Private Debt and Credit Solutions: Unlocking SME Growth in East Africa
As traditional lending criteria remain tight, there is a significant funding gap for Kenya's vibrant SMEs (Small and Medium Enterprises). This creates a compelling opportunity for private debt funds and alternative credit providers. Investors can achieve attractive, risk-adjusted returns by providing crucial capital to this engine of the Kenyan economy while supporting meaningful economic development.
The SME Financing Challenge
Small and Medium Enterprises represent over 80% of Kenya's business landscape and contribute approximately 33% to GDP, yet they face a massive $20 billion funding gap. Traditional banks often view SMEs as high-risk due to limited collateral and short operating histories.
Bank Rejection Rate
45% of SME loan applications rejected
Economic Impact
SMEs employ 14.9 million Kenyans
NHL's Private Credit Investment Strategy
Senior Secured Debt
- First lien on assets
- Conservative loan-to-value ratios
- 12-15% target returns
- 24-36 month tenors
Mezzanine Financing
- Subordinated debt with equity features
- 15-20% target returns
- Warrants or conversion rights
- Growth capital for expansion
Asset-Based Lending
- Loans secured by inventory & receivables
- Working capital solutions
- 10-14% target returns
- 6-18 month tenors
Special Situations
- Distressed company turnaround
- Bridge financing
- 18-25% target returns
- Higher risk, higher reward
Target Sectors & Investment Focus
Manufacturing
Value addition and import substitution
Retail & FMCG
Supply chain and distribution
Technology
Scale-up and growth capital
Our focus extends to businesses with proven cash flows, strong management teams, and clear growth trajectories. We prioritize sectors aligned with Kenya's economic development goals.
Comprehensive Risk Management Framework
Rigorous Due Diligence
Comprehensive financial analysis, management assessment, and market evaluation for every investment opportunity
Portfolio Diversification
Strategic allocation across sectors, geographies, and credit structures to mitigate concentration risk
Active Portfolio Management
Ongoing monitoring, quarterly reviews, and proactive intervention when needed
Risk-Return Profile
Investment Process & Timeline
Deal Sourcing
2-4 weeks
Network referrals and proprietary sourcing
Due Diligence
4-6 weeks
Financial, legal, and operational assessment
Structuring
2-3 weeks
Term sheet and documentation
Monitoring
Ongoing
Active portfolio management
Why Private Credit with NHL?
For Investors
- • Attractive risk-adjusted returns (12-18%)
- • Portfolio diversification benefits
- • Lower correlation to public markets
- • Monthly/quarterly income distributions
For Businesses
- • Flexible financing solutions
- • Faster decision-making than banks
- • Strategic partnership beyond capital
- • Growth acceleration support
NHL brings deep local expertise, rigorous risk management, and a track record of successful credit investments in East Africa's dynamic market.