SA's Metier Private Equity plans to merge with Catalyst Principal Partners, a Kenya-based manager, both firms said on Wednesday, combining resources to form a stronger pan-African player.

Emerging and frontier markets-focused private equity firms have struggled to raise capital in the past two years, due to the impact of the COVID-19 pandemic, giving rise to a new phase of mergers in Africa, industry executives said.

"This is just the next phase of the evolution of the industry," Paul Kavuma, the CEO of Catalyst, told Reuters after the tie-up between both firms was announced.

Metier and Catalyst will merge into one entity, once they secure investor and regulatory approvals from Mauritius, where Catalyst is registered, and other jurisdictions which regulate Metier.

Metier will manage Catalyst's two funds, with a combined $278 million, both sides said, while Catalyst will provide "investment and portfolio management capability".

Both managers have been investing in "consumer led" growth companies in various sectors like retail and manufacturing, Kavuma said, meaning they are a good fit for a combination that will also broaden Metier's reach into other areas outside of Southern Africa.