Sh1.55bn Catalyst funding set to benefit Kenyan firms

Catalyst CEO Paul Kavuma. PHOTO | DIANA NGILA | NMG 

By BRIAN NGUGI

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Summary

• The East Africa focused fund, which is the second by Nairobi-based private equity firm Catalyst Principal Partners, will make acquisitions in the local mid-market segment across sectors focusing mainly on priority consumer staples, financial services, industrials and healthcare.
• Catalyst’s initial capital of $123 million (Sh12.6 billion) has been invested in nine companies in the region.
• The fund has acquired significant stakes in Kenya’s Jamii Bora Bank, Goodlife Pharmacy, Tanzania’s Zenufa Pharmaceuticals, Effco (heavy equipment leasing) and Chai Bora (food and beverage).

Mid-sized companies in Kenya are set to benefit from the backing of $15 million (about Sh1.55 billion) in a private equity investment fund by the African Development Bank (AfDB).

AfDB said the East Africa focused fund, which is the second by Nairobi-based private equity firm Catalyst Principal Partners, will make acquisitions in the local mid-market segment across sectors focusing mainly on priority consumer staples, financial services, industrials and healthcare.

“The board of the African Development Bank approved an equity investment of $15 million in a second-generation private equity fund investing in mid-market companies in East Africa,” said AfDB in a statement.

“As the anchor investor in Catalyst Fund I, the bank is considering an equity participation of 8.6 per cent of the second fund’s capitalisation and an advisory committee seat to ensure that transparency, social, environmental and corporate governance best practices are adhered to both at the fund and portfolio company level,” added AfDB.

Catalyst’s initial capital of $123 million (Sh12.6 billion) has been invested in nine companies in the region.

The fund has acquired significant stakes in Kenya’s Jamii Bora Bank, Goodlife Pharmacy, Tanzania’s Zenufa Pharmaceuticals, Effco (heavy equipment leasing) and Chai Bora (food and beverage).

READ: Catalyst Principal raises Sh10.5bn with eye on acquisitions

Catalyst’s investors include development finance institutions, wealthy families and institutions seeking alternative investments outside the mainstream bond and stock markets. AfDB said the latest investment builds on its successful deployment of Catalyst Fund I.

Catalyst Fund II aims at netting $175 million (about Sh18 billion) to be invested in low-income countries in eastern Africa.

AfDB said Catalyst fund will work with its investee companies to create up to “130 jobs per year, ensure fair distribution of benefits across gender and age groups, and enhance the socio-economic welfare of communities.”

“Catalyst has demonstrated ability to source proprietary deals and actively manage its investments, and has built a diversified regional portfolio of leading products and brands,” the PE fund’s chief executive, Paul Kavuma, said last March.