KENYA – UK-based private equity fund Actis has put Java House (Java), a Kenyan-based restaurant chain, on sale for an undisclosed value, three years after it was acquired from Dubai-based Abraaj Group.
Java, founded in 1999 by Kevin Ashley and Jon Wagner, opened its first store in the same year at Adam’s Arcade in Nairobi. The chain has since grown to 75 branches in Kenya, four in Uganda, and three in Rwanda, and has previously sought to expand to Dar es Salaam, Lagos, Accra, and Lusaka.
Sources familiar with the transaction said Actis, which owns the high-end Garden City mall and is putting up a Grade A office on a 23-acre plot in Dandora in Nairobi, is looking for a buyer for its 100 percent stake in Java House in what could be another change of ownership at Kenya’s biggest coffee chain.
According to sources, the goal is to find a buyer for the chain by the end of this year, speculating it could run into a Billion-shilling transaction.
The source indicated that the deal is valued at US$40 million (Ksh4.9 billion) and that three of the potential buyers had been dropped on grounds that their asking price was below market rates.
The divestiture comes months after Actis inked a deal to buy hotel properties in Kenya and Tanzania and has been on since last year, multiple sources told newsrooms in Kenya.
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.
In addition, local chains, such as ArtCaffe, are expanding rapidly and taking a portion of Java House’s market share that is being left open.
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 chain which was bought in 2017 by private equity firm Abraaj is headed by Priscilla Gathungu, who is its first Kenyan chief executive, after replacing Derrick Van Houten, who took over in March 2021.
Washington-based Emerging Capital Partners (ECP), which owned 90 percent of Java in 2017, sold the entire stake to Abraaj as part of a takeover plan, also forcing the chain’s founder and chairman Kevin Ashley to part with his 10 percent stake that had been valued at Sh1.3 billion in a deal that was estimated at Sh13 billion.
The Competition Authority of Kenya then approved the acquisition of indirect control of Java’s owner — Abraaj Holdings — by Actis but did not specify the value of Actis’ acquisition of Abraaj’s Kenyan assets, which also includes a 10 percent stake in Brookside Dairy.
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