Fusion Capital Begins $150M Africa Investment

Fusion Capital, which is part of UK-based Fusion Investments, is putting $150 million to work in small and medium-sized businesses across Africa, Reuters reported. The fund – known as Fusion African Access – began investing in March and aims to deploy the entire fund by the end of the year. It invests between $250,000 and $5 million per company.

(Reuters) – Fusion Capital, part of Britain’s Fusion Investments, will invest its new $150 million private equity fund in small and medium-sized enterprises across east Africa, its chief executive said on Thursday.

With the integration of Rwanda, Burundi, Uganda, Tanzania and Kenya into a common market of 133 million people and combined GDP of $75 billion, the region has been attracting private funds.

“We began investing in March and expect to invest all this money by the end of the year. The first term will be a five-year payback period with at least 25 percent rate of return,” Fusion Capital Chief Executive Luke Kinoti told Reuters.

Known as Fusion African Access and wholly based in east Africa, the fund will invest between $250,000 and $5 million in small and mid-sized firms across all sectors.

It has invested in a housing project in Athi River, a town some half an hour’s drive to the east of the Kenyan capital, Nairobi.

During the initial phase it is also investing in a private cemetery in Kenya, a Rwandan manufacturer and financial services firms in Rwanda and Uganda.

Small and medium-sized enterprises are estimated to contribute about 40 percent of Kenya’s gross domestic product (GDP) while returns from real estate investment outpaced those from investments in Kenyan shares in the decade from 2000.

Phil Godwin, Fusion Capital’s chairman, said there were some risks for investors.

“Country risk, politics and currency volatility are a fact of life in frontier markets,” Godwin told a launch ceremony.

“Our approach is not at all about making predictions of what will happen but ensuring that, whatever happens, we have made good long-term investments for our investors.”

He said the weaker shilling currencies in the region offered a good opportunity to invest into a region which has had stable economic growth of 5-6 percent in the last five years.

The Kenyan, Tanzanian and Ugandan shillings have hit a series of record lows this year, largely due to rising food and oil prices. (Reporting by Kevin Mwanza; Editing by Duncan Miriri)