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DealMakers AFRICA 2019 Annual

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Private Equity Deal of the Year

(East Africa)


Fanisi Capital exit of Hillcrest International Schools

The exit of private equity firm Fanisi Capital of its investment in Hillcrest International Schools, to Dubai-based GEMS Education, is not only a feel good story but also one of good financial returns.  

Hillcrest Investments Limited (HIL) was established in 2011, with principal shareholders Fanisi Capital, a $50 million venture capital fund, represented at the time by Ayisi Makatiani and Anthony Wahome, an investor whose principal ventures included the Linksoft Group of companies and the Rose of Sharon Academy. 

At a time when private equity players were focused on large-scale infrastructure projects and the fast-growing information technology sector, Fanisi Capital took a bet on a sector not yet established on the private equity radar. With a nose for a good deal, Makatiani, as the HIL consortium, stepped in to buy Hillcrest International Schools out of bankruptcy, paying Barclays Bank of Kenya, the family of Kenneth Matiba and other creditors a total of Sh1,8 billion (c. US$18 million) in a deal recognised for its use of innovative acquisition financing prior to the implementation of the Companies Act of 2015. The plan, he was quoted as saying, was to develop the school into “Africa’s Eton”.

The exit by the consortium some seven and a half years later to Dubai-based GEMS Education for an estimated Sh2,6 billion (c. $26 million) is an impressive return, and this  excludes the profit on the sale of a portion of land (7,9 acres) immediately after the acquisition.

The investment by GEMS Education strengthens its presence in the Kenyan high-end education sector, adding to its Nairobi-based GEMS Cambridge International School. The Dubai school chain is backed by Varkey Group and Blackstone Group, an American multinational private equity, alternative asset management, and financial services firm.

Today, the education landscape has undergone substantial change with increased demand for private education offering international certifications such as the General Certificate of Education, resulting in the presence of a number of international schools such as Sabis, Montessori, Nova and Crawford.

Fanisi Capital’s major shareholders comprise the Norwegian Fund for Developing Countries, the Finnish Fund for Industrial Co-operation, Proparco (the private sector arm of Agence Française de Développement and the International Finance Corporation. 

Legal Advisers: IKM Advocates, Dentons Hamilton Harrison Matthews


Pick of the Best (in no particular order)


Airtel Networks Kenya – Telkom Kenya Merger

The signing of a binding agreement by Telkom Kenya (TKL) and Airtel Networks Kenya (Airtel) in February 2019, paved the way for the merging of their respective Mobile, Enterprise and Carrier Services businesses in Kenya under a joint venture company – Airtel-Telkom – in a bid to create a competitor that could challenge market leader Safaricom’s dominance of the East African country’s telecom industry.


Airtel, a subsidiary of Airtel Africa, is the second largest telecommunications services provider in Kenya after Safaricom, with a market share of approximately 26%. TKL is a semi-private telecoms company, 60%-owned by London-based Helios Investments and 40% by the Government of Kenya. TKL has approximately 9% market share.

Excluded from the deal are TKL’s real estate portfolio and specific government services. With no immediate changes to operations and structures, the brands Airtel and Telkom, as well as respective products and solutions, continue to co-exist. In August, the merger process was suspended pending a probe by the government’s anti-graft commission into allegations of misappropriation of public funds at TLK. The company was eventually cleared. 

The Competition Authority of Kenya (CAK) approved the planned merger with conditions. Central to CAK’s authorisation is the barring of the soon-to-be merged entity, Airtel-Telkom, from entering any other sale transactions in the next five years. The condition is a win for Safaricom as it essentially prevents any further market consolidation efforts, so protecting Safaricom’s market leader position. In addition, all existing contractual terms with government entities must be honoured, which translates to missed opportunities in any preferential treatment in their access to shared telecommunications infrastructure. In addition, TKL will be required to retain some 349 existing employees, just over half of the overall total, some for a specified period and some to be absorbed by network partners. 

Adviser to TKL, Anjarwalla & Khanna says that the complex transaction involved dealing with a heavily regulated industry, with multiple approvals required from four regulators including the Communications Authority, the Competition Authority, the COMESA Competition Commission and the Central Bank of Kenya. 

Legal Advisers: Anjarwalla & Khanna, Davis Polk & Wardwell

Adenia Partners investment in Quick Mart

and subsequent merger with Tumaini Self Service

In 2018, Adenia Partners – a private equity firm investing in sub-Saharan Africa – entered the Kenyan retail space with an investment (via its Adenia Capital (IV) fund) in Tumaini Self Service through special purpose vehicle, Sokoni Retail Kenya. This was the first transaction in a three-phased plan to create a new dominant, home-grown, 30-store retail chain within Kenya.  

In September 2019, Sokoni Retail – controlled by Adenia – acquired Quick Mart (a dominant middle tier retail chain) for an undisclosed sum. This paved the way for the third transaction, a merger between Quick Mart and Tumaini Self Service. Under the terms of the deal, Tumaini supermarkets, of which there are 13, would trade under the brand name Quick Mart, together with Quick Mart’s 11 with a total geographical spread across Nairobi, Kiambu, Nakuru, Kajiado and Kisumu.

Approval by the Competition Authority of Kenya was received in August, prior to the announcement by the respective boards of directors of Quick Mart and Tumaini, which first brought the deal to the attention of the public.

The merger under Sokoni Retail Kenya comes at a time when the retail space in Kenya continues to experience turbulence, with the collapse of long-standing homegrown retail chains such as Nakumatt,  Uchumi and Choppies, and competing supermarkets under pressure to maintain market share. Bowmans, who were the Kenyan legal advisers to Adenia Partners in all three transactions, said the transactions involved investments into family businesses, which meant that advice had to take into consideration varied and intricate business practices and understandings to enable the structure of the transactions to accommodate all parties. 

Legal Advisers: Bowmans
Accountants: Ernst & Young (Kenya)


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DealMakers Africa’s awards are based essentially on objective evidence - the value of deals or transactions, and the number of them. In limited instances judgment has to be applied on the categorisation and value ascribed to a particular deal or transaction. In only two of the awards is selection subjective and we approach these with considerable circumspection; they are for the Deal of the Year and the Private Equity Deal of the Year.

The first stage with both Deal of the Year and Private Equity Deal of the Year is that the DealMakers Africa editorial team, with nominations from the advisory firms, produce a short list of those it believes best qualify for consideration with input from the Independent Panel. The papers and press comment on each deal is then bundled and delivered to the members of the panel.

The Panel ranked the deals on the following criteria:

Deal of the Year:

Transformational transaction – does the deal or transaction transform the business or even the industry in which it operates? What is the extent of potential transformation as a result?

Execution complexity – does the overall deal or transaction involve multiple steps/a number of smaller inter related deals? Are there numerous conditions precedent that need to be fulfilled? Does it involve many and/or complex regulatory approvals?  Are there related debt/equity raising processes and how difficult are they to implement? Was there significant time pressure to conclude the deal/transaction? Did the deal/transaction exhibit innovative structuring?

Deal size – not an over-riding determinant but a significant factor.

Potential value creation – to what extent could shareholders and other stakeholders transaction over time?

Private Equity Deal of the Year:

Asset with good private equity characteristics – cashflow generative business and able to service an appropriate level of debt? A business model that is resilient to competitor action and downturns in the economic cycle? Strong management team that is well aligned with shareholders and capable of managing a private equity balance sheet? Predictable capex requirements that can be appropriately funded?

Deal size – is a factor to filter deals but plays a limited role for acquisitions. It does carry more weight for disposals.

Potential/ actual value creation – was the asset acquired at an attractive multiple? If the deal is a disposal was it sold at an attractive price? What is the estimated times money back and/or internal rate of return?


There is limited information available in the public domain on the private equity deals, and even somewhat educated guess work doesn't provide all answers in all instances.

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