PineBridge to expand private equity operations in EAC

PineBridge Investments East Africa Ltd CEO Jonathan Stichbury speaks at a media briefing in Nairobi. The Nairobi office will start handling more business after the parent company announced plans to expand its operations in the EAC. FILE 

By STEVE MBOGO, Special Correspondent

In Summary

• Managers say the firm is seeking partnerships with local EAC-focused companies.

East Africa-based private equity firms are likely to receive more capital inflows after PineBridge Private Funds Group announced it would expand its operations in the region.

In Africa, the company’s private equity arm, PineBridge Investments, mainly operates in South Africa, its sub-Saharan headquarters. PineBridge Investments also has a presence in Nairobi and Kampala.

The development means that its Nairobi office, which has been handling funds management, will get more business for the private equity arm.

David Jiang, the chief executive officer of PineBridge Investments, said the company was seeking partnerships with other EAC-focused private equity companies.

Studies have shown that the growing economies of East Africa and sub-Saharan Africa in general are attracting new foreign fund managers, even from countries like the United States, which have traditionally overlooked Africa’s financial markets.

“The opportunity for higher returns is much greater in emerging markets,” Mr Jiang said in Nairobi. “We are comfortable investing in the fast emerging markets here.”

In Kenya, PineBridge is the highest private pension manager, managing $1.37 billion of pension assets, just $50 million shy of the $1.42 billion in pension assets managed by the National Social Security Fund (NSSF). Overall, the Kenyan branch manages assets worth $1.72 billion, inclusive of pension.

Globally, PineBridge Private Funds Group manages about $6 billion’s worth of assets and has committed about $15 billion to private markets across the world since 2000.

The fund also participates in the secondary market, where investors purchase securities or assets from other investors, rather than from issuing companies themselves.

PineBridge said it would use its Islamic finance expertise from its operations in the Middle East to invest in assets that require compliance with the tenets of Islam.

Africa has increasingly become a favoured destination for private equity funds after companies realised that the industry offers higher returns than previously thought.

An earlier report released jointly by the African Venture Capital Association (AVCA) and a United States-based consultancy Cambridge Associates found that African funds returned 11.2 per cent for the 10 years up to the end of September 2012. The average return for funds in emerging markets was slightly above at 11.8 per cent.

Another report released jointly by AVCA and Ernst & Young found that 62 African exits by private equity firms between 2007 and 2012 generated almost double the returns of the Johannesburg Stock Exchange’s Africa All Share Index.