Ascent acquires majority stake in Auto Springs East Africa, in its second Kenyan deal

12 Feb 2018

  • Auto Springs East Africa is a leading Original Equipment Manufacturer and supplier for the motor industry in East Africa
  • First investment in the auto-mobile industry in the region for Ascent Rift Valley Fund
  • Debt financing for the transaction provided by SFC Finance  

Ascent Rift Valley Fund (ARVF), a leading SME Private Equity Fund investor has signed an investment deal that will see it acquire a majority stake in Auto Springs East Africa. The deal is their first investment in the auto-mobile industry in the region and their second investment in Kenya. The fund invests in Kenya, Uganda and Ethiopia.

The Limuru-based factory produces a wide range of products for the motor assembly and vehicle spare parts industry including a variety of wiring harness, leaf springs, nuts, bolts and washers to fit cars, trucks and SUVs.

Ascent Rift Valley Fund will acquire a majority stake in Auto Springs East Africa in a partnership deal with SFC Finance Limited (SFC), a non-bank financial institution which provides secured medium and long-term debt financing to SMEs in Africa.

“This investment has been done in partnership with SFC because they have shown increased interest in investing in East Africa and especially Kenya which has over the years embraced private equity funding. SFC has come in as a debt partners and the Ascent Rift Valley Fund will provide equity in this transaction” said David Owino, Partner at Ascent Capital Advisory Services LLP during the signing of the deal.

He further stated that with the investment, ARVF expects to gain a significant share in the growing automobile industry. Besides the capital going to acquiring the majority stake in the company, Ascent announced the financing will be used for product expansion and factory improvements.

“SFC is pleased to be a debt partner in this transaction, adding to its growing portfolio of financings in East Africa. In addition to meeting the financing need, we look forward to an active participation in the deal, helping Auto Springs to achieve its growth objectives,” said Samia Tnani, Head of Credit Origination at SFC Finance limited.

With favorable economic policies, Kenya has become the ideal hub for automotive manufacturers to gain entry into East and Central African region and grow their business. Auto Springs is positioning itself to serve this growing sector.

“Partnership with Ascent gives us strength and ability to better serve the quality and service demands of our clients. Our long- standing relationships with organisations such as Isuzu East Africa and Simba Colt Motors demand constant investment in new plant and technology. Ascent’s investment moves us not only to improve our current processes but to also look aggressively into new product development,” said Mr. Salil Patel, Chief Executive Officer of Auto Springs East Africa.

The assembly industry in Kenya is growing with the entry of major international players looking to turn around the local car assembly industry. Last year, Peugeot announced the re-opening of its car assembly facility targeting production over 1,000 units annually. Volkswagen has also begun production at Kenya Vehicle Manufacturers plant in Thika. Last September, Simba Corporation took full control of Mombasa-based, Associated Vehicle Assemblers (AVA), with plans to expand production with clients such as Toyota Kenya, Scania, Tata and Volvo on board. This year Foton Motors re-entered the market and has joined the assembly line at AVA.

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About Ascent

Ascent Rift Valley Fund is a US$80mn private equity fund whose focus is to invest in Kenya, Uganda & Ethiopia targeting small and medium sized companies (SMEs). The Fund has invested in other institutions in the region, including Medpharm Holdings Africa in Ethiopia, Chims Africa in Uganda and Kisumu Concrete Products in Kenya.

ARVF seeks to invest in scalable fast growing enterprises with investments amounts ranging between US$2mn to US$15mn per Investee Company. Ascent Capital Advisory Services LLP is the exclusive advisor to Ascent Capital Africa Ltd, which is the sole advisor to Ascent Rift Valley Fund.

For more information regarding this, contact Marieke Geurts- m.geurts@ascent-africa.com

About SFC Finance Limited

SFC Finance Limited is a non-bank financial institution, providing various secured debt financing products to Small and Medium Enterprises (SMEs) in Africa. It is a partnership between The AfricInvest Group, a leading private equity manager in Africa, FMO, the Dutch development bank, an emerging market private equity fund managed by MicroVest Capital Management and Finnfund, the Finnish development finance institution. SFC Finance Limited also has a long-term debt funding facility extended by Overseas Private Investment Corporation (OPIC).

For more information regarding this, contact: Mercy.kimani@africinvest.com  or Rosemary.Mulwa@africinvest.com.

 

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