Kisumu Concrete Products (KCP) Ltd yesterday inked an investment deal with Ascent Capital Advisory Services, making it the first company to attract Private Equity funding outside Nairobi.
The deal means the family-owned construction materials maker based in Kisumu will benefit from between Sh400 million and Sh1.4 billion ($4 million- $14 million) funding to scale up production. This is part of a Sh8 billion ($80 million) Ascent Rift Valley Fund, an SME private equity fund in Kenya, Uganda and Ethiopia.
Ascent Capital Managing Partner David Owino said injection of the funds is expected to increase production up to four times in four years and scale up the SME to international standards. Ascent will be part of a board providing synergy for this transformation.
KCP Chief Executive Officer Vimal Rabadia said the funds injected into the company would help it expand into the region, scaling up production to meet market demands and advance their production technology.
The investment comes at a time when Kisumu is witnessing boom in real estate investments, largely driven by population growth, devolution and countrywide infrastructure development, making it attractive and accessible to investors.
“The construction industry continues to evolve and the demand for construction materials is at an all-time high. Deploying advanced technology will enable us to meet the increased demand and also improve on the quality of our products,” Rabadia said.
Rabadia disclosed plans to venture into pocket friendly pre-cast building material to help spur efforts by real estate players to provide affordable housing and office space. “With acquisition of advanced technology, we expect production costs to go down and this will definitely translate into discounts for the customers,” he said.
A survey by the World Bank in 2015 showed that Kisumu was among counties in Kenya with speedy approval for building plans even though the lakeside town lacks elaborate zoning plan. The introduction of e-construction permit by the county government has made it easier for investor to put up projects.
“We are also looking to expand and diversify our range of concrete products and this partnership will now make it possible. These plans will enable us increase employment and contribute more to the national and county revenues through taxes.”
The partnership opens the way for domestic and international private equity investors to explore unique investment opportunities in Kisumu and other counties outside the capital.