Abraaj Group to acquire Kenya’s Java House Coffee Chain

Dubai-based Abraaj Group, an emerging markets equity firm with extensive investments in Africa has agreed to acquire Java House, a coffee chain based in Nairobi, Kenya.

Java House Group was established in 1999 by Mr. Kevin Ashley who later sold 90% stake to Emerging Capital Partners (ECP) in 2012 as he sought to raise additional capital to expand. The chain has since grown from 13 outlets in Nairobi to 60 outlets in 10 cities in Kenya, Uganda and Rwanda.

Abraaj acquired 100% ownership of Java House for an undisclosed amount after a year-long auction that attracted interest from a long list of investors. ECP was reported to have sought bids of $100m for Java House.

Abraaj Group Managing Partner and Global Head of Private Equity, Mustafa Abdel-Wadood described the acquisition as a thought-out plan to expand Java’s well-known culture and products across East Africa and beyond.

“This landmark transaction is a compelling opportunity to build on Java House’s success story across Sub-Saharan Africa to create a true regional champion.

“The rapidly expanding middle class and increasing urbanization trend creates compelling investment opportunities in multiple sectors and we believe Java House is ideally positioned to benefit from these trends,” he said.

Java House Group has since added Planet Yoghurt, a frozen yoghurt chain and 360 Degrees Artisan pizza, an upmarket Italian Pizzeria concept to its portfolio.

Ashish Patel, the head of Abraaj’s East Africa office, said the group was likely to hold Java for about five years and during that time, it would like to grow it to “several multiples” of its current size. The company said it will retain Mr. Ashley as an adviser.

“We have geographical opportunities, we have different themed opportunities.

“The Kenyan market is not just about coffee. We’ve got a comprehensive investment plan and there is a lot of stuff we want to do that is done better and easier with 100% ownership,” Patel said.

Mr. Ashley said that Abraaj was selected as the preferred buyer because of the price offered but also “their track record” in the region and the sector.

Abraaj Group partnered with French Yoghurt maker Danone in 2013 to acquire Fan Milk International (FMI), a frozen dairy products and juices maker in six West African countries (Ghana, Nigeria, Togo, Ivory Coast, Benin and Burkina Faso). Fan Milk had sales of about $26.3 million in 2012. Abraaj holds 51% stake in that venture to Danone’s 49%. In October 2016, Abraaj took a minority stake in Indorama Fertilizers B.V., a Port-Harcourt based urea fertilizer manufacturer.

The company said it has invested $3.2bn in 80 entities across Africa in two decades. Java House Group is the fourth transaction from its third generation Africa fund, which closed at $990m in 2015.

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