Sterling Capital, a Kenyan-based investment bank acquired a 20 percent stake in Afvest, a Nairobi-based emerging markets private equity firm, for an undisclosed value.
Afvest focuses on early-stage businesses in the financial services, energy, agri-processing and technology sectors.
According to Cytonn Investment Weekly Report, this acquisition is in line with the two firms’ strategy of investing in early-stage businesses and entrepreneurs with the potential to generate high returns.
In 2018, Afvest launched a 250 million shillings fund for long-term investment in early-stage businesses with the potential to generate at least 25 percent annual return on investment.
In March 2019, Sterling Capital announced that they would launch a 2 billion shillings hedge fund, with backing from Kuramo Capital, a New York-based private equity firm, which holds a minority equity stake in the firm since August 2018.
Sterling Capital would operate the hedge fund by raising money from institutions and high net-worth individuals.
The hedge fund is expected to focus on a wide range of assets and strategies. This is including derivatives that have recently been launched at the NSE, and on investments in the small and medium-sized enterprises (SME) sector or business with capital requirements of less than 50 million shillings.
For Sterling Capital, this acquisition will diversify its investment portfolio which mainly consists of equities and bonds into the small and medium-sized enterprises (SMEs) segment.