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Kenyan computer reseller gets PE firm’s funding

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Computer hardware and software retail shop, Bestell, has received funding from private equity (PE) firm GroFin Kenya to finance its expansion plans into Rwanda.

GroFin said that it has invested both debt and equity in the computer reseller, as part of a Sh200 million injection into four budding Kenyan businesses since December.

Bestell Computers, which has six branches in Nairobi and Kisumu, plans to open its seventh store in Kigali.

“GroFin is supporting (Bestell’s) growth plans with flexible finance and leveraging on GroFin’s presence in Rwanda to support growth into the East Africa region,” said the PE fund in a statement.

Grofin could not disclose the exact figure it has invested in Bestell, but said each of the four firms it has invested in since December received average funding of Sh50 million.

The other firms that received funding include Zuka Travel, a logistics company, healthcare products distributor Luwada Management Services and petroleum transporter Wargen Services.

The investment in Zuka has enabled it to have a fleet of between 50 and 70 vehicles at any one time while Luwada Management Services has used the funds to buy out a competitor in Nairobi.

All the GroFin transactions took place between December and January and the PE firm says there are more in the pipeline.

GroFin Kenya general manager Rishi Khubchandani said that the upcoming general election has acted as speed bumps in slowing down the rate of new investments, but the private equity firm plans to go ahead with its investment targets.

“We have faith in the growing SME sector in Kenya and its ability to withstand any negative investment sentiment. We have approved five SME investments thus far this year and expect to invest in a total of between 18 and 22 SMEs before the year-end,” said Mr Khubchandani in a statement.

Despite confidence that the general elections will not derail investment plans, GroFin has not thrown caution out of the window and is preparing a business continuity plan for all its investors in the event there are interruptions after the March 4 polls.

“The plan includes ensuring the necessary insurance are in place and up to date, premises and physical controls are enhanced, customer and credit control are managed; and ensuring suitable logistics and transport options are available,” said GroFin in the statement.

GroFin makes investments of between $50,000 (Sh4.4 million) and $1.5 million (Sh131.4 million) in debt or quasi-equity with an investment period that ranges between four and seven years.

The African Development Bank, the International Finance Corporation and the European Investment Bank are some of GroFin’s investors. The PE fund’s other recent investment was a capital injection in a Spur outlet in Eka Hotel, Nairobi in August last year.

At the time GroFin said that it had invested between Sh40 million and Sh45 million in the venture.

Growth in private equity funding as been an alternative to commercial bank loans as entrepreneurs have opened up to the idea of having additional owners in their businesses.

“Private equity has gotten quite popular as more companies are achieving scale, we are also seeing more third generations taking over family businesses meaning that they are open to selling stakes to achieve growth,” said NIC Capital general manager Wilson Irungu.

Fanisi Capital, Fusion Capital and Pearl Capital Partners are other private equity and venture firms that are active in the region.

Fanisi Capital recently invested close to Sh260 million in a Rwandan drugs wholesaler, Sophar Ltd while Pearl Capital Partners invested Sh200 million in Midlands, a food processing plant based in Nyandarua County.-Business Daily

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