Private equity vets to launch African trade group

Founded by seven established private equity firms, the East Africa Venture Capital Association will launch on 7 November.

Seven veterans of the private equity industry have founded the East Africa Venture Capital Association in response to increased private equity interest in the region.

After seven months of preparation by founding members The Abraaj Group, Actis, Africinvest, Catalyst Principle Partners, Centum, Fanisi Capital and TBL Mirror Fund, the group will launch in Nairobi, Kenya on 7 November. The group’s goal is to educate the public about private capital investment and to mobilise local capital. The 7 November launch is roughly six weeks later than the group’s original intended launch date of 27 September, which was delayed when Kenyan President Uhuru Kenyatta declared three days of mourning after the attacks on Nairobi’s Westgate Shopping Center.

“Our biggest goal besides raising awareness is the mobilisation of local capital,” said Nonnie Wanjihia, executive director of the EAVCA. “We would like to see pension funds among other local institutional investors actively investing in private equity as an asset class.”

The Retirement Benefits Authority in Kenya has an allocation cap of 5 percent to alternative assets, but very little of that capital is committed to private equity.

The EAVCA will start by focusing on Nairobi’s private equity industry because that is where most of the region’s funds are, but other East African community countries such as Uganda will eventually be included.

“We believe the East Africa community and regional integration process is helping to make the region an attractive investment destination,” Wanjihia said.

East African countries were largely unaffected by the financial crisis of 2008 and have generated steady levels of gross domestic product growth, Wanjihia added. As a result, the middle class is rising in the region, leading to an increase in consumption for consumer-facing sectors over the last five years. Other sectors to experience growth during the time period include healthcare, education and natural resources industries.

“More recently we believe the oil and gas finds in Tanzania and Kenya has also made the region more attractive”, Wanjihia said.

In order to increase networking in the industry, EAVCA will bring members together to create dialogue and discussion.

“There is very little data coming out of Africa in general,” said Wanjihia. “Because we’re GP-led, we hope to convince our members to submit data.”

EAVCA is still looking for a partner to collect data, but has been approached by KMPG, which has a long-standing relationship with the South African Venture Capital & Private Equity Association.

So far, EAVCA has 16 members, though Wanjihia said she’s “still chasing invoices”.  The group knows of 35 general partners that focus on the region, but it is also open to accepting membership inquiries from local and global financial institutions, intermediaries and law firms.