Tuesday , October 26 2021

Catalan Fund II establishes USD 155 million for investment in East Africa



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NAIROBI, KENYA, NOVEMBER 9 – Head of the Focused Fund for East Africa, Catalyst Principal Partners, announced the completion of his second fund, which reached $ 155 million.

This is about Ksh 15.5 billion capital liabilities of leading international and regional investors, as the successor to Catalyst Fund I, of the $ 125 million funded in 2009.

In launching its second fund, Catalyst has become the leading regional manager of private equity funds with the largest common fund managed by its peers dedicated to the East African region.

With more than 80 percent of international institutional investors in the Catalyst Fund II, who have already been investing in their first fund, Catalyst increased the investment obligations of its existing investors by more than 30 percent while attracting capital from new international and regional investors, including with local pension funds and family offices.

According to the director of Catalyst Paul Kavum, the increased investment by international institutional investors is a sign of confidence in the economic potential of the East African region.

United Nations Trade and Development data (UNCTAD) show that in 2017 the East African region accounted for 18 percent of FDI in Africa.

"Given that Catalyst Leading Partners are the leading investment fund in East Africa, investing only in the region, the increased interest of international institutional investors is an indicator of their trust in the region as a solid foundation. The East African region is the region with the fastest growing region of the continent by GDP, a factor , which continues to attract investors, "said Kavuma.

With regional investors' commitments, which increase by 50 percent for Catalyst Fund II, local capital, which marks the age of the regional private equity industry, is emerging and mobilizing.

The Secretary of the Eastern African Community and the Regional Development Secretariat Adan Mohamed, officially chairman of the closure of the Catalyst II Fund, concluded that the regional private equity sub-sector has shown remarkable growth over the past years, with several companies expressing interest in the development of regional economies.

"It should also be noted that regional investors, including pension funds, represent almost 20 percent of Catalyst II commitments, which is a clear indication that the region can not only absorb assets and ensure return on investment, but also that the region can also raise funds for its own development, "CS. Adan added.

He said that the Kenyan government would continue to implement reforms to improve the local business environment, while at the same time endeavoring to conclude trade agreements and blocks to expand local markets to local businesses.

This includes an agreement on a comprehensive free trade area in Africa (CFTA), which was signed by 44 countries earlier this year and created a wider market with more than 1.2 billion people with a total GDP of $ 2.19 billion.

"The creation of this market will allow the continent to deepen trade within Africa while creating opportunities for the growth of medium-sized enterprises. PE funds, such as Catalyst, will be crucial in facilitating SMEs access to this market. In addition to reforms, the government continues to invest in infrastructure at local level and as part of the Eastern African community with initiatives such as the North Corridor project in order to facilitate networking for businesses, "he said.

Catalyst CEO Kavuma said that increased interest in the region is largely based on policy reform, investment in infrastructure, and regional integration and coordination.

"The catalyst mainly focuses on emerging and medium-sized enterprises with strong growth and profitability. The increasing appetite of both international and regional investors in the private equity class is a sign that East Africa is not only an attractive investment opportunity, but that private equity offers credible and an innovative financing solution for ambitious companies and ambitious entrepreneurs looking for tailor-made risk capital to support growth and improve efficiency, "Cavum added.

In 2009, Catalyst Fund I raised $ 125 million (KZT 12.5 billion), invested in 9 companies in Kenya, Tanzania and Ethiopia with various interests in the production of consumer goods, pharmaceuticals, industrial agro-processors, logistics and engineering, and health care, technology and financial services.

Catalan Fund II will invest between $ 7.5 million and $ 22.5 million in emerging players in the Middle East market, among key growth sectors that are confronted with the demands of increasingly fascinating consumers, supported by favorable regional foundations.

The fund will focus on Kenya, Uganda, Tanzania, Ethiopia, Zambia, Rwanda and the Democratic Republic of the Congo.

The catalysts are invested by the main partners for a four-year investment period by taking on significant shares for companies that need expansion and surplus equity, recapitalization and IPO investments.

Catalysis Fund II will strive to increase the footprint and impact of private equity funds throughout the region, enabling more companies to access innovative financial solutions, while offering a value that goes beyond capital to develop leading regional championships.

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