Author Archives: bankelele

WEF Davos 2019

The annual meetings of the World Economic Forum (WEF) take place in Davos Switzerland this week. The 2019 event will feature over 3,500 attendees from 115 “economies” (according to WEF) of who 118 are from Africa. Among this number, 57 are from South Africa, 16 from Nigeria, 13 from Kenya, 9 from Egypt, 6 each from Zimbabwe and Ethiopia, 5 Rwanda, 4 Cote d’Ivoire and 3 from Morocco.

This year Qz has drilled down the attendees by continent, and listed under Kenya are Jesse Moore (M-Kopa), Katie Hill (Liquid Telecom), Mohammed Hassan (Kakuma Refugee Camp), Patrick Njoroge (Governor of the Central Bank of Kenya), Dr. Githinji Gitahi (CEO, AMREF) Agnes Kalibata (AGRA President), Paul Okumu (AfricaPlatform), Peter Munya (the Cabinet Secretary in the Ministry for Trade, Industry and Cooperatives), Liz Muange and Kanini Mutooni (both of USAID), Kennedy Odede (CEO Shining Hope), Mohamed Al-Beity (Savannah Fund) and Winnie Byanyima (Executive Director Oxfam).

 

Other familiar attendees from the continent include Tony Elumelu (Chairman of UBA Group), Ahmed Heikal (Qalaa), Cyril Ramaphosa (President, South Africa), Abiy Ahmed (Prime Minister, Ethiopia) Yoweri Museveni (President, Uganda), Moussa Mahamat (Chairperson African Union Commission), Akinwumi Adesina (President, African Development Bank), and Paul Kagame (President, Rwanda), Elizabeth Rossiello (CEO BitPesa – now in Senegal), and Emmerson Mnangagwa (President, Zimbabwe) who may have withdrawn to deal with the latest chapter in the country’s economic crisis.

Others are Mthuli Ncube (Finance Minister, Zimbabwe), from Botswana President Eric Masisi and Investment Minister Bogolo Kenewendo, Kamissa Camara (Foreign Affairs Minister Mali) and from the DRC is Denis Mukwege, who won the Nobel Peace Prize in 2018.  Qz notes that the youngest attendee at Davos this year is the 16-year-old photographer Skye Meaker from South Africa. 

Also on the list is William Browder, CEO of Hermitage Capital, a now frequent attendee at Davos. In his fascinating book, “Red Notice: A True Story of High Finance, Murder, and One Man’s Fight for Justice”, he writes of his first visit to Davos – where in 1996, he gatecrashed the town of Davos with an investment banking friend. They did not have an innovation to the $50,000 annual summit, “an A-list party of the business world,” in which all hotel rooms are booked a year in advance. But they did mingle around the town and met a former finance minister of Russia in a group where they had an eerie conversation about investing in Russia.

“Don’t worry about the election, Yeltsin is going to win for sure.”
“How can you say that? His approval rating is barely 6%”
“These guys will fix that”

Nairobi Riverside Terror Attack

Here are some noteworthy moments covered on Twitter.

The calm shatters.

First documentary video of the attack by journalist John Allan Namu.

Some early advice.

Breaking news advice.

This is a Twitter thread, but Facebook has more reach in a crisis.

Volunteer first responders.

Pleas for help.

Mistaken identity.

Victims

Terrorism has no religion, tribe, or colour. Islam does not condone terrorism.

Survivors and Survival Tales

 

Keep hope alive.

Police lines.

Bank customers okay.

Others Tales

The foreign media, and the New York Times become a talking point.

Situation updates by the Police.

Calls for support.

Corporate support for the responders.

Counseling and therapy services.

Support the victims’ families.

Supporting business continuity.

Lessons learnt.

14 Riverside reopens on January 28.

Remain vigilant! – US Embassy cautions.

What other notable tweets did you see this week?

Societe Generale and Absa partner to grow across Africa

Societe Generale (SocGen) of France and Absa have entered two deals; one for a Pan-African wholesale banking partnership and another for the sale of selected SocGen’s businesses in South Africa to Absa. 

SocGen bills itself as the number one bank in French-speaking Sub-Saharan Africa with a presence in 19 countries, mainly in Western and Northern Africa, while Absa is in 12 countries mainly in Southern and Eastern Africa, as a rebrand of Barclays across Africa.

The partnership will be a non-exclusive one that will allow the banks to sell each other’s products and services. It will also extend to providing dedicated services to Chinese multinational businesses, leveraging on SocGen’s presence in China.

The second agreement relates to the sale by SocGen of its custody, trustee and derivatives clearing services in South Africa to Absa and will result in the transfer of clients, employees, and IT services. The deal enables Absa to re-enter the custody and trustee business. It does not include SocGen’s securities lending services which will end in March 2019 leaving SocGen in South Africa to operate corporate and investment banking.

Barclays is the fourth largest bank in Kenya while Societe General has a Kenya Representative Office in Nairobi. SocGen’s digital banking journey includes ventures in mortgages, insurance technology, and auto leasing. Another is  YUP, a mobile money wallet launched in 2017 after acquiring a stake in TagPay, that is now in four African countries and has 300,000 clients.

Renault Trucks launch in East Africa with CMC

In Nairobi this week, Renault Trucks launched a new Range K line as part of an ambitious plan to expand in Eastern Africa. The Range K is a versatile, rugged truck that is designed for local owners engaged in a variety of sectors such as long-distance haulage to neighbouring countries and consumer goods delivery, or rugged conditions like mining and construction operations.

Renault Trucks are part of the Volvo Group and are completely separate from the Renault car company. In Kenya, Renault Trucks are exclusively distributed by the CMC Group, which was acquired by Majid Al Futtaim Auto in 2014. Renault Trucks sold 55,000 of their award-winning line of trucks in 2018. They lead in Franco-phone (Northern, Western, and Central) Africa, and their plans to expand further in Eastern and Southern Africa, led to a partnership deal with CMC, under Majid Al Futtaim Auto.

CMC Group, which is now in 3 countries (Kenya, Uganda, Tanzania), plans to grow to 10 countries – including Mauritius, Mozambique, Rwanda, Burundi Zambia, Zimbabwe Malawi over the next few years and the global brand of Renault Trucks will be part of that push. CMC Group will sell K440 (Range K) series and C440 Renault Truck model.

The Range K’s are fitted with robust chassis and heavy-duty robotized gearbox, which make them easier for their drivers. The trucks all have Optidrive Xtrem, described as the best gearbox in the market, which is a clutch-less manual gearbox. Drivers have an adjustable steering wheel with controls similar to a private car and there is a 7-inch screen for them to view all vehicle settings during operations.

The Range K trucks are designed can carry up to 13 tons per axle and they have heavy-duty “fifth wheels'” that can pull trailers of over 33 tons in this region with a range of over 1,000 kilometers on a single diesel tank. The trucks have load sensors and low range gears for use on project work like street sweeping, tarmac laying and water-spraying. They have electronic parking brakes and hill-start aids that prevent roll-back, and with drum brakes on all wheels that can go for up to 750,000 kilometres without needing change.

The K440 trucks have high ground clearance with engine under-guards and are designed to manoeuvre in tight spaces and climb out of hilly places like construction sites without damaging the underbelly of the trucks. The vehicle design encompasses steel protection of parts that are sensitive like headlights and license plates, so they are not damaged at rough worksites. For companies, there is also a large front advertising area above the radiator grilles, which itself easily opens to allow for drivers to do quick maintenance checks.

At the launch, key managers of CMC and Renault Trucks highlighted how operating expenses take up 76% of the ownership cost of a truck for investors – with fuel accounting for 37%, driver costs 23% and repairs for another 16%. Renault configures trucks for each owner in terms of axle ratios, braking and power modes. There is also mandatory driver training to ensure reliable vehicle usage while reducing fuel consumption and maintenance costs with the goal of having the trucks always available and working on the road. The trucks come with an international 12-month warranty and CMC also offers start-and-drive 5-year contracts and personalized maintenance plans in addition to after-sales services and genuine parts at its wide network of distribution centres around East Africa.

CMC Group has entered a partnership that will see Kenya Vehicle Manufacturers assemble Renault Trucks from CKD’s at Thika, and which the French Ambassador said would create 200 skilled jobs in the country.

Also at the launch, Kenya’s Cabinet Secretary at the Ministry of Trade, Industry and Cooperatives, Peter Munya, spoke of the government plans to increase manufacturing’s share of the economy through the formulation of policies and tax incentives that would secure investments by auto manufacturers to set up more assembly plants in Kenya.

Looking to the future, Renault Trucks plan to launch a line of all-electric trucks, from 2019, for Europe, but sadly not for East Africa, yet.

M&A Moment: January 2019

The Competition Authority of Kenya recently approved the completion of several corporate merger and acquisition (M&A) deals. They are interesting in that they reveal some revenue and deal value numbers that private companies, acquirers, and equity funds usually don’t make public.  The deals were all approved with exclusions as the transactions between the affected companies  will not affect competition negatively and they met the threshold for exclusion under the “merger threshold guidelines.”

The deals and exclusions include:

Airline/ Oil/Energy/Mining M&A

  • (The Competition Authority of Kenya [CA-K]) .. Excludes the proposed acquisition of 51% of Selenkei Ltd by Frontier Energy as the acquirer assets for the preceding year (2017) was KShs. 225 million while the target’s assets was KShs. 4 million and the combined assets valued at KShs. 222 million meet the threshold for exclusion.
  • Excludes the proposed acquisition of control of Paygo Energy by Novastar Ventures East Africa Fund 1 LP and FPCI Energy Access Venture Fund as the acquirers had no turnover for the preceding year 2017 while the target’s turnover was KShs 2 million
  • Excludes the proposed acquisition of 51% of Cedate by Frontier Energy as the acquirer assets for the preceding year 2017 was KShs. 225 million while the target’s assets was KShs. 355 million and the combined assets valued at KShs. 580 million meet the threshold for exclusion.
  • CA-K approved the proposed acquisition of the entire issued share capital in Iberafrica Power (E. A) by AEP Energy Africa
  • CA-K approved the proposed acquisition of control of Consolidated Infrastructure Group by Fairfax Africa Holdings.

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

  • Excludes the proposed acquisition of 44% of Cellulant Corporation by The Rise Fund Certify, L.P. as the acquirer had a turnover of KShs. 93 million for the preceding year 2017 while target had a turnover of KShs. 752 million and therefore, the combined turnover of KShs. 844 million meets the threshold for exclusion.
  • Excludes the proposed acquisition of 12% of Pezesha Africa with certain controlling rights by Consonance Kuramo Special Opportunities Fund 1 as the acquirer’s turnover for the preceding year 2017 was KShs. 6.2 million while the target’s turnover was KShs. 3.1 million
  • Excludes the proposed acquisition of 100% of Serian Asset Managers by Cytonn Asset Managers as the acquirer had a turnover of KShs. 0.9 million for the preceding year 2017 while target had a turnover of KShs. 1.1 million for the preceding year 2017 and therefore, the combined turnover of KShs. 1.9 million meets the threshold for exclusion.
  • The Competition Authority approved the acquisition of indirect control of Abraaj Investment Management by Actis International. Abraaj controls Star Foods Holdings, which ultimately controls Java House Ltd in Kenya.
  • CA-K approved the proposed purchase and subscription of up to 25% shareholding in Prime Bank by Africinvest Azure SPV

Agri-Business, Food & Beverage M&A

  • Excludes the proposed acquisition of 99.9% of  Twiga Foods Limited by Twiga Holdings as the acquirer has no operations in Kenya and therefore had no turnover for the preceding year 2017 while the target’s turnover was KShs. 140 million and the transaction meets the threshold for exclusion.
  • Excludes the proposed acquisition of the business and assets of Anchor Flour Millers Company by Archaic Industries Kenya as the acquirer is a natural person with no business activities and had no turnover or assets for the preceding year 2017 while the target’s turnover was KShs. 97.3 million.
  • Excludes the proposed acquisition of class B ordinary shares in Fertiplant East Africa by Oikocredit, Ecumenical Development Cooperative Society U.A as the acquirer is a natural person and had no turnover or assets for the preceding year 2017 while the target’s assets were valued at KShs. 47.5 million.
  • The Competition Authority approved the proposed acquisition of 100% of Art-Caffe Coffee and Bakery Ltd by Artcaffe Group
  • CA-K approved the proposed acquisition of certain assets and part of the business of Kreative Roses limited by Kongoni River Farm on condition that the target retains 43 of its employees while the acquirer employs the remaining 362 employees for at least one year after the completion of the proposed transaction.

Health and Medical, Pharmaceutical M&A

  • Excludes the proposed acquisition of 32.5% of the shares with certain veto rights in King Medical Supplies by LGT Capital Invest Mauritius PCC Cell E/VP as the acquirer is a newly incorporated company and had no turnover for the preceding year 2017 while the target’s turnover was KShs. 20.9 million.
  • Excludes the proposed acquisition of 32.5% of the shares with certain Veto Rights in City Eye Hospital by LGT Capital Invest Mauritius PCC Cell E/VP as the acquirer is a newly incorporated company and had no turnover for the preceding year 2017 while the target’s turnover was KShs. 62.1 million.
  • Excludes the proposed acquisition of sole control of Hain Lifescience East Africa Kenya by Bruker Daltonik GMBH as the acquirer’s turnover for the preceding year 2017 was KShs. 102 million while the target’s turnover was KShs. 106 million and the combined turnover of KShs. 208 million meets the threshold for exclusion.
  • Excludes the proposed acquisition of the manufacturing and distribution business of Pharmaceutical Manufacturing Company (Kenya) by Shalina Healthcare Kenya as the acquirer’s assets for the preceding year 2017 was KShs. 0.4 million while the target’s value of asset was KShs. 43 million and the combined value of asset of KShs. 44 million meets the threshold for exclusion.
  • Excludes the proposed acquisition of certain assets of Maghreb Pharmacy by Goodlife Pharmacy as the target had a turnover of KShs. 15 million for the preceding year 2016 and therefore, the transaction meets the threshold for exclusion.
  • Excludes the proposed acquisition of 60% shareholding in AK Life Sciences by CSSAF Lifeco Holdings as the acquirer had a turnover of KShs. 377 million for the preceding year 2017 while target had a turnover of KShs. 125 million for the preceding year 2017 and therefore, the combined turnover of KShs. 503 million meets the threshold for exclusion.
  • The competition authority approved the proposed acquisition of the entire share capital in Arysta Lifescience Inc by UPL Corporation.
  • The Competition Authority authorized the proposed investment by Tunza Health Investments in Pyramid Healthcare Ltd.
  • The Competition Authority approved, the acquisition of 100% of the business and assets of Desbro (Kenya) by Brenntang (Holding) B.V. on condition that Brenntang retains the 80 employees of Desbro for a period of one year. Desbro distributes over 600 industrial chemicals to various industries in Kenya, Uganda, Rwanda, Burundi and Ethiopia.

Logistics, Engineering, & Manufacturing M&A

  • Excludes the proposed acquisition of 100% of the shares in JGH Marine A/S and JOHS. Gram-Hanssen A/S by Pitzner Gruppen Holding A/S  as the acquirer has no presence in Kenya and, therefore, had no turnover for the preceding year 2017 while target had a turnover of KShs. 392 million for the preceding year 2017 and therefore, the transaction meets the threshold for exclusion.
  • Excludes the proposed acquisition of the assets and business of Socabelec East Africa by Cockerill East Africa as the acquirer had a turnover of KShs. 193, million for the preceding year 2016 while target had a turnover of KShs. 226 million the preceding year 2016 and therefore, the combined turnover of KShs. 419 million meets the threshold for exclusion.
  • Excludes the proposed acquisition of 55% of  Air Sea Logistics (ASL) by Expolanka Freight PZCO as the acquirer had no turnover for the preceding year 2017 while the target’s turnover for the preceding year 2017 was KShs. 8 million and therefore meets the threshold for exclusion.
  • Excludes the proposed acquisition of the assets of Rich Logistics (K) by Bigcold Kenya as the acquirer is newly incorporated and hence, had no turnover for the preceding year 2017 while the target had a turnover of KShs. 48 million for the preceding year 2017 and therefore, the transaction meets the threshold for exclusion.
  • CA-K approved the proposed acquisition of the stationery and shavers manufacturing, sales and distribution of stationery, lighters and shavers business of Haco Industries Kenya  by BIC East Africa.
  • CA-K approved the proposed acquisition of the Kenyan freight forwarding business and assets of Dodwell & Co (East Africa) and those of Inchcape Shipping Services Kenya by ISS Global Forwarding (Kenya) – which is owned by Investment Corporate of Dubai (ICD). 
  • The Competition Authority approved the proposed acquisition of the assets and business of Blue Nile Wire Products by Blue Nile Rolling Mills.
  • The Competition Authority approved the acquisition of the assets and business of Wild Elegance Fashions by Wild Elegance Africa.
  • The Competition Authority approved the proposed acquisition of 73.6% of Sintel Security Print Solutions by Ramco Plexus. Sintel is involved in the printing and supply of scratch cards, highly secured cheques and custom labels.
  • CA-K approved the proposed acquisition of the business and assets of Office Mart by Sai Office Supplies
  • CA-K approved the proposed acquisition of the business and assets of Lino Stationers by Sai Office Supplies on condition that the acquirer employs not less than 57 out of the 74 employees after the completion of the proposed transaction.

Real Estate, Tourism, & Supermarkets M&A

  • Excludes the proposed acquisition of 40% of Dufry Kenya by Ananta as the acquirer had no turnover for the preceding year 2016 while the target had a turnover of KShs. 269 million for the preceding year 2016 and therefore, the transaction meets the threshold for exclusion.
  • Excludes the proposed joint venture between Scan-Thor Group and Otto International GmbH as the acquirer has no market presence in Kenya and, therefore, had no turnover for the preceding year 2017 while target had a turnover of KShs. 11 million for the preceding year 2017 and therefore, the transaction meets the threshold for exclusion.
  • Excludes the proposed transfer of 100% of Norbu Manda Pwani Ltd to Margot Kiser from the provisions of Part IV of the as the acquirer is a natural person and had no turnover or assets for the preceding year 2017 while the target’s assets were valued at KShs. 47.5 million.
  • Excludes the proposed acquisition of the business and assets of Giraffe Ark Game Lodge by Archaic Industries Kenya as the acquirer is a newly incorporated company and had no turnover for the preceding year 2017 while the target’s turnover was KShs. 51.5 million
  • Excludes the proposed acquisition of the business of Ocean Sports (2006) by Ocean Sports Hotel as the acquirer had no turnover for the preceding year 2016 while the target’s turnover was KSh. 44.6 million.
  • Excludes the proposed acquisition of 34.48% of African Forest Lodges by Earth Friends LLP as the acquirer is a newly incorporated company and has no assets or turnover for the preceding year 2016 while the target’s assets was KShs. 197 million.
  • Excludes the proposed acquisition of the (Furniture, fittings, equipment and Prefabricated building) assets of Me To We Ltd by Bogani Training, excludes the proposed acquisition of the (motor vehicle) assets of Me To We Ltd by Minga Ltd and excludes the proposed acquisition of the assets  (vehicles, beads, stocks) of Me To We Ltd by Araveli For Mamas as the acquirers had no turnover for the preceding year 2016 while the target’s turnover for the preceding year 2016 was KShs. 68 million and therefore, meets the threshold for exclusion.
  • CA-K approved the proposed acquisition of control of Tumaini Self Service by Sokoni Retail Kenya. Tumani operates retail stores in Nairobi, Kisumu and Kajiado.
  • CA-K approved the proposed acquisition of Nova Academics Tatu City Property Ltd by Summit Real Estate Pty
  • The Competition Authority of Kenya approved the proposed acquisition of 100% of Hillcrest Investment Holdings by Education Asia Holdings – which is an investment holding company owned by GEMS Global Schools. Hillcrest operates three learning institutions in Nairobi – Hillcrest Early Years, Hillcrest Preparatory School and Hillcrest Secondary School.

Telecommunications, Media & Publishing M&A

  • Excludes the proposed acquisition of 39% of the shareholding in the Star Publication by Avandale Investments and 10% of the shareholding by Adil Arshed Khawaja as the acquirer had no turnover for the financial year ending 30th June 2017 while the target’s turnover was KShs. 679 million.
  • Excludes the proposed acquisition of Mobile Web (trading as Hivisasa) by Novastar Ventures Easy Africa Fund 1 L.P.  as the acquirer had no turnover for the preceding year 2017 while target had a turnover of KShs. 14 million or the preceding year 2017 and therefore, the transaction meets the threshold for exclusion.

Other M&A

  • Excludes the proposed acquisition of Dc Xiang Kenya Company by Lin Bingwei from the provisions of Part IV of the Act as the acquirer is a natural person with no business activities and had no turnover or assets for the preceding year 2017 while the target is a newly incorporated company and had no turnover or assets;
  • Excludes the proposed acquisition of 100% of the shares in Kesar Investments by Dipak Lakshman Halai and Ramesh Kurji Visram as the acquirer are individuals and had no turnover for the preceding year 2016 while the target’s assets was KES 0.07 million
  • CA-K approved the proposed acquisition of Zelepak Africa by PPG  Holdings

CA-K, as a regulator, has not yet reported on two mega deals; the proposed bank merger between CBA and NIC and the buyout of Kenol by Rubis that will lead to a delisting of the company. EDIT: Later in January 2019, the Competition Authority approved the Rubis-Kenol deal along with a few other deals. 

Also, see some other deals approved six years ago.

$1 = Kshs 101