Fusion Capital, the private equity firm, is looking to grow its investments in the region by offering small and medium sized enterprises loans in both local and foreign currency.
“The sectors that we are looking at are in education, financial services, construction, agri-processing and consumer industries,” says Luke Kinoti, the group chief executive of the Fusion Group.
The company is eyeing investment in Kenya, Uganda, Tanzania, Rwanda and Burundi.
“We are able to lend in both local and hard currencies. As such, we have noted a number of dollar denominated opportunities in Burundi, Uganda and Rwanda, which builds a natural hedge in our current portfolio.”
Dollar denominated loans cushion the SMEs against the volatility of currencies, which was evident late last year with most currencies in the region depreciating against the dollar.
Fusion focuses on providing growth capital to SMEs and corporates across the region through either access to private debt or private equity, and where required a combination of both.
“The small and medium enterprise market segment remains largely untapped as the demand for capital far exceeds the availability of suitable sources of funding,” says Mr Kinoti.
Mr Kinoti cites a recent McKinsey Report, which stated that by 2015, it is estimated that revenues generated from the formal banking sector arising from SMEs in sub-Saharan Africa will total $12 billion.
Fusion, which started over six years ago, launched the Fusion African Access in August 2011.
The firm, already operating in Kenya, Uganda and Rwanda, says it has reviewed Ksh1 billion worth of private equity investment spanning a range of sectors including real estate, private cemetery, financial services and is in the final stages of successful projects and in some cases, awaiting regulatory approval.
Fusion’s investments range from a minimum of $100,000 to about $6 million.
One of the challenges the firm faces is opportunities to exit from companies it has invested in.
But Fusion is looking forward to the establishment of the growth enterprise market segment, which will see the listing of the SME’s at the Nairobi Securities Exchange.