East Africa: PE Fund Aureos Capital Exits Region as Term Expires

Regional private equity fund Aureos East Africa Fund LLC has started the process of exiting its investments in East Africa.

The fund which was established by Aureos Capital in 2003, had made several investments in Kenya, Uganda and Tanzania.

Its key sectors included banking, manufacturing, tourism, advertising, wholesale and retail.

Recently, the fund which is managed by the Abraaj Group announced that it had entered into an agreement to sell its entire 5.53 per cent (6.83 million shares) stake in the clothing retailer Deacons East Africa Plc.

The value of the transactions is yet to be made public but conservative estimates based on the current market value of the company’s stock on the Nairobi Securities Exchange puts the price at around Ksh24 million ($240,000).

The share sell-purchase transaction which is still subject to regulatory approval will be executed off the NSE as a private transaction.

The fund has also invested in the cement firm Athi River Mining, Bank of Africa, Athi River Steel Plant, Cable Holdings Ltd, Dorini (Tourism) and advertising firm Ovidian.

In Uganda and Tanzania, the fund has invested in the Bank of Africa (Uganda) and Bank of Africa (Tanzania).

The $40 million fund is incorporated in Mauritius and seeks to make equity and quasi-equity investments in small and medium-sized enterprises (SMEs) with strong potential for profitable growth and regional expansion.

Aureos seeks to invest in East Africa with a focus on Kenya, Tanzania and Uganda, with investments of between $0.5 million and $4 million per transaction.

It holds its investments for a period of five years. The fund specialises in funding start-ups, growth capital financing, consolidations, mergers and acquisitions, recapitalisations and buyouts.

Aureos acquired 5.53 per cent shareholding in Deacons East Africa in the year 2006. Deacons’ issued shares stand at 124 million shares.

100 per cent waiver

The company listed the shares by way of introduction on the NSE last year, and its stock is currently trading at around Ksh3.55 ($0.03) per share.

Apart from Aureos, Deacons’ other shareholders with more than three per cent stake gave an undertaking not to sell more than 50 per cent of their shareholding for two years from the listing date of August 2, 2016.

The Capital Markets Authority (CMA) granted a 100 per cent waiver from the 24-month lock-up requirement to Aureos.

Among Deacons’ top shareholders are Swedfund International AB (14.03 per cent), Pinpoint Investments Ltd (8.73 per cent) and Diana Bird (7.96 per cent).

Others are Charles Mwangi Gathuri (7.56 per cent), Kirimara Ltd (6.5 per cent), Tri-Kay Development Company Ltd (5.56 per cent) and Aureos East Africa Fund (5.53 per cent).

Chief executive Muchiri Wahome owns 3.49 per cent shareholding in the company.

Deacons’ joint venture with Woolworths Holding (Mauritius) ended on December 31, 2015 after Deacons sold its 49 per cent in Woolworths Kenya Ltd to Woolworths Holding (Mauritius) Ltd which already owned 51 per cent stake in the company.

Deacons made Ksh64.9 million ($649,000) from the sale that left Woolworths Kenya Ltd a fully-owned subsidiary of Woolworths Holding (Mauritius) Ltd.

Other corporate deals on the Kenyan corporate landscape last week included the agreement by Heritage Insurance Company Ltd, a subsidiary of Liberty Holdings Ltd (Kenya) to sell off its shares in Azali Ltd to Emerg Investments Ltd (Kenya).

Azali Ltd is a non-operating company which owns and manages Heritage House in Naivasha town in the county of Nakuru.

The transaction is still subject to regulatory approvals including the CMA and Competition Authority of Kenya.

Source: allAfrica