Group of PE and venture capital firms signs deal with Strathmore

An attendant fuels a car at a petrol station. Firms scouting for deals are expected to increase as the region’s natural resource industry begins to take off. FILE  Nation Media Group

By John Gachiri

An umbrella body of seven private equity and venture capital firms has signed a memorandum of understanding (MoU) with Strathmore Business School as they seek to strengthen the industry.

The East Africa Venture Capital Association (EAVCA) and Strathmore Business School signed the MoU earlier in the month with the official launch of the association initially set for Friday before it was postponed.

The partnership is meant to make firms better investment targets, highlight the growing but new industry and improve skills of professionals working for related firms.

Combined resources

“The parties, through their combined resources, aim to emphasise skills building to improve the private equity and venture capital industry’s market strength in securing and sustaining high value investment opportunities,” said EAVCA in a statement. Abraaj, Actis, AfricInvest, Catalyst Principal Partners, Centum, Fanisi Capital and TBL Mirror Fund are EAVCA’s founding members.

The founding firms have invested in small and mid-sized enterprises (SMEs) in the technology, agriculture, health, education and retail sectors across Kenya, Uganda, Tanzania, Rwanda and Ethiopia.

Firms scouting for deals are expected to increase as the region’s natural resource industry begins to take off. “We expect to see more oil and gas deals in the not-so-distance future. We are also seeing more investors competing for a relatively small number of ‘‘big ticket’’ deals each year,” said EAVCA executive director Nonnie Wanjihia in a statement.

Kenya has been the most preferred destination in the region because of growth prospects and more people joining the middle class as well as its developed financial system.

Government incapacity to offer quality services in education and health has also seen entrepreneurs rush to fill the gap, which has led to private equity and venture capital funds following suit.

“In health, scalable businesses that are attractive are like groups of clinics, hospitals, pharmacies, labs, diagnostics, everything driven by growth of consumption, middle class and health insurance.

‘‘Others are businesses providing services to the health sector, like mobile health andhealth software,” said TBL Mirror Fund investment director Eline Blaauboer.