Ascent Capital, an East Africa-focused private equity firm that invests in small and medium-sized enterprises (SMEs), has struck the fourth deal from its second investment vehicle.
The Port Louis-headquartered PE firm acquired a minority stake in a Kenyan paper packaging manufacturing company from its $128-million Ascent Rift Valley Fund II (ARVF II).
ARVF II bought a stake in Nairobi-based Dune Packaging, which makes paper packaging materials used in various industries including food, beverage, pharmaceutical, and retail. Dune’s subsidiary, Tiger Packaging Ltd, manufactures woven polypropylene bags. Dune’s product portfolio includes custom-printed paper bags for food, beverage, pharmaceutical, and retail industries, tea sacks to package tea leaves, seed bags for agriculture, khaki grocery bags, stitched bags, takeaway bags, and construction bags.
The deal includes veto rights, covering the appointment of senior management, control of business plans, and budgeting decisions by Ascent Capital.
The acquisition proposal was recently approved by the Competition Authority of Kenya.
Last year in February, Dune Packaging acquired Palm Tree Kenya, which manufactures paper and paper products, including paper straws, and glue for packaging
ARVF II, which invests in small and medium enterprises across Ethiopia, Kenya, Uganda, Rwanda, and Tanzania, commits ticket sizes between $4 million and $15 million. It covers sectors including manufacturing, wholesale and retail trade services, financial services, education, healthcare, and agro-processing.
ARVF II marked the final close in September 2022, raising $128 million, as against the initial target of $120 million.
The other investments by ARVF II are in the financial and healthcare services sectors. These include Valley Hospital in Nakuru, Kenya, and Diani Beach Hospital on the South Coast of Kenya.
The investment vehicle is backed by leading African investors such as BIO (Belgian Investment Company for Developing Countries, BII Group (the UK’s development finance institution), FMO (Dutch entrepreneurial development bank), IFC (International Finance Corporation), Norfund (the Norwegian Investment Fund for developing countries), FISEA (advised by Proparco, France’s development finance institution), SDG Frontier Fund, impact investors and major Kenyan pension funds.
Ascent Capital in its previous outing, the $80-million Ascent Rift Valley Fund I, deployed capital in nine investments in Ethiopia, Uganda, and Kenya across a slew of sectors, including healthcare, distribution,
financial services, and manufacturing. The 2014 fund invested in ticket sizes between $2 million and $15 million. Its portfolio from the first fund includes a medical laboratory, a concrete products manufacturer, a chemical manufacturer, a retail pharmacy, and a plastic crate manufacturer.