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Dangote-backed fund buys Kenyan tour firm for Sh4bn
Founder and Chief Executive of the Dangote Group Aliko Dangote gestures during an interview with Reuters in his office in Lagos, Nigeria on June 13, 2012.
A fund backed by Africa’s richest man, Aliko Dangote, has paid an estimated Sh4 billion to fully acquire one of Kenya’s oldest tour companies, marking its second major deal after buying restaurant chain Java House for an undisclosed amount.
Alterra Capital, a private equity firm with wealthy backers including Mr Dangote, has entered the East African tourism market through the full acquisition of Pollman’s Tours and Safaris Limited (Pollman’s).
A transaction advisor who participated in the Pollman’s deal and who spoke to the Business Daily on condition of anonymity said the deal is worth Sh4 billion, a pointer to Pollman’s value.
Pollman’s has been specialising in providing guided safaris and sells travel packages to travel agents and tour operators globally.
Started in 2020 to invest in Africa, Alterra has set its sights on Kenya’s resurgent tourism sector, with holiday-bound tourist arrivals crossing the one-million mark for the first time in 2024 and earnings jumping Sh650 billion.
Mr Dangote is worth $23.9 billion (Sh3.08 trillion), according to the latest wealth ranking by Forbes, and is among the investors backing Alterra Capital—the African-focused private equity fund that got the nod to acquire a majority stake in coffee chain Java from UK-based Actis. The other PE fund in the Java deal is Phatisa.
Prominent investors in Alterra Capital include co-founders of the US private equity giant Carlyle Group David Rubenstein and Bill Conway, Norway’s state-owned development finance institution Norfund AS, and the World Bank Group’s private investment arm, International Finance Corporation (IFC).
Mr Dangote’s earlier attempts to enter Kenya’s cement industry, his main area of specialisation, were frustrated.
Pollman’s is Kenya’s most established and respected tour operator, boasting a fleet of over 200 custom-designed vehicles tailored for the region’s diverse terrains.
Pollman’s parent company, ARP Africa, also owns Ranger Safaris of Tanzania and the United Kingdom’s ARP Africa Travel.
ARP Africa was established in Tanzania in 1978 and has since built a reputation as a leading provider of destination management services in the region.
According to Kenya’s competition watchdog, the market for tour operators has low concentration, with 322 active players who include the target.
Players listed by the competition watchdog include Bonfire Adventures, Bountiful Safaris, Aanika Karibu Safaris Limited, Acacia Holidays Limited, Cheetah Tours, Dens of Africa and Exotic Travel Centre.
“Concerning the proposed transaction, post-merger, the market share of the merged entity will not change as the target and the acquirer is not in similar business and therefore the structure and concentration of the markets for tour operators in Kenya will not be affected,” the Competition Authority of Kenya (CAK) said.
“Therefore, the structure and concentration of the market for tour operators will not be affected, and as such, the transaction does not raise competition concerns.”
Mr Dangote and other investors saw a chance to back African-focused PE funds interested in investing in relatively small and young companies that are thirsty for capital and have room for growth.
The fund provides capital and strategic support to scalable businesses in sectors such as consumer goods, logistics, healthcare, and tech.
Its push for deals in Africa marks a departure from that of many Western PE firms that often focus on large deals in mature companies.
The mismatch between the size of available deals in Africa and the target investment size of global private equity giants triggered top equity investors like Blackstone and KKR to retreat from the continent.
Alterra’s backing from billionaire investors such as Mr Dangote mirrors the practice in many Western economies where influential businesspeople opt to put their money in funds aimed at specific sectors on top of their direct investments in companies. Their money becomes funding for early-stage high-risk ventures.
However, in Africa, the common practice has been that wealthy individuals hold stakes in different companies from which they earn a return.
The Nigerian tycoon, who controls Dangote Industries conglomerate that includes Dangote Cement and the continent’s largest oil refinery, had since 2014 been linked with entering Kenya’s cement market through a greenfield plant. However, this has remained pending.
The billionaire investor in 2017 postponed plans to set up his cement plant in the country.
He also missed the 2021 launch date despite having described Kenya as a market that is “high on our priorities.”
Mr Dangote visited Kenya in 2022 during the inauguration of President William Ruto, with watchers viewing this as a signal that the country remains on his radar.
Instead, his involvement has largely been through a fund manager that he backs, which has pumped an undisclosed amount of money into Alterra in its funding round in 2023.
