Author Archives: bankelele

About bankelele

Writing on banking, finance and investments in East Africa. Email bankelele_at_hotmail.com, Instagram: Bankelele, Twitter: @Bankelele.

Merger deals in Eastern & Southern Africa (COMESA)

An interesting list of merger statistics was published by the COMESA Competition Commission which regulates trade between member states in the Common Market for Eastern and Southern (COMESA) region.

Most of the proposals involve companies in Kenya Mauritius Zambia Zimbabwe Uganda and Rwanda and are mainly concentrated in energy, banking and agri-business.

It showed that there were 46 deals in 2019, compared to 45 in 2018, and that last year the Commission approved 37 mergers with unconditional clearance and 6 others with conditions. Some were covered earlier, but some notable ones last year include:

Airline/ Oil/Energy/Mining M&A

  • Acquisition of shares by Azura Power (Mauritius) in Thika Holding, Thika Power and Thika Power Services. The target, Thika, is registered in the British Virgin Islands and generates electricity from heavy fuel oil and provides related support services. Azura is acquiring 90% from Melec and the other 10% will be held by Africa Energy Resources Plc.
  • 100% of Iberafrica Power E. A. (“Iberafrica”) has been acquired by the Africa Infrastructure Fund via a Danish partnership. Iberafrica owns and operates a 52.5 MW heavy fuel oil Nairobi power plant and has a PPA with Kenya Power and Lighting Company that will expire in 2034.
  • Matador (managed by the Carlyle Group) intends to acquire between 30 – 40% of the shareholding in CEPS, the parent of a group of companies that supply fuels and fuel derivatives products, with operations in Egypt and Kenya.
  • KenolKobil Plc is acquiring 10 petroleum retail outlets in Zambia from Samfuel.
  • Engie Afrique S.A.S. is acquiring Mobisol Kenya and Mobisol Rwanda which market, distribute and sell solar home systems and related appliances in Kenya and Rwanda.

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

  • MyBucks (formerly New Finance Bank), a Malawian bank, is acquiring 100% of Nedbank Malawi, which has 11 branches and 50,000 customers. Mybucks is a subsidiary of Frankfurt-listed fintech MyBucks SA which intends to consolidate the two banks.
  • The acquisition of 66.53% of Banque Commerciale de Congo by Equity Group Holdings Plc (covered here).
  • The acquisition by Access Bank Plc of 100% of Transnational Bank Plc (covered here)
  • The proposed acquisition by Banque Centrale Populaire (BCP) of Banque Malgache de l’Ocean Indien (BMOI),a Malagasy commercial bank with 19 branches.

Agri-Business, Food & Beverage M&A

  • PepsiCo is acquiring Pioneer Food Group of South Africa which supplies various grocery products, beverages and breakfast cereal products in the COMESA region.
  • Actis International, through Neoma Managers (Mauritius), is acquiring the management rights held by Abraaj Investment Management (in provisional liquidation) that represent a controlling interest in firms that are in the manufacturing, casual dining and healthcare sectors.
  • Vivo will acquire shares comprising 50% of Kuku Foods Kenya, Kuku Foods Uganda and Kuku Foods Rwanda. Vivo distributes and markets fuels and lubricants across Africa, while Kuku Holdings, incorporated in Mauritius, operates “KFC” quick-service restaurants franchises in Kenya and Uganda, while Kuku Foods Rwanda is not yet operational.
  • The acquisition of a controlling shareholding in Almasi by Coca Cola through its affiliate Coca-Cola Sabco (East Africa).
  • The proposed merger involving Pledge Holdco, an affiliate of TPG and Maziwa, which is controlled by Bainne Holdings. The target owns subsidiaries that sell dairy products in Kenya and Uganda.
  • Zaad BV will acquire a 40% stake in EASEED, a seed firm with interests in Kenya, Tanzania, Ugandan, Rwanda and Zambia, with an option to acquire an additional stake in the future. EASEED is newly incorporated, owned and controlled by a Kenyan national, Mr. Jitendra Shah.
  • A merger between the Finnish Fund for Industrial Development Cooperation and Green Resources AS, a Ugandan operator of East Africa’s largest sawmill (in Tanzania) as well as other electric pole and charcoal manufacturing plants in the region.

Pharmaceutical, Health and Medical M&A

  • TPG Global LLC and Abraaj Healthcare Group Hospitals. (AHG) which owns subsidiaries that provide healthcare services at hospitals and medical clinics in Kenya (Nairobi and Kisumu).

Logistics, Engineering, & Manufacturing M&A

  • A joint venture involving Bollore Transport & Logistics Kenya, Nippon Yusen Kabushiki Kaisha, and Toyota Tsusho Corporation was incorporated in Kenya in January 2017 and will result in Bollore NYK Autologistics that will provide inland transportation, storage and distribution of new or used vehicles arriving at any other port in Kenya and any vehicles manufactured and/or assembled in Kenya.
  • The formation of a joint venture between CFAO (a wholly-owned subsidiary of Toyota Tsusho) and tyre-manufacturer Compagnie Financiere Michelin SCmA (Michelin) that is intended to develop a distribution network to promote tyre sales and tyre-related services in Kenya and Uganda.
  • The proposed merger between Augusta Acquisition B.V., a subsidiary of Uber International, and Careem Inc, a technology platform in the greater Middle East. Uber has operations in Egypt, Kenya and Uganda while Careem operates in 125 cities across 15 countries, including Egypt and Sudan. The COMESA Commission found Egypt is where there was an overlap of the two companies in and approved the deal with some interesting conditions on fares, safety, surge pricing, driver compensation, data sharing, among others.

Real Estate, Tourism, & Supermarkets M&A

  • A proposed merger involving African Wildlife Holdings partnership and Wilderness Holdings. Wilderness operates under various brands including Wilderness Safaris, Wilderness Air, Governors’ Camp Collection and Governors’ Aviation in Kenya, Rwanda, Zambia and Zimbabwe.
  • A Mauritius private equity fund, through Amethis Retail, intends to acquire a minority stake in Naivas International and will indirectly gain control of the target’s Kenyan subsidiary, Naivas, a family-owned, leading supermarket chain with 58 stores. In Kenya, Amethis has invested in and indirectly controls Chase Bank, Ramco Plexus and Kenafric.

Telecommunications, Education, Media & Publishing M&A

  • The proposed merger involving Airtel Networks Kenya and Telkom Kenya, in which Telkom Kenya end up with a 49% shareholding in a renamed Airtel-Telkom was approved as it was not likely to affect competition within COMESA.
  • The acquisition of 100% of Eaton Towers Holdings by NYSE-listed ATC Heston. Both have operations in Kenya and Uganda.
  • Raphael Bidco Ltd, which is owned by CVC Funds, is acquiring joint control of GEMS, an international education company. It is listed as being active only in Egypt, but there are GEMS schools in East Africa.

Co-Op Bank to acquire Jamii Bora

Kenya’s third-largest bank group Co-operative (Co-Op), which is listed on the Nairobi Securities Exchange, has entered discussions to acquire 100% of Jamii Bora bank.

Co-op Bank has an asset base of Kshs 450 billion (~$4.5 billion) and 15 million customers while Jamii Bora has assets of Kshs 12.5 billion (~$125 million).

Kitale branch

Jamii Bora’s assets have been on the decline and it is ranked number 36 by asset size with about Kshs 5 billion of deposits and Kshs 8 billion of loans at last reporting. Three years ago it was to raise $12 million from Equator Capital Partners and Progression Capital Africa, and early last year Jamii Bora was linked to being acquired by CBA, but that appears to have been shelved after CBA merged with NIC.

It is owned by Asterisk Holdings, Equator Capital Partners, Jamii Bora Scandinavia, Catalyst JBB Holdings, Nordic Micro Cap Investments (PUBL-AB), has 650 other shareholders and the CEO owns 1% as the largest individual shareholder of the bank.

Jamii Bora had made a few unfortunate forays in the corporate space, and became the largest shareholder of a restructured Uchumi, with about 15% ownership. It also got swept into the Kenya Airways debt for equity swap.

Jamii Bora has about 350,000 customers and with 17 branches. It has a strategic niche with micro, small, and medium enterprises offering LPO financing, lease finance and trade finance services as well as training and meeting space to business owners at its headquarters in Kilimani.

The End of Social Conventions?

For weeks, investors and the business community have been rattled by massive  disruptions to global supply chains, as factories shut down in China. Everyone from BMW and Mercedes to Apple is feeling the squeeze on account of the coronavirus.

But economies and businesses are not the only ones dealing with disruption. 

Social conventions are adjusting in unprecedented ways.

Yesterday, Italy shut down ALL schools and contemplated banning kissing in an attempt to thwart the spread of the coronavirus pandemic.  The kissing ban may not be necessary. Italians are already voting with their feet and keeping their cheeks at a very safe distance from friends, family members and others.

But Italy is not alone.

In France, where “La bise” is an age-old ritual, kissing friends has always been a rather complicated affair, especially for uninitiated foreigners. Rather than shaking hands, waving hello or hugging, you simply  lean forward, touch cheeks and kiss the air while making a sound with your lips. 

Friends in France tell me that ‘La bise’ could soon go the way of the dodo if the virus known as “COVID19” remains unrelenting.

Here in Abidjan in Côte d’Ivoire, as in many other parts of the world, social conventions are rapidly changing. Unlike the French double blise, Ivorienes, conduct a rapid triple kiss. But they too have become extremely economical with their cheek and air kisses. 

At the African Development Bank, where we have rapidly put a coronavirus contingency plan in place, kisses and handshakes are quickly giving way to fist and elbow bumps, or to no contact at all. Many understandably  prefer an adoring “keep your hands to yourself” stance.

Across town, it is not uncommon to see men and women now tap their feet rather than touch cheeks or shake hands. What first started out a few weeks ago as a  comedic viral video in Asia, has since mushroomed into a full-blown practice in some communities. 

I’ve already been offered the foot of friendship’ several times, so I can testify.

Last night, I was having dinner with a colleague at Indian By Nature, a lovely restaurant off of Boulevard de Marseille in the Marcory district that is a favourite hangout for many in the expatriate community.

Three things struck me. 

One, very visible neon yellow alcoholic hand sanitizers were on full display all around the restaurant. You couldn’t miss them.

Second, everyone … waiters, chefs, and owners kept their hands and cheeks to themselves. 

And third, it would seem that the hand-clasped Hindi ‘Namaste’ greeting could soon become a globally preferred and much safer social norm, in a world battling with a pandemic that has already spooked the media and business world for good reason.

Social conventions have always been arcane arbitrary rules and norms that govern behaviours from kissing, hugging, shaking hands, to bowing. In the age of increasing pandemics, it would seem that old conventions are quickly giving way to the new and the not so new.

For now, stay safe and Namaste!

Dr. Victor Oladokun, is the Director of Communication and External Relations, African Development Bank.

KPMG on Geopolitical Risks and Opportunities

KPMG’s Audit Committee Institute series organized a breakfast session in Nairobi today that assessed the risks posed by global events & trends and the potential opportunities that could emerge. The session took place at a time when countries and industries around the world are gripped by concerns and efforts to contain the spread and impact of the Coronavirus.

Sophie Heading, KPMG Global’s Head of Geopolitics, who is on a tour to speak in different capitals around East Africa mentioned that geopolitics now affects the developed world as much as it does for developing countries. She said that US domestic governance is the number one political risk across the world, and that while there has been a shift in leadership away from the US & Europe (G-7 nation) towards China, currently we are in a G-Zero world in which there is no clear leader.

She referenced three distinct areas of technology, trade and trust in which geopolitics could be traced along, and the opportunities they presented for different African countries.

Excerpts

  • Technology: Advances bring geopolitical power and this is likely to spread to other markets – as seen in the battle between the US and China over spectrum (5G), data, and platforms. China is looking to reshape the Sub-Saharan Africa technological space while the US wants to protect its security interests and intellectual property.
  • Trade: The US and China have decided to decouple and go separate ways and other countries will have to choose who to align with. Both are seeking new alliances, investors, partners, suppliers, staff etc. but this is also at a time that other key markets are increasing their regulations in terms of capital, policies, taxes and data, etc. Foreign aid used to be a tool that Western states used to influence economic events in Africa, but with the Chinese model of financing infrastructure being so successful, she expected that there will be a drop in aid from the West as it is no longer seen as being effective.
  • Trust: There is social discontent across the world as young populations feel that government systems are not meeting their needs. This is different in developed nations versus it is in developing ones. But because of their debt levels, most nations now have less policy flexibility to address their internal issues. Also with global growth having slowed down to about 3%, and which may reduce further to as low as 1.5% with the Coronavirus outbreak, any such interventions may widen the social wealth divides within countries.

She said that there is more need to pay more attention to environmental, social, and governance (ESG) issues. This is something that Europe, and the private sector, have championed, but which other governments have not, while the US, China and India have all stepped back on the environmental front.

She cautioned that Nairobi, which is the second-biggest hub in the region for impact investing, but without the Kenya government signalling its interest in championing of ESG issues, may lose out on future investment and client opportunities.

Barclays Kenya changes to Absa at the NSE

Barclays Bank of Kenya completed its transition journey to Absa this week with a confirmation of approval from the Central Bank of Kenya and the change over of its share ticker at the Nairobi Securities Exchange from BBK to Absa. 

This was the conclusion of a three-year journey that has seen Absa rebrand all Barclays operations across Africa under one name after Barclays had reduced its shareholding to under 15% and seen Barclays Africa renamed as the Absa Group.

Geoffrey Odundo the CEO of the Nairobi Securities Exchange (NSE) said that Barclays was one of their key listed banking stocks and its shareholders had seen good returns with Barclays being the best performing bank share last year. The bank had also been a key partner that has helped the NSE with product development and  market development. 

James Ndegwa, Chairman of Kenya’s Capital Markets Authority, said Barclays, which traced its history in the Country to 1916 when the National Bank of South Africa opened a branch in Mombasa, had become the first commercial bank to offer shares to the public in a 1986. He called on the bank to float more shares as he said the NSE had struggled to attract new listings, with daily trading dominated by a few companies.

Jeremy Awori CEO of Absa Bank Kenya said that, as part of one of Africa largest financial groups, they aimed to connect the dreams and aspirations of Kenyans with the financial resources to achieve these. Aside from enhancing financing for SME’s and offering the country’s lowest mortgage rate of 11.75%, he said that Absa which had recently launched the first vertical (debit & credit) cards in Kenya and received a new license for asset management, would soon launch a chatbot, and an online toolkit for small business owners.

Other guests at the event that was held at the Nairobi Securities Exchange included Daniel Mminele, the new CEO of Absa Group, Peter Matlare, the Deputy CEO of Absa Group, and Charles Muchene, the Board Chairman of Absa Bank Kenya PLC.

On it’s debut, Absa Bank Kenya traded 126,800 shares to close at Kshs 13.25.