(Clarifies timeframe for plans to seek investment for real
estate projects and introduce REITs in paragraphs 7,8)
By Edmund Blair and Kevin Mwanza
NAIROBI, April 5 Kenya-based private equity firm
Catalyst Principal Partners has an eye on demand from East
Africa's growing middle class as it starts to make investments
from a broad $125 million fund and from a partnership dedicated
to real estate.
Mauritius-registered Catalyst, which in November finished
raising cash for its first closed-end fund, sees opportunities
in a region of about 200 million people, where consumer demand
is rising and a big boost from recent oil and gas discoveries is
expected for the future.
"We are very much focused on consumer demand on the regional
front," said Catalyst Chief Executive Officer Paul Kavuma in an
interview this week. He left Actis East Africa to found Catalyst
Catalyst this year plans to invest 35 percent of the first
fund in consumer goods, technology, financial services and
industries such as cement and building materials. Kavuma said
some of its first investments were in Tanzania and some of the
most attractive opportunities were outside Kenya, the region's
Development institutions, such as the World Bank's
International Finance Corporation, accounted for about 70
percent of cash raised for the first fund, and the rest came
from individuals, insurance firms, fund of funds and others.
The firm may approach the market to raise a second fund in
the next two years, Kavuma said.
Meanwhile, Acre Solutions, a partnership Catalyst has set up
with an international property developer, has identified real
estate projects and could be seeking investors for some of them
in the next month or two, he said.
He said the firm would consider setting up real estate
investment trusts (REITs) in future. Kenya's capital markets
authority is working to introduce REITs, securities that trade
like stocks on the exchange and usually offer investors high
A residential project worth $40 million to $45 million will
be its first to market, and the partnership is also working on a
mixed commercial, residential and hospitality development in
Kenya requiring about $2 billion in investment over 10 years,
Demand for middle class homes and other housing in east
Africa has outstripped supply for decades, and the sector has
outperformed other asset classes such as stocks and fixed
Catalyst, along with many others, expects the region's
growing economies and consumer demand to get a further boost
from oil and gas finds, but Kavuma said this would come with a
risk that corruption could rise and transparency suffer.
"There is a risk that the pot of gold is so significant that
we may go backward on our corruption indices and things like
that," he said.
The net effect would still be positive, he said. "I do not
think the drag will outweigh the benefit."
(editing by Jane Baird)