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M&A Moment: March 2018

Various merger/acquisition (M&A) deals in the last few weeks and months in East Africa since the last update.

Banking and Finance: Finance, Law, & Insurance M&A

Centum Investments is selling its shareholding in GenAfrica Asset Managers to Kuramo Capital LLC, an independent investment management firm based in New York City with offices in Nairobi and Lagos, and registered as an investment advisor by the Securities and Exchange Commission (“SEC”).

Centum sold 25% of Platcorp Holdings to  Suzerian Investments a consortium of the Platcorp management team (platinum credit and premier credit) which provides emergency loans to individuals in  Kenya Uganda Tanzania while Premier offers working capital loans to companies – at a 31% return.

AfricInvest, a leading pan-African mid-cap-focused private equity firm invested in Britam Holdings Plc (Britam),  taking up a 14.3% stake. The investment was made in partnership with DEG-Deutsche Investitions- und Entwicklungsgesellschaft mbH (DEG), The Dutch Development Bank FMO, and Proparco, a subsidiary of Agence Française de Développement (AFD), focused on private sector development.

Hamilton Harrison & Mathews Advocates (HH&M), one of Kenya’s oldest and largest law firm has entered into an agreement to combine with Dentons, the world’s largest law firm. Upon regulatory approval, HH&M will become part of Dentons, which is combining with seven elite firms in Africa, the Caribbean and South East Asia.

The Competition Authority of Kenya has authorized the proposed acquisition of control in AON Kenya Insurance Brokers by Extologix Proprietary through Heartland Holdings.

BitPesa, the first and largest blockchain payments platform for Africa and Europe, announced their acquisition of TransferZero, an international, online money transfer platform that specializes in sending money to consumers and companies in 200 countries using over 50 different currencies.

Mastercard has completed its acquisition of mobile payments technology company Oltio from Standard Bank Group. The acquisition builds on Mastercard’s longstanding relationship with Oltio’s technology enables consumers to authenticate Masterpass digital wallet purchases in South Africa using their bank PIN and mobile phone.

DEG – Deutsche Investitions- und Entwicklungsgesellschaft mbH, is investing EUR 4 million in M-BIRR, a cashless money transfer and payment service in Ethiopia to improved access to banking services in Ethiopia on a wide scale. Other investors include the European Investment Bank (EIB). The Finnish development finance company Finnfund has been a shareholder in M-BIRR since as early as 2012 which is inspired by the success story of the Kenyan provider M-PESA.

The Competition Authority authorized the proposed acquisition of 100% of the issued share capital of Youjay’s Insurance Brokers by I & M Insurance Agency.

Customers of Chase Bank were given an update by the Central Bank (CBK) and the Kenya Deposit Insurance Corporation (KDIC) on the ongoing takeover of selected assets and liabilities of their  bank by State Bank of Mauritius (SBM).

Food & Beverage M&A

A South-African based private equity fund has invested Sh404 million ($4 million) to acquire an undisclosed stake in Kenyan fast food chain Big Square. Uqalo says its investment will expand its footprint from the current nine stores to 30 over the next four years. Uqalo, which targets investments located in Kenya, Ethiopia and Nigeria, is primarily funded by Hong Kong-based supply chain and logistics conglomerate Fung Group and its strategy is to acquire minority stakes by investing between Sh202m and Sh506m ($2m and $5m) in “mature businesses” through equity or convertible debt (via Business Daily).

The Competition Authority approved the proposed acquisition of 100% shareholding in Nairobi Java House limited by Star Foods Holding

Wow Beverages  has made an application to enter into exclusive import arrangements with specified international and local manufacturers and suppliers of ‘premium’ wines and spirits in Kenya – from Gallo Vineyards Inc. trading as E&J Gallow Winery Europe, Vina San Pedro Tarapasca S.A, Felix Solis Avantis S.A, Afrique Interlink (PTY), Interlink (PTY) Limited, Edrington Group Limited and Tradall S.A (Bacardi-Martini Group).

Seaboard has made a low offer to buy out other minority shareholders of Unga.

The Kenya Tea Development Agency (KTDA) Chebut factory is set to take over management of 260 acres of mature tea owned by the Nandi county government after the conclusion of ongoing negotiations.

Logistics, Engineering, & Agri-Biz M&A

Ascent Rift Valley Fund (ARVF), a leading SME Private Equity Fund investor will acquire a majority stake in Auto Springs East Africa, a Limuru-based factory that produces a wide range of products for the motor assembly and vehicle spare parts industry. It will be done in a partnership deal with SFC Finance.

Sendy, an app-based on-demand delivery services platform operating across Kenya, has completed a Series A investment round, led by DOB Equity. DOB Equity will invest alongside CFAO, member of the Toyota Group, and other private investors. DOB Equity says that the new funds will enable Sendy to increase their platforms’ service offering. This includes adding more delivery vehicles to their platform, increasing their coverage area, expanding the sales and technology team, and preparing for future expansion into neighboring countries in East Africa.

The owners of flower farm Karuturi Limited have secured an investor to inject fund into their business as they fight to save their priced asset from being auctioned by CfC Stanbic over Sh1.8 billion loan default. The firm in a statement said that it has reached an agreement with Phoenix Group for a ‘blend of debt and equity’ which will help it to meet its current debt obligations and restart its operations (Via Business Daily)

Ethiopia acquires 19% in Berbera Port becoming a strategic shareholder; UAE’s DP World has 51% while Somaliland gets 30% following the agreement being signed.

Trading on Express Kenya shares has resumed at the Nairobi Securities Exchange (NSE) after a three-month suspension following a takeover bid by the firm’s CEO Hector Diniz. Diniz Holdings, an investment firm, has bid to acquire the 38.36% stake held by other shareholders other than its affiliates for Sh5.50 a share. (Via Business Daily).

The Competition Authority authorized the proposed acquisition of the entire issued share capital of Trillvane Ltd by Kuehne+ Nagel limited.

The Competition Authority authorized the proposed acquisition of Carzan Flowers (Kenya) limited by Star Bright Holdings.

The Competition Authority authorized the proposed acquisition by Diamond (bc) b.v. of the Diversey Care division of Sealed Air corporation (“sealed air”) and of Sealed Air’s food hygiene and cleaning business within its food care division.

The Competition Authority authorizes the proposed acquisition of 51% shareholding in Mavuno Fertilizers Limited by Omya (Schweiz) Ag.

Trans Miller Limited carrying on the business of food processing, packaging and distribution and other related agri-business activities, situate at L.R. No. 4953/1185, Thika, have been sold and transferred by the transferor to Tahuna Limited, who will carry on the said business of manufacturing under the name and style of Tahuna Limited.

Funguo Investments Limited has acquired a majority – 51% stake in Feastfoods Processors Limited, a food processing company that has been set up to manufacture fruit juice puree and concentrates in Kwale County (via Business Today)

Airline/ Oil/Energy/Mining M&A

Kenya Airways PLC, KLM Royal Dutch Airlines (KLM) and Societe Air France S.A (Air France) have made an application under section 25 (1) of the Act for the exemption of their proposed Agreement of Accession and Amendment to Joint Venture Agreement (proposed Amended JV) from the provisions of section• A of Part III of the Act. The application for exemption is for an indefinite period (as long as the amended N Agreement remains in force).1. The proposed Amended N agreement provides as follows —(a) the inclusion of Air France as a party to the Joint Venture Agreement (original JV agreement) between Kenya Airways and KU* and(b) that all references to KLM in the original JV be construed as a reference to both KLM and Air France.

There has been an ownership change at Safarilink as ALS Limited, one of the shareholders of the firm, sold its entire to Bridges Limited, a Ramco Group affiliate, and an existing shareholder. As a result of this private transaction, Captain Aslam Khan of ALS relinquished his position of chairman with Safarilink’s owners settling on Mr. Ngunze to steer the airline’s board (via Business Daily)

Ethiopian Airlines, the largest Aviation Group in Africa announced that it has finalized shareholders agreement with the Government of Zambia for the re-launch of Zambia Airways. The Government of Zambia will be the majority shareholder with 55% and Ethiopian will have 45% stakes in the airline – and this comes after another consolidation at Ethiopian.

Base Resources announced that it reached  agreement with World Titane Holdings whereby Base Resources will acquire an initial 85% interest in the wholly owned Mauritian subsidiaries of World Titane, which between them hold a 100% interest in the Toliara Sands Project in Madagascar. Base Resources will acquire the remaining 15% interest, with a further US$17 million payable on achievement of key milestones, as the project advances to mine development. The acquisition is to be funded by the A$100 million share offer currently underway, refer below for further details. Completion of the acquisition is expected to occur in late January 2018.

Investec Asset Management through its Africa Private Equity increased its investment in Mobisol with consortium partners the IFC and FMO. Mobisol, headquartered in Berlin deals with the energy demand from off-grid households and has operations in Kenya, Tanzania and Rwanda where it has sold 110,000 systems benefiting over 550,000 people.

Following Total SA’s commitment, the Government has consented to a proposed acquisition of the issued and to-be-issued share capital of Maersk Oil Exploration International (Mogas Kenya) in respect of Blocks 10BA, 10BB and 13T. Earlier, Total had acquired Maersk Oil for $7.45 billion in a share and debt transaction.

Africa Finance Corporation and Harith General Partners (Aldwych Holdings) have merged their electricity generation assets into a new company – Anergi Holdings (includes Lake Turkana Wind Farm and Rabai Heavy Fuel plant in Kenya.

The competition Authority approved the proposed acquisition of indirect control of Savannah Cement by Benson Sande Ndeta. 

The Competition Authority approved the proposed acquisition of Associated Vehicle Assemblers by Simba corporation. 

Real Estate & Supermarkets M&A

Actis has agreed to sell its 79.5% majority stake in Mentor Management Limited a Kenyan project management company, to Turner & Townsend, a global construction and management consultant. The management team of MML will retain its minority stake. Actis acquired a controlling stake in MML in 2011 (Via Business Daily).

Mr. Price franchised business carried on by Deacons (East Africa) PLC will be transferred on or after 1st April, 2018 to MIRP Retail Kenya Limited  which will carry on the business.

Nakumatt Holdings and Tusker Mattresses have made an application under section 25 of the Act for the exemption of their proposed management services and loan Agreement for a period of three years.1. The terms of the agreement are that: Tuskys shall provide management services to Nakumatt including procurement and inventory management; Tuskys shall advance a loan to Nakumatt to provide it with emergency funding which shall be used to pay some of the outstanding amounts to employees and landlords; Tuskys shall provide recurring payment guarantees to the suppliers of the target to ensure the suppliers supply stocks to the following Nakumatt’s outlets: Village Market, Galleria, tikay Center, Lavington, Prestige, Mega, Highridge, Karen Crossoads, Ridgeways, Lifestyle, Embakasi, Garden City.

Telecommunications, Media & Publishing M&A

Kwesé has acquired a significant stake in iflix Africa, which will now form part of Kwesé’s diverse broadcast offering, as the core vehicle to deliver seamless mobile experiences to millions of viewers in Africa. Having set up operations in Nigeria, Kenya, Ghana and South Africa, iflix offers users the region’s most extensive collection of highly acclaimed local African and international series and movies, including first-to-market exclusive programming. This, in partnership with Kwesé’s broadcast operations and footprint, will create an exceptional mobile offering for consumers on the continent.

TPG Growth, the middle market and growth equity investment platform of global alternative asset firm TPG, announced today that it has signed a definitive agreement to acquire a majority stake in TRACE, the market leader in afro-urban music and entertainment. The remaining stake will be owned by TRACE’s co-founder and management team. TPG Growth will invest alongside Evolution Media and Satya Capital. As part of the transaction, MTG, a leading international digital entertainment group that invested in TRACE in 2014, will sell its stake in the company.

International Paper and Board Supplies carrying on the business of trading in printing and packaging materials and consumables at L.R. No. 209/11066, will transfer all its business, stocks and assets to The Print Store who intends to carry on the business from the aforesaid premises.

The Competition Authority authorizes the proposed acquisition of the entire issued share capital of Alldean Networks limited, Simbanet com limited and Wananchi telecom limited by Synergy.

Pressmaster carrying on the business of trading in printing and packaging materials and consumables at L.R. No. 209/12156, will transfer all its business, stocks and assets to Pressmaster Africa Ltd.

The Competition Authority authorized the proposed acquisition of the assets and business of International Paper and Board Supplies Limited by the Print Stores Limited, on condition that the acquirer absorbs not less than 45 out of the current 78 employees in the target business.

The Competition Authority authorizes the proposed acquisition of the entire issued share capital of Pressmaster Africa Limited by Ramco Plexus.

Other M&A

The Competition Authority authorized the proposed acquisition of 40% of the ordinary shares in AAH (BVI) limited by Oman Trading International with certain veto rights.

Kenya Airways March 2018 results

Kenya Airways (KQ) announced their full-year results in Nairobi this morning covering the nine-month period April to December 2017, as in a change for past years, they have shifted their year-end to December to be in line with their airline partners. It was tough to compare 2017 to 2016 which was a full year but it was a significant year in which the airline  completed a capital optimization to wipe out a deficit in their balance sheet which was achieved by Kenyan banks converting debt into equity, and becoming the second-largest shareholder (38.1%) after the Kenya Government who also funded their airline with cash and guarantees as their shareholding went up to 49%.

CEO Sebastian Mikosz said that fuel prices (which went up from about $52 to $62 in the year combined with elections (which included a 20% drop in East African domestic travel) had the biggest impact on the bottom line. He said that they flew 3.4 million passengers with a 76.2 average cabin factor and 8.1million revenue kilometers and increased frequencies to Cape Town, and added a  new route to Victoria Falls.  He

Acting CFO Hellen Mwariri read the results which included an operating profit Kshs 1.3 billion and a loss after tax of Kshs 6.1 billion. This was from revenue of Kshs 81 billion (compared to Kshs 106 billion in the full year before) and with assets at year-end of Kshs 140 billion (146 billion the year before) and they had also wiped out the negative equity position that went from minus Kshs 44 billion to minus 4 billion.

Mikosz spoke of the need to get more revenue from Kenya Airways corporate brands –  Jambojet, Technical (servicing their own aircraft and they gained two external customers in the year), Cargo, Pride (training), and Holidays. He also spoke of network optimization at the airline –  adding New York flights, new routes to Mauritius and Cape Town, and using more Q400 turboprops on short regional routes. Kenya Airways will also be enlarging their joint-venture with KLM to now include Air France and will KQ introduce an “economy comfort” product in all aircraft in the next 12-15 months, something that is popular with European partners customers. They have also recalled a Boeing 787, that they had sub-leased Oman Air, which they will now use on the New York route from October.

Mikosz said he was not a big fan of “open skies” that African nations were pushing for as Africa was not like Europe that regulated and policed open skies and was able to monitor the competitive space and the support availed to all airlines and the levels of state protection.

Barclays Timiza launched

On Friday, Barclays unveiled Timiza, its virtual banking strategy to extend its growth and services to the mobile space.

It comes after two other banks CBA (through M-Shwari) and KCB have also extended virtual services over Safaricom and M-Pesa to reach millions more digital customers and borrowers.

Timiza is immediately available to all M-Pesa customers (they are 27.8 million) who are either Barclays customers and non-customers. Timiza has a simple registration by dialing *848# or downloading the app from the google store and entering a national ID and phone number and within minutes of creating a new password, one can see their credit limit and start borrowing. The minimum loan amount is Kshs 50, and maximum Kshs 1 million, though it’s really up to 150,000 (~$1,500) depending on one’s credit rating and funds are immediately sent to one’s Timiza wallet (not M-pesa). For demonstration, a loan of Kshs 1,000 (~$10) for 30 days attracts a fee of 1.17% plus a facility fee of 5%, for a repayment of Kshs 1061.67

Besides being an easy and low-interest loan avenue, Timiza also offers a simple current account, savings account, fixed deposit account (term deposits of 1, 3, 6, 12 months – minimum Kshs 1,000. no top-up), group savings accounts, and channels for utility payments. One can also purchase insurance (a whole life cover policy) in the app.

A few months ago when M-Shwari was marking five years since its launch, CBA announced they would have variable pricing for good-repayers and a rebate on fees for people who paid loans within 10 days. These have not been done, but there are hints of such revisions in Timiza

Other Timiza Notes

The Timiza T&C‘s mostly relate to the use of personal information and clauses on resolving disputed. But they also have some interesting things:

  • There are no fees for transfers between Timiza and M-pesa
  • Barclays may suspend a Timiza account and credit if they discover it is being used for fraud or illegal activities, and they may also suspend them if they become aware that a customer is defaulting on other loans.
  • Unique from M-Shwari in that the loans can be rolled-over, and there will be a “roll-over” fee levied. However, the staff at Barclays branches have no authority to alter Timiza agreements. 
  • Timiza users will be eligible  for store finance at Barclays-selected merchants
  • One can select the period for repayment of a loan when applying for a loan  – maximum of 30 days

Barclays has 88 branches which are located in 38 of Kenya’s 47 counties and says they are responding to their customers preference for more mobile and internet banking channels. Barclays targets to get 5 million new customers in the next five years.

$1=Kshs 101

Stanbic to Increase Kenya stake to 75%


Stanbic Africa Holdings (Stanbic) – SAHL has tendered an offer to other shareholders of its Kenyan subsidiary who may be willing to sell their shares to the SAHL group at a premium as it seeks to increases its stake in Kenya’s 8th largest bank.

SAHL, which owns 237 million shares representing 60% of Stanbic Kenya, is seeking to buy another 59 million shares, which will take its stake to 75% (296 million shares) as part of a commitment to grow business in Africa. Stanbic Kenya is listed on the Nairobi Securities Exchange and SAHL has declared that the shares will remain listed after the deal and have applied for an exemption from being required to make a formal takeover.

The bank shares were trading at Kshs 83 before the announcement, and SAHL is offering to buy no more than 59 million additional shares at Kshs 95 (~$0.94) a share. SAHL states that it will give preference to shareholders on the register date for up to a maximum of 10,000 shares in the offer, which runs to April 27.

In 2016, Stanbic Kenya had 4,424 shareholders, 3,837 of whom owned less than 10,000 shares, and 1,838 of these had less than 500 shares. While SAHL states that it is not acting in concert with any other parties, it is entirely possible that the three largest shareholders behind SAHL in the Kenyan bank – two foreign firms and one local company who may own a combined 59 million shares may be targets of the offer.  One of the shareholders has also recently divested from owning large stakes in other NSE-listed companies including Athi River Mining and Kenol-Kobil.

SAHL established its banking presence in Kenya in 2007 by initially merging with the CFC Bank Group. Shareholders who take up the new offer to sell their shares will also forego a dividend of Kshs 4.00 per share declared this month when Stanbic reported bank profits of Kshs 5.6 billion along with assets of Kshs 239 billion, loans of 130 billion and deposits of Kshs 153 billion.

SGR enters the Nairobi National Park

Kenya’s National Land Commission (NLC) has again published a list of land titles it is seeking to acquire on behalf of Kenya Railways for the construction of Phase 2A of the Standard Gauge Railway (SGR) between Nairobi and Naivasha.

The parcels are in the counties of Kiambu, Kajiado, Nakuru, and Narok. Big winners include Kedong Ranch Ltd as they will be compensated for three huge land parcels (measuring 35.7 hectares, 13.01 hectares, and 100.65 hectares) that were previously listed as being belonging from Morning Side Heights,  Ruaraka Housing Estate, and Morningside Heights respectively. Another is Kiambu Western Grazing Area from who the NLC will purchase 146.8 hectares.

Big losers include the Nairobi National Park which is managed by Kenya Wildlife Services (KWS) and which is billed as the only national park within a capital city in the world which will lose loses 41.3 hectares (about 102 acres) which will be hived from land title – L.R. 10758 that was reserved.  The Nairobi National Park was originally 28,950 acres in 1961 when a 999-year lease was granted to Trustees of the Royal Nairobi Parks. Another loser will be Oloolua Forest 17.3 hectares (about 43 acres) to the railway, at a time when Kenyans are concerned about depletion of forests.There have been news reports that construction work for the SGR has commenced in the Nairobi National Park park in the last few weeks.

Construction through the park had been contested for some time, and back in November 2016, a session was held at the Strathmore Business School where Kenya Railways staff met wildlife conservation groups, and concerned residents, to explain issues like the intent of the government, justification for the SGR, land rights, the railway route, land acquisition cost, feasibilities done, stakeholders consultations, impact on wildlife, environmental and community impact etc.

Alternative routes map from Save Nairobi National Park (“SNNP”)

Athanas Maina, MD of Kenya Railways said that it was not possible to follow the corridor of the old (British) railway, which would not be funded and whose terrain was difficult – and that they had considered seven different routes through which the new railway could exit Nairobi to pass through a crucial tunnel at Ngong. They had settled on a “modified savannah” option and the new SGR railway would loop back from the Inland Container Depot at Embakasi, and go over six kilometers of the Nairobi National Park. This would be achieved by constructing elevated bridges in three stages, and running the railway elevated at an average height of eighteen (18) metres over the park with noise defectors and that construction would be completed in 18 months.

The acting Chairman of the Friends of the Nairobi National Park said that if there was a conflict between conservation vs development,  it is because of a lack of planning and consultation, while another representative spoke of continuous assaults on the Nation National Park over the years with demands for the park to cede more land for construction of the Southern bypass highway, oil pipeline, and fibre cables among others.

Maina said that exact route that the railway would follow remained a secret as many people wanted the line to pass on their land to make money – speculating on land at any cost and waiting for the government project to come – and pointed to the LAPSSET projects that had been derailed demands for land compensation. (Elsewhere it has been reported that landowners in the Konza area got Kshs 3 million (~$30,000) per acre of undeveloped land that was acquired for phase one of the SGR). Another resident said that the park’s main threat was  not the SGR, but individuals who were privatizing land, along wildlife corridors, south of the park for housing and quarrying and cited the Jamii Bora development case

Finally, a letter from Richard Leakey, Chairman of the KWS, was read out in which he said that the SGR would have minimal impact on Nairobi National Park, and mainly during the two years of construction. He added that some conservationists had opposed fencing the southern part of the park for many years because wildlife species migrate through there, and if the railway was laid and fenced there, outside the park, it would cut off wildlife from accessing the park. That ended the debate, that day.