East Africa-focused private equity firms Fanisi Capital and Ascent Capital are set to merge and raise funds for bigger deals in the region.
The two say consolidating their operations will help them to scale up and yield higher returns for investors.
Merging will result in a fund size of at least Sh15.5 billion, going by their capital raising plans. Fanisi Fund II has Sh3.5 billion ($35 million) growth capital while Ascent Rift Valley Fund (ARVF) II is expected to raise Sh12 billion ($120 million) upon its first close this year.
The merger will see both Fanisi and Ascent co-invest systematically to achieve benefits of economies of scale leading to improved returns from their diverse investments the region.
The two firms expect the transaction to be finalised by March subject to relevant approvals from regulators such as Competition Authority of Kenya.
“As the transaction progresses, we expect benefits of scale and more robust investment returns to the Fanisi II investors over time,” said Ayisi Makatiani, managing partner at Fanisi.
The two firms, however, said all pre-merger investments will continue to be managed separately.
Fanisi was founded in 2009 and has managed two funds with a combined value of Sh7.9 billon ($78 million) by investing in education, healthcare and food processing sectors in Kenya, Tanzania, Rwanda and Uganda.
Ascent has also been investing in a broad range of sectors in Ethiopia, Kenya and Uganda usually through transactions ranging between Sh201 million ($2 million) and Sh1.5 billion ($15 million).
“We are confident that the partnership between the two funds will bring scale and value for all investors,” said David Owino, founding Partner at Ascent.