Africa’s Telecoms Private Equity On Growth Path

Mergers, Acquisitions and Financial Results

East Africa's investment and venture capital markets are set for a revolution with the establishment of the Africa Technology Media and Telecoms (ATMT) Fund. The package is a US$100 million fund aimed at the fast-growing information and communications technology (ICT) sector in the region and is managed by East Africa Capital Partners, a firm based here in Nairobi.

ATMT is aimed at African companies in the ICT sector, which has become one of the most exciting business sectors on the continent.

The rate of growth in telecoms, internet connectivity and other forms of ICT companies has been nothing short of astounding, and indicates a pent-up demand for the benefits of communication.

One of ATMT's primary investments has been in the Wananchi Group, one of Kenya's leading internet and entertainment companies. The $40 million investment that has been made will enable the Group move to the front of the extremely competitive market.

One of Wananchi's main consumer strategies is to be the first company in the region to offer true triple play service - with customers being able to sign up to a true broadband service, voice telephony and multi-channel cable television, all through one pipe into their homes.

ATMT's other investments are just as revolutionary. The fund has established the small and medium enterprise (SME) Ventures, which is aimed at early-growth companies. SME Ventures aims at funding 'Kenya's Bill Gates and Tanzania's Steve Jobs' young, ambitious entrepreneurs who are gutsy enough to start billion-dollar companies on the continent.

SME Ventures will provide between $ 50,000 and $500,000 to such start-ups, aiming at assuring between five and seven years of growth, before the fund's exit point. ATMT also owns a piece of TEAMS, one of the submarine cables set to land on the eastern seaboard in 2009.

When that happens, it is expected to fundamentally alter the internet industry in Africa, by making it remarkably cheaper, faster and more stable than the current reliance on satellite access.

ATMT is partly funded by the Overseas Private Investment Corporation, a US-government agency that aims to foster economic development in emerging markets.

The other half of the funding comes from East African, American and British high net worth individuals, who have a great deal of experience both in financing growth and running companies in the region.

They range from Kenyan internet pioneer Richard Bell (who also manages EACP) to Jimnah Mbaru, the former chairman of the Nairobi Stock Exchange and Ali Mufuruki, one of Tanzania's leading communications titans and lead CEO of the Tanzania CEOs Roundtable.

Others include James Gachui, chairman of one of Kenya's leading investment firms, Transcentury, Richard Essex, a leading British investor and Mark Schneider, who founded one of the US's leading cable television companies, Liberty International. Bell's excitement about the fund and its growth potential is palpable.

He says: "We are creating Africa 's next billionaires."

East African Business Week