KENYA – UK-based private equity fund Actis has reached advanced talks with Java House’s potential buyer in a deal that could be valued at between Sh2.5 billion (US$18.4m) and Sh3 billion (US$24m), according to a person familiar with the negotiations.
The sources said the buyer of all shares in Java, Mauritius-based private equity firm Adenia Partners, is after investing and taking over some of Africa’s most promising businesses to set their foothold tight on the continent.
“Adenia is offering to buy Java. The deal is estimated to be around Sh2.5 billion to Sh3 billion and talks are looking good,” the source who sought anonymity told BusinessDaily.
Actis put Java up for sale three years after it was acquired from Dubai-based Abraaj Group. The sources noted the PE valued the casual dining and coffee chain at $40 million (Sh4.9 billion).
For Adenia, the transaction of Java will deepen its presence in Kenya after acquiring stakes in retail chain Quickmart in 2019, Reds Land Roses which deals in fresh cut roses, heavy construction equipment dealer Kanu Equipment and Africa Biosystem Limited—which deals in health kits.
According to Business Focus, the sale is expected to cement Kenya’s reputation as a high-return market that offers exit routes for Private Equity (PE) funds and development finance institutions (DFIs).
Most PE funds and DFIs have exited by selling to similar funds, indicating a strong demand from institutional investors that pool funds from wealthy families, pension funds, and governments.
The restaurant industry in Kenya has seen significant growth in recent years, driven by rising disposable household incomes, fast economic growth, and a young population.
This has attracted global players such as KFC, Subway, Burger King, Cold Stone Creamery, Toridoll, and Domino’s Pizza to open more stores in Kenya.
These global players are turning to emerging markets such as Africa for growth, attracted by a rising middle class, according to a study by McKinsey.
Local chains such as ArtCaffe have not been left behind in this rapid expansion, taking a portion of Java House’s market share.
Java is the biggest restaurant chain in the region with 82 outlets, followed by Chicken Inn (72), Artcaffe (35), KFC (33), and Burger King (5). Besides Kukito, Java House Group runs Java restaurants, Planet Yogurt (PY), and 360 Degrees Pizza.
Despite the fast-food chains and Hotel industry showing signs of sluggish recovery from the Covid-19 hit and economic downturn, Actis inked a deal to buy Nairobi’s Fairview Hotel, Town Lodge, and City Lodge in Two Rivers for an estimated Sh1 billion from City Lodge.
This proves that PE funds are playing an important role in backing local modern chains and industries that could have otherwise collapsed.
Kasada Hospitality Fund, which is backed by the Qatar Investment Authority (QIA) — the country’s sovereign wealth fund—last year fully acquired Crowne Plaza Hotel for an estimated Sh4.6 billion.
In addition, Saudi billionaire Prince Al-Waleed bin Talal sold his stake in The Norfolk and Fairmont Mara Safari Club to a Nepalese tycoon for Sh2.8 billion.
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