**Table 1: Sub-Saharan Africa Deal Flow by Country (2013-2015)**

||**201**|**3**|**201**|**4**|**201**|**5**|**Total**||**Tota**|**l**|
|---|---|---|---|---|---|---|---|---|---|---|
||**# of Deal**|**Capital**<br>**Invested**<br>**(US$M)**|**# of Deals**|**Capital**<br>**Invested**<br>**(US$M)**|**# of Deals**|**Capital**<br>**Invested**<br>**(US$M)**|**# of Deals**|**%**|**Capital**<br>**Invested**<br>**(US$M)**|**%**|
|South Africa|24|368|22|418|25|586|71|21.3%|1,372|28.2%|
|Nigeria|14|176|17|614|20|159|51|15.3%|949|19.5%|
|**Kenya**|**15**|**629**|**22**|**22**|**11**|**104**|**48**|**14.4%**|**755**|**15.5%**|
|Ghana|7|25|15|179|8|6|30|9.0%|210|4.3%|
|Cote d'Ivoire|7|14|4|38|2|N/A|13|3.9%|52|1.1%|
|Other|43|715|45|631|33|187|121|36.2%|1,533|31.5%|
|Total|110|1,927|125|1,902|99|1,042|334|100.0%|4,871|100.0%|

<!-- Start of picture text --> Source: EMPEA<br><!-- End of picture text --> Kenya offers clear advantages for fund managers seeking to target East Africa. The country’s capital, Nairobi, is viewed as the most attractive location in East Africa from which investors can establish offices and cover the region. This advantage makes the city the de facto alternative investment hub of East Africa, and places it alongside Johannesburg and Lagos as the investment capitals of SSA. Investors who choose to establish themselves in the city note that they have done so based on quality of life, a solid foundation of human capital, efficient transportation links, and a strong community of service providers such as accountants, lawyers, and consultants. For these reasons, Nairobi is also home to the East Africa Venture Capital Association (EAVCA), an organization that was set up in March 2013 to advocate on behalf of VC and PE investors.

Moreover, Kenya serves as a launch pad for investors to execute cross-border investments in companies that operate within the East African Community. The EAC, which comprises six partner states (the Republics of Burundi, Kenya, Rwanda, South Sudan, Tanzania, and Uganda) has pursued legal and trade harmonization in an attempt to support regional commerce and cross-border expansion by businesses in these markets. Given Kenya’s membership in the East African Community, basing an investment firm in the country offers a fund manager the possibility of “regionalizing” local businesses and taking advantage of the EAC’s cross-border regulations and commercial policies.

Pursuing regional integration also makes commercial sense. Although Kenya is the largest, most advanced economy in the region, it is easier to reach scale and attract the interest of strategic acquirers by building regional businesses that leverage the EAC market. While Kenya has a population of 45 million and a GDP of US$65 billion, the population of the EAC is estimated at 150 million and its GDP is US$146 billion. Many firms include regional aspirations in their investment theses when investing in companies that are already present in one part of the EAC region. Leveraging the political and economic links forged by the EAC to do so makes a regional approach even more compelling. At the same time, funds operating in Kenya must take regional legal and regulatory factors into account in addition to navigating those in Kenya. In this sense, Kenyan fund managers often operate within a regional legal and regulatory context.

With a significant population of investment firms resident in the country, Kenya sees more deal flow than elsewhere in East Africa. On a stand-alone basis, Kenya also benefits from secular trends - rapid urbanization, a growing workforce, ongoing technological evolution, and sustained consumer and business spending - that also support a Kenya-led private equity investment thesis. Kenya consistently captures the majority of deals in East Africa. As shown below in Figure 2, Kenya dominates the East Africa sub-region in terms of deal volume.

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