Lofty Corban has become the first investment banking firm in East Africa to introduce a private debt-focused special fund targeting corporate, institutional and retail investors to address a Ksh 2.4 trillion credit gap.
The Private Debt Special Fund is structured as a unique collective investment scheme that will primarily focus on investing in commercial paper as hand-picked growth-oriented financing opportunities for Saccos, NGOs, churches, endowments, trusts, and foundations.
Speaking in a statement, Lofty Corban’s Chief Executive Officer, Stanley Mutuku, explained that the new fund is designed to bridge a growing financing gap, offering investors exposure to contractual, income-generating assets in addition to traditional equity and bond markets.
The Lofty Corban Private Debt Special Fund is expected to support enterprise growth through alternative financing and accelerate the development of non-bank lending channels.
“Private debt investments are originated directly with borrowers and held to maturity. The Lofty Corban Private Debt Special Fund will pool investor capital to finance carefully selected credit opportunities, supported by rigorous credit assessment, portfolio diversification, and ongoing risk monitoring,” explained Mutuku.
He added that the fund will enable investors to benefit from the higher yields that have been historically associated with less liquid investments, commonly referred to as the illiquidity premium.
For corporate and institutional investors such as pension funds, endowments, and insurance companies, the private debt special fund offers the potential for predictable income streams, better yields compared to traditional money market funds, and fixed income instruments with lower sensitivity to public market volatility.
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Retail investors, who have fewer domestic alternatives, now have access to an asset class previously out of reach, income-oriented returns in a rising-rate environment, and professional credit management within a collective structure.
Mutuku noted that private debt funds have increasingly been used to finance SMEs, infrastructure, and development-linked projects such as roads, facilities, and utilities, yet access for retail investors has remained limited. Private debt funds have become a core financing channel for mid-sized companies, infrastructure projects, and real estate developments, with annual growth in assets under management exceeding 20%.
“While returns depend on market conditions and credit performance, private debt special funds have demonstrated in other jurisdictions that they can deliver competitive risk-adjusted returns over the medium to long term,” he noted.
The launch signals growing sophistication within Kenya’s Collective Investment Schemes (CIS) sector, where Assets under management have registered a steady rise, and special funds have increasingly been used to introduce innovative strategies and alternative assets.
By opening up access to private credit investments that have traditionally been available only to large institutional investors in more mature financial markets, the new fund represents a significant development in Kenya’s capital markets.
Private debt has grown rapidly over the past decade as institutional investors search for yield and diversification in an environment of volatile public markets. Globally, the private credit market is estimated to be Ksh 300 trillion (USD 3 trillion) as of the end of 2024, with forecasts projecting continued growth driven by pension funds, insurers, and asset managers. It has the potential to grow to over Ksh 350 trillion (USD 3.5 trillion) by 2028 as investors seek higher income yields and build diversified asset portfolios.
