NAIROBI, SEPTEMBER 17 — Private Equity investments in Africa remain robust, market indicators reflect, with the education sector being among top areas of investment.
The increasing investor interest in PE’s is attributable to rapid urbanization, a resilient and adapting middle class and increased consumerism.
The Sub Sahara’s private markets have also been termed “attractive” in terms of valuations compared to its public markets.
According to investment firm-Cytonn, the attractive valuations in Sub Saharan Africa’s markets compared to global markets and better economic projections in Sub Sahara Africa compared to global markets, have also remained an attractive aspect.
In Kenya’s education sector, Fanisi Capital, a private equity and venture capital firm that focuses on healthcare, education, consumer goods, and agriculture last week agreed to invest Ksh400 million in Kitengela International School (KISC), with an initial injection of Ksh205 million for an undisclosed stake.
KISC opened its doors in January 2009, with an 8-4-4 curriculum, having both a mixed day and boarding primary school, and a girls’ high school.
It has since expanded to four schools, one offering a British curriculum and the other the 8-4-4 curriculum for primary school.
The school has an ambitious strategy to triple the number of students, which is currently 1,000 in its four institutions, and to open two more schools over the next five-years.
In 2011, Fanisi Capital acquired a 55 per cent stake in Hillcrest International School after settling the Ksh620 million debt the school owed to Barclays Bank of Kenya with a consortium of investors, making KISC their second investment in the education sector school.
The investment is evidence of increasing investor interest in Kenya’s education sector.
Other investors who have invested in the education sector include Advtech Group, a private education provider, listed in the Johannesburg Stock Exchange, which opened a school under its Crawford Schools brand at Tatu City in September 2018.
The institution offers pre-primary education focusing on the THRASS (Teaching, Handwriting, Reading and Spelling Skills) curriculum.
Nova Pioneer, a South African educator, has set up a primary school and a high school in Tatu city offering the 8-4-4 curriculum.
Centum Limited, an investment firm, in partnership with Sabis Education Network, has set up the Sabis International School in Runda.
Cytonn Investments, through its education affiliate Cytonn Education Services, has come out to provide education at all levels from Early Childhood Development Education (ECDE) to tertiary education, beginning with a technical college-branded Cytonn College of Innovation and Entrepreneurship.
Advtech Group, Schole (Mauritius) Limited, a London based education provider, and Caerus Capital, a leading international education consultancy group jointly acquired Makini Schools at an estimated value of Ksh1.7 billion (US$16.9 million).
The investments are an indication of investors’ interest in the education sector in Sub-Saharan Africa which is motivated by increasing demand for quality and affordable education.
According to The Business of Education in Africa report by Caerus Capital, the Gross Enrollment Ratio (GER) has doubled over the last ten years, from 4.5 per cent in 2006 to 8.5 per cent in 2016.
Support such as ease of approvals offered to investors in the education sector, by governments looking to meet Sustainable Development Goals (SDGs) targets of universal access to education, have supported investments.
“We remain bullish on PE as an asset class in Sub-Sahara Africa. Going forward, the increasing investor interest and a stable macroeconomic environment will continue to boost deal flow into African markets,” Cytonn Investment said in its recent report.
The firm said it remains “neutral” on equities for investors with a short-term investment horizon, since the market has rallied and brought the market PE slightly above its’ historical average.
“However, pockets of value exist, with a number of undervalued sectors like financial services, which provide an attractive entry point for long-term investors, and with expectations of higher corporate earnings this year, we are “Positive” for investors with a long-term investment horizon,” the firm said.