Nine PE exits in Uganda in the last decade

In the last decade, Uganda has had two election campaign periods characterized by political instability and high inflation. However, new data on private equity exits has shown that the private sector flourished despite all this.

African Private Equity and Venture Capital Association report on PE exit activity on the continent shows 49 exits, the second highest recorded numbers in the surveyed ten-year period. 10% were in the East Africa region.

In Uganda, AVCA told this website that nine PE exits were recorded in 2007-2017.

The report focused on full exits, most of which (37%) they found to be through buyouts by larger private equity firms and other financial buyers. Other exits are via private sales, trade buyers and capital markets.

AVCA calculated the average holding period for PE firms to be longer than investments in developed markets. Many exits in 2016 and 2017 – the two highest in the period – were made in 2005-2008. PE firms have managed these portfolio companies through difficult times and have now achieved robust exits with favourable financial returns, AVCA stated.

The most publicly reported exit in Uganda was the 2016 Actis exit of Umeme. Actis invested in the power distributor in March 2005.

In the eleven-year period that Actis held the investment portfolio, Umeme Ltd listed on the Uganda and Nairobi stock exchanges after external financing help from the International Finance Corporation, World Bank’s investment arm. The firm began selling their stake in 2012 and completed exit with the Shs 59.4bn sale to NSSF in 2016.

Kibo Capital Partners held their investment in International Medical Group for a shorter period. They first invested in January 2012, then increased their holding in August 2014 when they acquired 12% more from TBL Mirror Fund. They sold their entire 40% stake in July 2015 – only three years since investing – to Mauritius-based conglomerate Ciel Group and India’s healthcare operator Fortis.

Investment Funds for Health in Africa also closed their portfolio with Kampala Hospital Limited, after they invested growth capital in November 2013. They exited in May 2014.

There is an overall increase in PE activity in the region, with PE firms outperforming the public sector by 49%. Burbidge Capital says the most activity in Uganda is seen in agribusiness with almost 20 deals in 2015 and 2014. In the same period, there were over 150 deals in Kenya – all in the financial sector. Most transactions remain undisclosed.

Looking forward, AVCA expects increased investment on the continent in consumer products and services, energy, fintech, healthcare and education. They advise allowing time for detailed divestment planning – “one or two years before the targeted exit date”. Strong digital and technology use in data analytics to improve exit strategy and increase pre-sale value.