Kenyan PE invests in Tanzania logistics company

Catalysts Principal Partners, a Kenyan-based private equity firm, has bought a stake in EFFCO, a Tanzanian logistics and heavy equipment renting company.

Catalysts did not disclose the extent or value of the deal, but its investment criteria show that it puts between $5 million (Sh432 million) and $20 million (Sh1.73 billion) in a venture.

EFFCO will use the funds to expand its operations which are primarily in transport and leasing of equipment like forklifts, excavators, graders, trucks, compactors, dozers and cranes to contractors especially those in construction, mining, oil and gas.

“Catalysts ability to add value, its active investment approach and extensive networks will allow us to rapidly scale up our operations and expand the business to take a leading positioning in Tanzania and across the rest of the east African region,” said EFFCO group chief executive George Miseda in a statement.

EFFCO is also present in South Africa, Namibia and Botswana. It counts DHL, Tanzania Breweries, Tanga Cement and Swissport among its customers.

Catalyst managing director Rajal Upadhyaya said EFFCO would help the fund benefit from the oil and gas industry which is growing rapidly with more discoveries in eastern Africa.

“I think companies servicing this sector will also see strong growth prospects and will require capital and expertise to capture these growth prospects, which is where PE firms can help,” said Mr Upadhyaya.

Kenya, Tanzania, Uganda and Mozambique have made recent oil and gas discoveries with both local and multinationals servicing exploration firms bagging lucrative contracts.

KK Securities and Civicon have signed lucrative deals with UK explorer Tullow Oil.

Hong Kong-based DVN Holdings has bought a stake in Kijipwa Aviation, a Kilifi-based company that offers logistics, aviation and risk management services to companies involved in the natural resources sector.

The private equity firm invests in companies for between four and six years before exiting. Catalyst has also invested in Yes Brands, an Ethiopian water bottling company; ChemiCotex a Tanzanian personal healthcare manufacturer and Chai Bora a tea packer in Kenya and Tanzania.