New York-based PE fund buys stake in Kenyan broker

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Kuramo Capital chief executive Shaka Kariuki (left) and Sterling Capital chairman Stanley Ngaine during the signing of the deal in Nairobi. PHOTO | SALATON NJAU | NMG

New York-based Kuramo Capital, TransCentury’s single-largest shareholder, has purchased a stake in stockbrokerage firm Sterling Capital.

Kuramo and Sterling both declined to disclose the value of the transaction. They did not also reveal whether the purchase is exclusively equity, debt or a mix of both or even its anticipated closing date.

The acquisition is subject to regulatory approvals.

Kuramo’s stake in Sterling Capital post the acquisition will be at least 25 per cent, according to third parties familiar with the transaction.

Sterling, an investment bank founded in 1994 by its current chairman Stanley Ngaine, mainly deals in equities and fixed income trading as well as offering advisory services.

It is the second-largest bond trader in the country.

Kuramo’s investment will see Sterling grow its Nairobi-based business into other countries and expand its services to include advising clients during big ticket initial public offers and rights issues.

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“African public markets remain largely untapped despite being one of the fastest growing in the world, Shaka Kariuki, a Kuramo Capital’s chief executive, said in a statement.

“The transaction is also anticipated to yield strong synergistic value across Kuramo’s diverse interests in Africa’s public markets.”

Sterling Capital has four shareholders — Mr Ngaine, his son David Ngaine and executive directors Ahmed Ndope and John Kirimi. The business has 25 employees.

Last year, Sterling Capital made the largest gain in bond trading at the Nairobi Securities Exchange, raising its market share to 15.3 per cent from 6.5 per cent the previous year.

The investment bank ended the year behind sector leader Kestrel Capital, which had 28.4 per cent of bonds traded on the secondary market.

“We are glad to have Kuramo Capital on board as a partner and anticipate that the investment will catalyse Sterling Capital’s growth in the Kenyan market as well as other strategic markets in Africa,” said Mr Ngaine, the firm’s chairman.

Kuramo Capital, which last year bailed out TransCentury with Sh2 billion in return for a 25 per cent stake, has 21 investments across the continent, including in other funds like Catalyst Fund, Helios and Verod Capital Management.

The PE firm operates offices in Kenya and Nigeria with a portfolio size of just over $300 million (Sh30.9 billion).