
Group chief executive officer Luke Kinoti said his company is waiting for approval by the regulator to enable it list as soon as possible.
“Plans are at an advanced stage and we are liaising with the regulator to list the firm and unlock more funds for cheaper capital,” said Mr Kinoti.
Increased economic activity especially in the construction industry is driving demand for capital as investors run away from high interest rates in the mainstream lending market.
“We are looking at high net worth individuals from the UK and Kenya to provide the needed capital to tap into the high demand,” said Mr Kinoti.
Fusion Capital reported that its return on capital has been above 20 per cent since it was started in 2006.
The company which is currently financing 425 clients in Tanzania, Rwanda, Uganda and Kenya is also planning to launch operations in Burundi.
It is also targeting to fund the rapidly expanding Mount Kenya University which is currently setting up branches in countries such as Rwanda.
The PE fund is currently funding the construction of a Sh800 million luxury apartments project at the Coast, targeting the holiday home market.
Growing economic activity in the region has spurred the expansion of education, financial services, construction, agroprocessing and consumer industries which have become the target of PE funds.
“We are able to lend in both local and hard currencies. As such, we have noted a number of dollar-denominated opportunities in Burundi, Uganda and Rwanda, which builds a natural hedge in our current portfolio,” said Mr Kinoti.
Dollar loans cushion the firms against the volatility of currencies, which was evident late last year with most currencies in the region depreciating against the dollar.
Fusion focuses on providing growth capital to SMEs and corporates across the region through either access to private debt or private equity, and where required, a combination of both.
The firm, already operating in Kenya, Uganda and Rwanda, says it has reviewed Sh1 billion worth of private equity investment spanning sectors including real estate, private cemetery and financial services.
One of the challenges private equity funds face is opportunities to exit from companies they have stakes in. But Fusion is looking forward to the establishment of the growth enterprise market segment, which will see the listing of the SME’s at the NSE.
Fusion African Access dedicated to SMEs is a private equity fund run by Fusion Capital and is regulated by the Guernsey Financial Services Commission (GFSC). Fusion also plans to launch a real estate fund to benefit from the heavy activity in the sector.
The fund that mainly serves the East African market also intends to set up a new fund dedicated to raising capital from institutional investors after the successful launch of the Fusion Africa Access.