Private equity firms cautious over inflation and regulatory hurdles

welcome back in business the 2024 deoe Africa private Equity confidence survey shows that investment climate in East Africa is the fastest fastest growing on the continent the survey which gives an analysis of the investment climate further shows that with a projected Regional gross domestic product rate of 5.8% in 2024 which is expected to expand reaching an average of 6.6% by 2026 the region offers the best potential for investment this Deo says could result in an increase in capital dispersement in the next couple of years Jimmy MoGo has more the investment climate in the country is Shifting in favor of small and mediumsized Enterprises this is according to the latest data from deit Africa which shows that the region is witnessing a move towards smaller investment sizes and alternative Capital deployment structures such as private debt funds and Evergreen funds alongside traditional close-ended private Equity Funds according to the report 54% of private Equity Farms expect an average deal size in Kenya to be below $25 million an equivalent of 3.2 billion Shillings in the next 12 months and that's where mediumsized uh Enterprises sit and that is really uh driven by the higher returns that you'd expect uh for these uh media mediumsized Enterprises and also you know the larger more established um Enterprises are yielding uh lower valuations um lower valuations or lower returns um um unlike medium-sized Enterprises in 2023 for instance private Equity investment in Kenya stood at $ 6.3 million an equivalent of 77.2 billion Shillings worth of capital deployed by pe Farms across 95 deals however despite a promising Outlook challenges such as inflation currency depreciation and political uncertainities remain a thorn in the flesh of investors even as PE activities in Kenya are set to increase driven by economic reforms investor interest and favorable investment climate so the Serge is largely driven by the the anticipated uh economic growth in in in in Kenya in general and also in key sectors we still anticipate quite increased investment in your financial services Manufacturing and agre business largely and and this is the same Trend that we see across Africa and also slightly followed by by by by Healthcare to take advantage of the private Equity inflow into the country small and mediumsized Enterprises have been AED to ensure consistency in their operations to assure investors of a return on their investment uh key thing for attracting uh p uh capital is really you know consistency around uh returns consistency around governance uh consistency around um both um ensuring that the business model is is is one that can actually with stand the test of time the rising cost of doing business and difficulties in achieving exit have also been cited as pressing issues but with the country's microeconomic environment remaining stable kimoo says Kenya will be among subsaharan countries that could reap big from the ongoing fundraisings Jimmy boo Citizen TV Nairobi