(Bloomberg) -- Kenya’s government named a new majority shareholder for Telkom Kenya Ltd. just hours after it revoked last year’s exit of a private equity fund that previously held the 60% stake.

United Arab Emirates-based Infrastructure Corp. of Africa LLC was selected as the new owner after a competitive process initiated in January, Kenyan Treasury Secretary Njuguna Ndung’u said. 

ICA will take over the stake from Jamhuri Holdings Ltd., which is wholly owned by Helios Investors III, L.P., a fund advised by Helios Investment Partners.

“In order to complete the process of onboarding ICA, GoK will work with Jamhuri/Helios to transfer their 60% shareholding directly to ICA, this process will inevitably require rescinding of the transaction documents already signed between GoK and Jamhuri/Helios,” National Treasury said in a statement.

On Tuesday, Kenya’s cabinet rescinded an agreement to buy the stake and demanded a refund for an unspecified amount from Jamhuri, which concluded the deal in the final days of former President Uhuru Kenyatta’s administration, saying the transaction had “governance challenges.” In February, lawmakers rejected a $51.2 million payment to Helios.

The cabinet also directed Telkom to initiate the search for a new strategic investor. A few hours later National Treasury said a months-long evaluation process had already settled on ICA.

“The offer by ICA includes a capital injection to fund Telkom’s critical infrastructure and the overall upgrade of the company’s capabilities, and also settle some of the outstanding liabilities of the company,” according to the Treasury statement.

Helios Investment Partners didn’t respond to an emailed request for comment.

Deal Terms

The decision to cancel the deal comes as Kenya’s government faces questions about its ability to meet external funding needs. The East African nation is contending with skyrocketing energy and food import bills, low foreign-exchange reserves and has a $2 billion eurobond maturing in June.

Read More: Kenyan Bonds Drop on Latest Messaging About 2024 Repayment

Helios’s sale of the 60% stake in Telkom Kenya was announced by the government in October, two months after President William Ruto’s election. The government’s purchase of the shareholding made the firm wholly state-owned — it previously held 40% of the shares.

Jamhuri said in a letter to lawmakers that the decision to sell the stake was made after the Kenyan government unlawfully expropriated Telkom assets without consulting Helios, Business Daily reported in March. A failed attempt to combine Telkom’s operations with Airtel Kenya Ltd. to form a competitor to industry leader Safaricom Ltd. also prompted the exit, it said.

The fallout could be messy, said Deepak Dave, an analyst at Toronto-based Riverside Advisory.

“Helios is a firm with sharp elbows, and are unlikely to just roll over if they see themselves as being on firm legal ground,” he said by email. “It will be instructive for the entire financial sector in Africa to see what Kenya’s Plan B is should Helios refuse to pay.”

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