Kenya Attracts Sh39b in Private Equity Injection

Kenya led the East Africa region and surpassed North and Southern Africa in venture capital (VC) and private equity investment deals in the first half of the year, a new industry report shows.

Data from the African Private Equity and Venture Capital Association (AVCA) shows that Kenya attracted Sh39 billion worth of investments at current exchange rates in the six months to June.

For instance, Wasoko’s Sh15 billion ($125 million) Series B round enabled the Kenyan e-commerce firm to launch in Côte d’Ivoire and Senegal, thereby officially expanding into West Africa.

Solar and financial technology firm M-Kopa also secured $75 million (Sh9 billion) in equity funding in March 2022, which the company intends to use to cement their launch in Ghana and expand into additional countries, adding to its hubs in Kenya, Uganda, Nigeria

Notable CleanTech deals that took place in the first six months of 2022 include the US$19 million Series C round in Kenyan sanitation and waste management company Sanergy, as well as the $6.2 million Series A in Romco Group, a CleanTech metals recycling company.

The report finds that the region attracting the largest share of VC investment by deal volume remains largely unchanged with West Africa leading with 33 percent.

Nadia Kouassi Coulibaly, Head of Research at AVCA said the record-breaking performance is a powerful demonstration of the continued growth of the African private capital and venture capital ecosystem, despite significant global headwinds.

“The industry is on track for stellar performance in the second of the year and we are working closely with members to provide the insight and support they need to grow their portfolios,” she added.

The report’s sector focus highlights that financials remains a titan of the ecosystem as the most active sector by both volume at 32 percent and value at 44 percent.

Three sectors emerged from the margins to the mainstream in 2022 such as health care delivering 50 percent growth year on year, education, 64 percent and utilities at 23 percent growth.

In one of the strongest half-year of private capital activity ever recorded, private capital investment in Africa in the period under review saw a total deal volume of 338 deals with a cumulative deal value of Sh564 billion at current exchange rates ($4.7 billion).

“There are three main factors that contributed to strong deal activity: the substantial amount of fresh capital raised by fund managers in 2021 as investors made deployments across various strategies and sectors, and an increasing interest in Africa’s venture ecosystem. This has not only attracted international investors and supported the development of domestic venture capital firms but has also encouraged pan-African private equity firms to broaden their strategy to include a dedicated focus on venture capital, and overall larger ticket sizes,” the report notes.

Unsurprisingly, given its enormous potential, the continent’s financial services industry has continued to attract investors from all over the world, with FinTech companies, in particular, comprising 89 percent of the total number of deals within Financials.

From a regional perspective, West Africa continues to dominate private capital deals by volume at 34 percent. Senegal now holds third place, overtaking Côte d’Ivoire, to follow Nigeria and Ghana as having the largest shares of deal volume in the region.

East Africa experienced the strongest growth in its share of deal volume compared to the corresponding period last year. 

Kenya’s role in this was key, with early-stage venture deals in financials and consumer discretionary – mainly online retailing – contributing significantly to this remarkable growth.