Private equity Ascent Capital raises US$102m to invest in SMEs across East Africa

KENYA – Private equity fund Ascent Capital has raised from US$102 million from the World Bank and top sovereign funds for investment in local companies across Eastern African.

The capital was raised from the World Bank Group’s private sector arm, the International Finance Corp (IFC), the UK government-owned finance agency, the CDC Group, Dutch development financier FMO, and the French development finance institution, Proparco alongside other high net worth investors.

The fund said it will invest between US$5 million and a maximum of US$19.5 million in firms across growth sectors like financial services, manufacturing, trade, education and health sectors in Kenya, Ethiopia, Uganda, Tanzania and Rwanda.

Ascent Capital said it will seek majority or significant minority ownership in the targeted companies, suggesting it needs say in the boardroom of the firms.

“We are looking and have seen interesting opportunities. The market is still there for investors chasing a return and funds are available for businesses that are looking for equity partners to work with them,” said Ascent Capital founding partner David Owino.

CDC contributed US$25 million though a breakdown of the rest of the parties’ contribution was not immediately available.

“The market is still there for investors chasing a return and funds are available for businesses that are looking for equity partners to work with them”

David Owino- Founding Partner, Ascent Capital

Kenyan pension funds deployed about US$12 million in the fund, according to Mr Owino.

The investment firm was founded in 2012 by three partners including Mr Owino who had cut his deal making skills at the listed Centum Investments.

It targeted small and mid-sized firms, breaking the market norm where most PE funds eye stakes in small companies opted for passive, minority stakes.

It has invested in a broad range of sectors in Ethiopia, Kenya and Uganda usually through transactions ranging between US$2 million and US$15 million.

Mr Owino said the latest fundraising will help medium sized businesses in Kenya strengthen their capital structures, improve their governance and scale up.

“We want to take significant stakes in the businesses we invest in. If we can take a controlling stake of more than 51 percent, we are okay. If we get a minority stake, we are also okay, but it must be a significant minority. Our idea in investing is to grow the company to become a mid-cap company,” Mr Owino said.

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