Saturday , October 1 2022

The Catalyst II Fund raises a $ 155 million successor fund for investment in East Africa


NAIROBI, KENYA, 9 NOVEMBER – The East-East Fund, Catalyst Principal Partners, announced the end of the second fund, reaching $ 155 million.

It's about 15.5 billion Ksh of capital commitments from high-ranking international and regional investors as the successor to the Catalyst I Fund, a $ 125 million fund raised in 2009.

At the launch of the second fund, Catalyst assumes the position of regional leader of private equity funds with the largest fund of funds administered by its colleagues dedicated to the region of East Africa.

With more than 80% of Catalyst II's international investors, who have already invested in its first fund, Catalyst has increased its existing investment commitments by over 30%, attracting capital from new international and regional investors, and offices by family.

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

According to the United Nations Trade and Development Conference (UNCTAD) data, the East African region accounted for 18% of foreign direct investment in Africa in 2017.

"Given that Catalyst Principal Partners is the main East African fund that invests only in the region, the increased interest of international institutional investors is an indicator of their trust in the strong foundations of the regions. The East African region is the fastest the continent with GDP, a factor that continues to attract investors, "Kavuma said.

Regarding the commitments of regional investors that increase by 50% in the case of the Catalyst II Fund, the emergence and mobilization of domestic capital brands is due to the proximity of the private private equity industry.

The East African Community and Regional Development Cabinet Secretary Adan Mohamed, who officially presided over the closure of the Catalyst II Fund, stressed that the regional private equity sub-sector has seen tremendous growth over the years, with several firms showing an interest in development of regional economies.

"It is also worth noting that regional investors, including pension funds, account for almost 20% of the commitments made under the Catalyst Fund II, a clear indicator that not only can the region absorb funds and ensure return on investment but that the region can also raise funds for its own development, "CS. Adan added.

He said the Kenyan government will continue to undertake reforms aimed at improving the local business environment, while trying to conclude trade agreements and blocks that expand the market for local companies.

This includes the Africa Free Continental Free Zone (CFTA) agreement signed earlier this year by 44 countries, creating a wider market of more than 1.2 billion people, with a combined GDP of 2.19 trillion US dollars.

"The creation of this market will allow the continent to deepen intra-African trade, while creating growth opportunities for medium-sized companies." PE funds such as Catalyst will help facilitate SME access to this market. continues to invest in infrastructure both locally and as part of the East African community through initiatives such as the North Corridor project to ease business connectivity, "he said.

Catalist CEO Kavuma noted that increased interest in the region is largely driven by policy reform, infrastructure investment, and regional integration and harmonization.

"Catalyst focuses largely on emerging and medium-sized companies with strong growth prospects and profitability. Raising appetite both from international investors and regional investors in the private asset class is an indication that East Africa is not just a attractive investment opportunity, but that private capital offers a credible and innovative financing solution for ambitious companies and aspiring entrepreneurs seeking venture capital tailored to support growth and improve performance, "Kavuma added.

In 2009, the Catalist Fund I raised $ 125 million (€ 12.5 billion) in 9 companies in Kenya, Tanzania and Ethiopia, with various interests in the production of consumer goods, pharmaceuticals, processing agro-food, logistics and engineering, financial technologies and services.

Catalyst Fund II will invest between $ 7.5 million and $ 22.5 million for East African emerging market players in a key growth sector that responds to the demands of increasingly aspired consumers backed by favorable regional fundamentals .

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

Catalyst Principal Partners is investing in a four-year investment horizon by taking a significant stake in businesses that need capital expansion and replacement, recapitalisations and previous IPO investments.

Through Catalyst Fund II, Catalyst Principal Partners will try to increase the footprint and impact of private equity funds in the region, allowing more businesses to access innovative financing solutions, while offering value beyond capital to develop top regional champions.

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