Private placements or non-public offerings are a method of raising capital by selling securities directly to a chosen or pre-determined number of investors rather than through a public offering. Private placements have emerged as a vital component of capital raising in Kenya’s financial markets, especially in an environment where traditional public offerings face stringent regulatory requirements, prolonged approval timelines, and market volatility. We chose to cover this topic to demystify a financial mechanism that remains under-discussed yet widely used by both private and public sector players. With the Kenyan economy in a state of recovery and transition, businesses and the government need flexible, accessible, and efficient ways of raising capital. Private placements are now gaining more traction among the government, medium-sized corporates and large institutions that require capital without the regulatory complexities and public scrutiny associated with public offerings, inclusive of Eurobonds for the government. By understanding private placements, readers will be better positioned to engage in or evaluate private placement deals, especially in the context of accredited institutional and individual investors meeting specific criteria, actively participating in such issuances.

We will focus on providing a clear understanding of private placements in Kenya, how they operate and their role in Kenya’s financial markets. We aim to equip investors, issuers, and other stakeholders with the knowledge required to assess the suitability of private placements as a financing tool, particularly given recent developments such as the Government of Kenya’s amortizing note issued via private placement in April 2025. As such we shall cover;

1. Demystifying Private Placements in Kenya,
2. Regulations on Private Placements in Kenya,
3. Kenya’s Private Placements Dealings,
4. Implications of Private Placements, and,
5. Recommendations for Expanding and Strengthening Private Placements in Kenya, and,
6. Conclusion.

Section I: Demystifying Private Placements in Kenya

In Kenya, private placements are governed by the Capital Markets Act and regulations from the Capital Markets Authority (CMA) and typically involves high net-worth investors, institutional investors or specific financial intermediaries. Private placements are favored for their speed, flexibility, and confidentiality, particularly in circumstances where time-sensitive funding is required or where the issuer wishes to avoid the regulatory complexities of a public issue.  They appeal to both issuers seeking quick capital and investors desiring tailored investment terms. In Kenya, financial institutions, real estate developers, and government agencies frequently use private placements to meet their funding needs without diluting control or incurring heavy regulatory costs.

Unlike public issues, private placements are not open to the general public and do not require listing on a securities exchange. Public issues involve offering securities to the general public. The table below outlines the key differences between private placements and public issues:

Source: Cytonn Research

In Kenya private placements are employed by a diverse range of entities from start-ups and SMEs that lack resources for public offerings, large corporations looking to avoid the regulatory complexities of public issues to government, government agencies and parastatals requiring swift funding.

Typically, the steps involved in a private placement in Kenya include:

1. Preparation: The issuer prepares a short-form prospectus outlining the terms of the offering,
2. Regulatory Submission: The prospectus and, if applicable, an information notice are submitted to the Capital Markets Authority (CMA) for approval,
3. Investor Engagement: The issuer or an appointed arranger markets the offering to selected investors,
4. Due Diligence: Potential Investors conduct their own thorough investigations into the issuer and offering to assess the investment’s risk and return,
5. Subscription and Allotment: Investors subscribe to the securities, and the issuer allots them accordingly, and,
6. Settlement: Funds are transferred, and the securities are registered, often through the Central Depository and Settlement Corporation (CDSC) for corporate issuances, or through the Central Bank of Kenya (CBK) in the case of government securities.”

Section II: Regulations on Private Placements in Kenya

In Kenya, the framework for private placements is anchored in Section 30A of the Capital Markets Act, which governs offers and invitations to subscribe for securities. This provision restricts such activities to those compliant with the Capital Markets Authority (CMA) regulations, while carving out exemptions for private placements, as elaborated in Regulation 17 of the 2023 Regulations. The rules aim to confine private placements to a select group of investors, minimizing the risks inherent in broader public offerings. Regulation 21 outlines the boundaries of private placements with precision: offers must target fewer than 100 persons (excluding professional investors) within a 12-month period, avoid public advertising through mediums like newspapers or television, and focus on qualified institutional investors or sophisticated individuals with specific income or net worth profiles. This structure ensures the offer remains private, aligning with global standards that emphasize investor sophistication to reduce financial risks.

Disclosure and Documentation

Unlike public offerings, private placements in Kenya are spared the requirement of a CMA-approved prospectus. Instead, issuers are tasked with preparing an Information Memorandum or a similar disclosure document, which serves as a vital resource for investors’ decision-making. This document must paint a clear picture of the issuer’s background, business model, and operational history. It should articulate how the funds raised will be utilized, disclose potential risks tied to the investment, and specify the terms, pricing, and conditions of the securities offered. Additionally, issuers must provide audited financial statements spanning the past three years to ensure transparency, alongside details of the company’s governance structure and shareholding. Although the Information Memorandum does not require CMA approval, it must be shared with prospective investors. The CMA retains the right to request and scrutinize this document at any time, holding issuers accountable to high standards of disclosure.

Investor Eligibility

The regulations place a premium on investor sophistication, a cornerstone of the exemptions granted to private placements. Eligible investors typically fall into two categories qualified institutional investors, such as banks, insurance companies, or pension funds, which possess the expertise to navigate complex investment opportunities, and sophisticated individuals, defined as high-net-worth persons meeting CMA-specified income or asset thresholds. By targeting these capable investors, the regulations reduce the need for intensive regulatory oversight, as these parties are assumed to have the knowledge and resources to perform thorough due diligence before committing their capital.

Restrictions on Marketing

To preserve the private nature of these offerings, issuers are strictly prohibited from employing public media or broad marketing campaigns. This restriction is critical to preventing private placements from morphing into de facto public offers, which would trigger far more stringent compliance obligations. By limiting outreach to direct, private channels, the regulations ensure that only the intended audience, sophisticated or institutional investors, receives the offer.

Exemptions and Reporting Obligations

Private placements enjoy significant regulatory relief, making them an appealing option for small and medium-sized enterprises (SMEs) or startups looking to raise capital efficiently. Issuers are exempt from preparing a CMA-approved prospectus, bypassing a time-consuming and costly process. They also do not need prior CMA approval for the offer, unlike public offerings, and are free from the continuous disclosure requirements imposed on publicly listed companies. These exemptions streamline the fundraising process, allowing issuers to focus on their business objectives rather than navigating bureaucratic hurdles.

Oversight and Reporting

Despite the exemptions, the CMA maintains robust oversight to ensure compliance. The Authority can request the Information Memorandum or other relevant documents at any time and investigate potential violations, such as exceeding the 100-investor limit or engaging in prohibited public solicitation. Issuers are required to keep detailed records of the offer and investor information, enabling the CMA to conduct inquiries when necessary. This balance of flexibility and accountability fosters transparency without imposing excessive reporting burdens on issuers.

Enforcement and Penalties

The CMA vigilantly enforces the rules governing private placements to protect investors and maintain market integrity. Breaches of exemption conditions such as surpassing the 100-investor threshold, advertising the offer publicly, or targeting unqualified investors can lead to severe consequences. The CMA may declare the offer illegal, effectively halting the fundraising effort, and investors may be entitled to refunds or compensation for losses. Issuers face fines, and directors could be disqualified from holding office.

The table below highlights the comparison between private placements and public offers under the Capital Markets Act:

Source: Cytonn Research, Capital Markets Act

Section III: Kenya’s Private Placement Dealings

1. Kenya’s Recent Private Placement dealings by the government

Over the past decade, Kenya has diversified its borrowing strategies, tapping into Eurobond markets, multilateral institutions like the World Bank, Trade and Development Bank, and IMF, and bilateral lenders such as China. However, Eurobonds have become more expensive due to high interest rates, while Chinese lending to African countries has slowed amid shifting geopolitical dynamics. Additionally, Eurobonds tend to have bullet repayments where all the principal is paid at the end of the loan, which poses refinancing and rollover risks. However, Kenya has recently been issuing amortizing Eurobonds such as the Eurobonds issued in 2019 which were to be amortized over their last three years to maturity. In response, Kenya has increasingly turned to private placements and alternative funding channels such as Panda and Samurai bonds to manage its debt obligations and finance development. This strategic pivot allows for more flexible terms, reduced market exposure, and better alignment with fiscal planning.

Kenya secured a USD 1.5 billion private bond placement in the United Arab Emirates, structured with bullet repayments of USD 500.0 million each in 2032, 2034, and 2036. This repayment structure offers liquidity but defers repayment pressure to the future. This financing, agreed upon in 2024, carries an 8.25% interest rate and a 7-year tenor. As of early 2025, the government had opted to delay drawing down these funds to better align with its fiscal framework and budgetary planning. The funds are earmarked for liability management and budgetary support, providing flexibility to address upcoming debt maturities and fiscal needs. The government received the first tranche of USD 500.0 million in the last week of April 2025, and opted to receive the remaining USD 1.0 billion in the next fiscal year.

On April 25, 2025, Kenya announced the pricing of a USD 500.0 million amortizing note maturing in 2032, carrying a fixed coupon rate of 8.25%. This seven-year tenor bond was arranged through a private placement at par value, offering the government more control over investor selection and pricing. The amortizing structure means that principal repayments will be made periodically over the life of the bond, rather than a lump sum at maturity. Proceeds from this issuance are intended to support budgetary needs and refinance existing debt, contributing to Kenya's broader strategy of managing its debt profile and ensuring fiscal sustainability.  This deal was led with advisory from G&A Advocates LLP and White & Case LLP. Compared to the 2024 USD 1.5 bn Eurobond issue with a similar tenor which matures in February 2031, a coupon rate of 9.75% and a yield of 10.3%, the private placement offers a lower cost of debt at 8.25%. Even though the 2024 Eurobond is structured with semi-annual interest payments scheduled for February 16 and August 16 each year, beginning on August 16, 2024, it remains more expensive than the recent private placement. Therefore, these notes are fairly priced and support better debt management without excessive cost. Typically, amortizing notes are considered lower-risk by investors, which justifies a lower coupon.

In 2024, several Sub-Saharan African nations, including Kenya, Ivory Coast, Benin, Senegal, Cameroon, South Africa and Nigeria re-entered the Eurobond market after a 1-year hiatus to raise funds to refinance debt and fund infrastructure projects. Additionally, as of May 2025, three countries in the Sub-Saharan African region have tapped into the international markets by issuing Eurobonds. Benin initiated Africa's first Eurobond issuance of the year, a 16-year USD 500.0 mn through a 16-year bond that attracted USD 3.5 bn in demand.  Kenya issued a new USD 1.5 bn 11-year Eurobond to facilitate the buyback of the 7-year tenor USD 900.0 mn Eurobond tenders issued in 2019 with a maturity of May 2027. Ivory Coast issued a 11- year USD 1.75 bn Eurobond in March 2025. The table below shows the 2024 and 2025 Eurobond issuance for Sub-Saharan African countries along with their Fitch’s ratings’ Long-Term Foreign Currency IDR:

By tapping into private placements, Kenya seeks to secure funding with potentially more favorable terms, further supporting its development agenda and debt management objectives. Private placements diversify funding sources and potentially reduce borrowing costs and risks. 

2. Private Placements by Corporate Institutions in Kenya

Private placements have become an increasingly popular financing mechanism among Kenyan corporate institutions, offering a streamlined and cost-effective alternative to public offerings. This method allows companies to raise capital by selling securities directly to a select group of investors, thereby avoiding the extensive regulatory requirements associated with public offers. Under the Capital Markets (Securities) (Public Offers, Listing and Disclosures) Regulations, 2002, private placements are defined by criteria such as the number of offerees and the nature of the investor group, ensuring that the offerings are targeted and compliant with existing laws. The reduced disclosure obligations and faster execution timelines make private placements particularly attractive for companies seeking flexible funding solutions.

Private placements for companies can be made through various ways:

1. Private Bonds – Companies issue bonds directly to select investors than the general public. These bonds provide fixed interest payments and are often used for long-term financing. The terms, including the interest rates and tenors are negotiated privately and must comply with the CMA regulations.
2. Private Placement of Equity – This involves selling shares of the company to private investors rather than through a public offering. The company identifies a few individuals or institutional investors to buy newly issued shares. Approvals from the CMA and the company’s board are required, and disclosure obligations apply even through it is not public.
3. Commercial Paper – Commercial papers are short-term unsecured debt instruments, with maturity of less than a year, issued by companies to meet immediate financing needs. The company issues commercial paper to select investors. They must meet CMA guidelines, including minimum credit ratings and disclosure requirements.
4. Notes – Notes are debt instruments similar to bonds but can vary in term length. Short-term notes have a maturity up to 1 year while medium-term range between 5-10 years. Medium-term notes are issued in tranches. They are issued privately to select investors under mutually agreed terms, where the company negotiates interest and repayment schedules privately.
5. Convertible Debentures – These are debt instruments that can be converted into equities shares after a set period of time or under specified conditions. They are issued private to select investors. The terms for conversion, interest rates and maturity rates are set out in advance. CMA approval is needed, and conversion terms must be disclosed to the investors.

Kenyan companies have increasingly turned to private placements to raise capital efficiently. The table below shows some of the private placements issued by Kenyan Companies across various industries over the years:

 Source: Cytonn Research

The adoption of private placements by Kenyan corporates reflects a broader shift towards more agile and tailored financing strategies. By leveraging this mechanism, companies can access capital more efficiently, align funding structures with their specific needs, and engage with investors who bring not only capital but also strategic value. As the financial landscape continues to evolve, private placements are poised to play a pivotal role in supporting the growth and resilience of Kenya's corporate sector.

Section IV: Implications of Private Placements

Private placements present both benefits and limitations that affects the issuers and investors. While they offer a streamlined and adaptable method for raising capital, they also come with inherent trade-offs. Some of the advantages and disadvantages are outlined below;

 Advantages of private placements

1. Speed and Cost Efficiency-Private placements typically bypass many of the bureaucratic hurdles and high cost of public offerings. This makes them particularly attractive during times of urgency, such as when a government or company needs to refinance debt quickly or respond to market shocks. Additionally, with reduced intermediaries such as broker and lower legal costs, issuers can raise funds faster and more economically. This is ideal for small businesses seeking to raise funds for expansion.
2. Flexibility-Unlike public offerings, which must be standardized to attract a broad investor base, private placements can be customized. Issuers can negotiate terms such as amortization schedules, interest rate structures and amounts based on the unique needs of both parties. Private placements can also be tailored to enable companies to access funding rapidly and cost-effectively, bypassing the lengthy and expensive procedures typically associated with public offerings.
3. Confidentiality-Private placements do not require broad public disclosure before issuance such as disclosure of detailed financial information required for public listings. For issuers managing sensitive financial restructurings or strategic moves, this discretion helps avoid market speculation and preserves negotiating leverage.
4. Strategic Investor Relationships-Engaging a select group of institutional investors allows for deeper, long-term partnerships. Governments, for instance, can use private placements to strengthen ties with local pension funds or banks—providing consistent investment pipelines while keeping capital within domestic markets.
5. Control-Private placements enable companies to retain stronger control over their financing arrangements and ownership structure. They allow issuers to selectively engage with investors and tailor the terms of the offering to align with their operational and strategic goals. Additionally, private placements help companies minimize exposure to activist investors or external pressures that could potentially interfere with internal decision-making and long-term planning.

Disadvantages of private placements

1. Illiquidity-Privately placed instruments are not listed on secondary markets, making them harder to sell before maturity. The limited liquidity of private placement securities can reduce their appeal to investors, potentially impacting the overall demand for such offerings.
2. Dilution of Ownership-Private placements can lead to the dilution of existing shareholders' equity in the company. By issuing additional ownership stakes to new investors, the relative shareholding of current owners may be reduced. This dilution can affect decision-making power and influence over the company’s strategic direction, potentially resulting in tensions or conflicts among shareholders regarding control and governance.
3. Investor Concentration Risk-Heavy reliance on a small group of investors may pose systemic risks. For example, if a large institutional investor like a pension fund holds a significant portion of a government placement and later faces liquidity issues, the effects can ripple across the financial system.
4. Risk of Overuse or Misuse-There’s a fine line between strategic private placements and using them to bypass market scrutiny or parliamentary oversight. Overuse may signal an inability to raise funds transparently or efficiently in public markets; a red flag for credit rating agencies and foreign investors.
5. Less competitive rate discovery – Unlike public markets that benefit from broad investor participation, private placements involve a smaller pool of investors. This can limit competitive pressure during pricing, potentially leading to interest rates that are more influenced by investor expectations than by broader market benchmarks.

Section V: Recommendations for Expanding and Strengthening Private Placements Dealings in Kenya

As Kenya seeks to deepen its capital markets and diversify financing tools, private placements have a clear and important role to play. However, there are still major gaps that needs to be addressed to ensure its success. Below are some of the actions recommended:

1. Improve perception: Too often private placements are seen as illegal in Kenya given the myth that all fund raisings have to be regulated and or approved by CMA. The market needs to be comfortable that private placements are exempt from being regulated.
2. Address illiquidity in Private Placements-To mitigate the challenge of illiquidity associated with privately placed instruments, policymakers and market participants should explore the development of structured secondary trading platforms or private placement exchange mechanisms within regulated environments. This would allow limited, controlled resale of private placement securities among qualified investors, thereby enhancing their attractiveness without compromising regulatory safeguards. Additionally, issuers can improve marketability by incorporating call or put options, shorter tenors, or periodic liquidity windows into the terms of the instruments, providing investors with greater flexibility and exit opportunities. Expanding investor awareness and education around these features can further help alleviate liquidity concerns.
3. Broaden the domestic investor base- To ensure the sustainability of private placement issuance and avoid excessive concentration of risk among a small number of large institutional investors, it is crucial to diversify and expand the pool of domestic participants. One key approach is to increase the number of persons to whom the offer is to be made from the current 100 persons and also to promote financial literacy and education, particularly among mid-sized institutions such as SACCO’s, Tier II pension schemes, cooperative societies, fund managers, and insurance funds. By enhancing their understanding of private placement instruments, these investors can more confidently participate in such offerings, thus increasing market depth. Additionally, product innovation can play a transformative role. Structuring pooled investment vehicles—such as private placement funds or securitized instruments—can enable smaller institutions to collectively access investment opportunities that would otherwise be beyond their individual reach. This not only democratizes access but also helps distribute risk more evenly across the financial ecosystem, ultimately supporting a more resilient and inclusive capital market.
4. Enhance local capacity for advisory Services- Another barrier to the growth of private placements in Kenya is the limited internal capacity among many corporates—especially small and mid-sized enterprises—to structure and execute these transactions effectively. Without the necessary expertise in legal, financial, and regulatory matters, many potential issuers are unable to take advantage of private placement opportunities. To bridge this gap, training programs are necessary, equipping the parties with practical skills in deal structuring, legal compliance, investor engagement, and risk assessment. Building a strong pipeline of local talent will foster a deeper understanding of the domestic regulatory environment. Additionally, the government and financial sector regulators can incentivize local advisory firms—such as fund managers, investment banks, law firms, and financial consultants—to develop and offer affordable, tailored services for mid-sized businesses.
5. Align with Regional Capital Market Goals-As Kenya continues to participate in the broader financial integration agenda of the East African Community (EAC) and the African Union, aligning its private placement framework with regional objectives can help achieve greater opportunities. By aligning with the private placement regulations across member states, Kenya can facilitate cross-border investor participation, allowing issuers to tap into a larger pool of capital while providing investors with more diverse opportunities. Additionally, regulators and market players should encourage cross-listing or joint private placements within the region. This would enable companies to access capital from multiple jurisdictions without undergoing the full requirements of a public listing. Regional alignment can enhance liquidity, deepen market integration, and make Kenya a hub for private capital flows in East Africa.

Section VI: Conclusion

Private placements enable business owners to secure funding without going through the lengthy, complex, and demanding process of an initial public offering (IPO). By targeting a select group of investors, companies can raise capital for growth while avoiding the extensive regulatory obligations associated with going public.

Private placements offer companies enhanced control over their funding strategies and ownership structure, while also providing a higher level of confidentiality compared to public offerings. As entities increasingly seek flexible, cost-efficient financing methods and investors look for diversified alternatives, private placements are expected to remain a significant component of today’s modern capital markets.

The continued advancement of technology and the rise of digital platforms are likely to further increase both the accessibility and reach of private placement opportunities, benefiting a broader range of issuers and investors.

However, both parties must approach private placements with a clear and informed understanding of the associated risks and benefits. Investors should adequately evaluate potential returns, assess the underlying risks, and engage only with credible issuers and trusted financial intermediaries. Meanwhile, issuers must ensure full compliance with all relevant securities laws and regulatory requirements to mitigate the risk of legal or reputational repercussions. Additionally, issuers should be strategic in selecting investors and negotiating terms that align with their capital needs and long-term goals.

Disclaimer: The views expressed in this publication are those of the writers where particulars are not warranted. This publication is meant for general information only and is not a warranty, representation, advice or solicitation of any nature. Readers are advised in all circumstances to seek the advice of a registered investment advisor.