Kenya: Private Equity firms expected to seek more control in banks

Apr 14, 2016

The collapse of Chase Bank could dampen investors' appetite for mid-size banks.

Private Equity (PE) firms are likely to demand more managerial control in the Kenyan banks they invest in after Chase Bank was put in receivership by the Central Bank, according to analysts.

"Seeing that a lender like Chase Bank had several reputable PE firms and could not catch the vice tells you that minority stakes in unlisted business will no longer be attractive to these firms," Britam Asset Managers chief investment officer Elizabeth Irungu told The Star.

"We may see more and more PE firms requiring more say in the running of the businesses they invest in, and the way to get that say is to have significant holdings."

This comment comes after the placement in receivership of several mid-size banks in the past months, including Imperial Bank and Dubai Bank Kenya.

However, the region remained popular throughout last year, with the value of PE deals in East Africa more than doubling in 2015, according to a report from Burbidge Capital.

More than 40 private equity deals were recorded in the region last year, with a total value of $1.44 billion (€1.32 billion), up from 35 a year earlier ($678 million). These deals were mainly concentrated in the financial sector.ADNFCR-2976-ID-801816539-ADNFCR