The sale of Java House, the Nairobi-based restaurant and coffee-shop chain, may finally be imminent, after all but one of the bidders dropped out of the auction-style sale. A source tells me that the winning bidder is Abraaj Group, a Dubai-based buyout firm, which emerged tops after outbidding the TPG Capital and the Carlyle Group, both of which are American private equity firms.
There is no confirmation about the price, but there are strong indications that the final bid - which closed last Friday - was in excess of $130 million, or significantly more than 13 billion shillings. The sale, if confirmed, will see the exit of Emerging Capital Partners, which bought into Java in May 2012, and which has overseen a massive expansion of the chain, including to other Kenyan cities and towns and into Uganda and Rwanda. Java House also encompasses the Planet Yogurt frozen desserts chain, and 360 degrees Pizza (which for now has one branch, at ABC Place on Waiyaki Way, with a second under construction at Rosslyn Riviera on Limuru Road). It may also see the exit of founder Kevin Ashley, who retains a minority shareholding in the chain.
Java was attractive to investors because many see it as hitting the sweet spot for a widening middle class, which is developing an eating-out culture. Its coffee and sit-down food service mean that it has consistently full restaurants, with a moderately high average spend per table. A hidden attraction as well is the fact that it has been able to settle on choice real estate on city streets and in shopping malls, which some of its competitors have struggled with.
Abraaj is a fund with $10 billion under management. In 2015, it launched a sub-Saharan Africa-focused fund, and has been hungry to deploy the approximately $990 million in growth companies and industries on the continent.
I did some analysis a couple of months ago on why Java (and the wider food industry) is so interesting now. Video below (courtesy of NTV)