Urbanisation prompts Abraaj to acquire dining chain from ECP

The firm’s $990 million Africa Fund III aims to benefit from the continent’s rapidly expanding middle class.

Abraaj Group, the Dubai-based growth markets investor, has agreed to acquire East Africa’s “largest” casual dining chain from Emerging Capital Partners and the company’s founder, as the fourth investment from its third African fund.

ECP Africa Fund III acquired a majority stake in Java House Group in May 2012 with its founder and chairman, Kevin Ashley, retaining a minority holding. The group has expanded from 13 branches in Nairobi when ECP first identified the deal to 60 stores across 10 cities in Kenya, Uganda and Rwanda. ECP received many active and unsolicited approaches for the business, it said.

Abraaj’s $990 million Africa Fund III, a 2015-vintage which received commitments from the International Finance Corporation, Swedfund and Danish asset manager PKA AIP, will acquire 100 percent of the company. The deal includes Java’s three flagship brands, Java House, Planet Yogurt and 360 Degrees Artisan Pizza.

Abraaj will target expansion into new markets, as well as acquisitions, to build a “leading” casual dining and food service group across east, west and north Africa. The firm had been tracking Java House Group for more than two years prior to the transaction, Ashish Patel, managing director of Abraaj Group, told PEI.

The firm believes Java House Group would be a “great partner” for international brands looking to move into east Africa, Patel added. The company is three times larger than the next comparable alternative in the sector, he said.

Founded in 1999, Java House Group currently has more than 320,000 transactions a month and employ 2,000 people.

“Africa’s rapidly expanding middle class, sustained population growth and increasing urbanisation is creating compelling investment opportunities in multiple sectors, and we believe Java House is ideally positioned to benefit from these trends,” Mustafa Abdel-Wadood, managing partner and global head of private equity at Abraaj Group, said.

Freshfields Bruckhaus Deringer and Bowmans Kenya acted as legal advisors, while PwC served as financial and tax advisor to Abraaj.

Abraaj has deployed $3.2 billion in 80 transactions across Africa. The firm is currently investing its $1 billion Growth Markets Health Fund across the Middle East and Africa, and is thought to be targeting $6 billion for its first global fund.