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ECP Kenya Ltd, the Nairobi-based arm of the U.S.-headquartered private equity firm Emerging Capital Partners (ECP), has officially initiated voluntary liquidation, signalling the end of its operations in the Kenyan investment ecosystem. The company, once a key player in Kenya’s private equity landscape and former owner of the popular Java House restaurant chain, has opted to wind down following a series of financial and legal setbacks.
According to a public notice published in the Kenya Gazette, the firm submitted a formal petition to the High Court on July 3rd seeking permission to voluntarily dissolve. The court has since called upon the company’s creditors to present any support for—or objections to—the proposed liquidation process.
This development comes in the wake of a protracted legal and tax dispute stemming from ECP Kenya’s exit from Java House in 2017. The firm had acquired Java House in 2012 and sold it five years later to the now-defunct Dubai-based Abraaj Group. The sale was valued at over USD 100 million.
However, in February 2022, the Kenya Revenue Authority (KRA) issued a corporate income tax assessment totalling KSh 3.21 billion (approximately USD 27 million at the time) against ECP Kenya Ltd. The KRA maintained that the proceeds from the Java House transaction constituted taxable trading income. ECP, on the other hand, contended that the earnings were investment income and thus should be subjected to capital gains tax, which carries a significantly lower rate.
Despite ECP’s challenge, the Tax Appeals Tribunal ruled in October 2023 in favour of the KRA, though it reduced the assessed amount to KSh 773.8 million. The tribunal further determined that ECP had established a “permanent establishment” in Kenya through the activities of ECP Kenya Ltd, effectively tying the U.S.-based parent firm’s fund management and advisory roles to operations within the country.
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Subsequently, ECP Kenya sought to appeal the decision. However, in December 2023, the High Court dismissed the appeal due to the firm’s failure to file necessary legal submissions and to actively pursue the case. This allowed the tribunal’s ruling—and the significant tax liability—to stand uncontested. Facing this financial burden and legal closure, ECP Kenya Ltd has now chosen to voluntarily liquidate, bringing to a close its chapter in Kenya’s private equity and business history.
