PE company Catalyst eyes Kenyan firms with Sh6bn

East African-focused private equity firm Catalyst Principal Partners, plans to sink up to Sh6.23 billion in Kenya’s mid-sized and emerging firms in coming months following a successful fund-raising which ended in July.

Catalyst's CEO Paul Kavuma said in an interview that between 35 and 40 percent of the Sh15.57 billion ($153 million) it raised in the second growth capital drive will target growth-hungry ventures in Kenya with potential to generate net cumulative returns of at least 20 percent in six years.

Catalyst's capital raising drive attracted 22.4 percent more cash than the first fund, which raised $125 million (Sh12.7 billion) in 2009.

Mr Kavuma said the funds raising process was challenging due to a plunge in commodity prices, which hurt investor’s appetite in emerging markets such as East Africa.

“The emerging markets have had a little bit pressure (due to commodity crisis) in recent years and even in regional markets, we’ve come through a sort of a political cycle which has been challenging,” he said in Nairobi ahead of the fund’s annual investor meeting this Thursday.

“But what we were able to communicate, and what investors are confident in, is the long-term fundamentals of East Africa which are extremely positive underpinned by improving macroeconomic policy, increasing investment in infrastructure and a young demographic.”

Mid-sized firms in Tanzania, Ethiopia and Uganda will get about a quarter (Sh3.83 billion) of the raised funds, while a maximum of 20 percent will target investment opportunities in new markets of Rwanda, Democratic Republic of Congo and Zambia.