Category Archives: actis

I&M Bank Rwanda IPO Launched

Yesterday, I&M Bank Rwanda launched an IPO share sale that will result in the listing of the bank’s entire share capital at the Rwanda Stock Exchange. The Government of Rwanda will sell its entire 19.81% in the bank as part of its divestment from public enterprise policy, and through the sale of 90 million shares of the bank, they hope to raise 8.9 billion francs (~$10.8 million), which will go to the Rwanda government after deducting expenses.

Quick Notes

  • Minimum is 1,000 shares at RWF 90 per share, therefore the cost of investment is RWF 90,000 (~approx $109 or Kshs 11,350). Further purchases are in blocks of 100 shares.
  • Opens 14 February, closes 3 March 2017.
  • Allotment plan: 40% of the shares are reserved for international investors and 60% for domestic investors. The domestic pool is further broken down with 25% reserved for East African nationals, 5% for employees of the bank, 15% for Rwanda institutional investors (QII’s) and 15% for other East African QII’s.
  • The Plan is to list and trade the shares, in Kigali, as ‘IMR’ from 31 March 2017.

IN 2015, I&M Bank Rwanda (IMR) was the 3rd largest bank in Rwanda by assets (RWF 171 billion), behind Bank of Kigali (RWF 561 billion), and Cogebanque (RWF 178 billion). Other banks were KCB Rwanda (RWF 149 billion) and Equity Rwanda (RWF 93 billion). For 2016, IMR had assets of 206 billion francs in 2016, loans of 111 billion and deposits of 134 billion and a pretax profit of 8.4 billion francs. It’ has 17 branches, and plans to build a new headquarters ($25M) and install a new IT system ($4M). It’s business is in four mains sectors – construction, wholesale & retail, manufacturing, and agriculture.

I&M Bank Rwanda (formerly Banque Commerciale du Rwanda Limited – BCR) is the Rwanda subsidiary of I&M Holdings Limited. I&M Holdings listed on the Nairobi Securities exchange in June 2013. It is the oldest financial institution with over 50 years of existence and the first bank in Rwanda, having been incorporated in 1963Actis recapitalized the bank and became an 80% owner in 2004 and sold that 80% stake in 2012 to I&M (55%) and the governments of Germany and France who, through their development finance institutions of DEG and Proparco respectively, each retain 12.5%.

Odd points

  • IMR has entered three swap snap transactions with the National Bank of Rwanda (regulator) in which I&M has given $8 million to the regulator in exchange for local currency. I&M will receive 2% interest and pay the NBR 8% interest in local currency.
  •  In Rwanda, bank directors sign conflict of interest statements?!

More details in the prospectus from Dyer & Blair Investment Bank, who, along with BARAKA Capital Limited Uganda, are Lead Transaction Advisors. BARAKA Capital Rwanda is the Lead Sponsoring Broker.

EDIT

  • @imbankrw Feb 21Good News! The Sale of @imbankrw shares has been extended to March 10, 2017. Do not miss out on this opportunity. Apply Today. #OwnYourBank
  • @imbankrw 3 minutes ago Equity Credit offers an opportunity to our customers who need financing tobuy shares http://www.imbank.com/rwanda/loans/equity-credit/ … #OwnYourBank (I&M is financing purchase of shares, up to 70% of the value of shares, up to 15 million Rwf)

1 KES = 7.93 RWF and 1 USD = 823 RWF

Nairobi Mall and Supermarket Moment

A research report by Knight Frank notes that Nairobi has about 470,000 square meters of shopping center space under  development underway and is one of the five largest cities in Africa (excluding south africa) in that regard (it currently has 391,000 square meters of shop space).

Knight Frank Shop Africa Nairobi spotlight

Knight Frank Shop Africa Nairobi spotlight

Knight Frank notes that, aside from Actis (the pioneering UK investor), most of the developers and landlords of Nairobi’s shopping centres are local Kenyan property owners.

A second Buffalo Mall is  to be built in Eldoret. This comes after the Pivotal Fund acquired 50% of Buffalo Mall Naivasha.

Carrefour: This week opened their first store in East Africa. a 60,000 square foot hypermarket at the Hub in Karen, one of 57 stores that have opened there. Carrefour will be the anchor tenant and are run under franchise of Majid Al Futtaim Retail of Dubai.   EdIt – Carrefour Kenya have an app for shoppers 

(The) Game operated by Massamart. in which Walmart has a majority stake, opened at Garden City Mall as the anchor tenant. 

Khetia:  are in the midst of a Kshs 1  billion expansion in western Kenya. They plan to open up stores in Kisii, Busia and Kericho, each of which requires Kshs  200 million.

Nakumatt: Just launched their 59th branch in Kakamega – the Nakumatt Midtown Supermarket. It was remodeled after nakumatt acquired three supermarket stores in Western Kenay (Kakamega, Bungoma, Busia) from Yako Supermarkets in a Kshs 260 million investment program. They have also added new stores like  Sports Planet departmental  at the reopened Westgate mall. 

Naivas The ownership of widely admired chain is subject to an inheritance court case. 

Sarit Center: Nairobi’s first formal mall is undergoing an expansion program to add more stores.  

Society Stores: An offshoot of a Khetia family member  – Trushar Khetia, hopes to grow the store brand. He says that they had the first chance to buy out Ukwala, but it wasn’t backed by the board and the deal fell through.

Two Rivers backed by Centum and built by Avic will also house a Carrefour store at the 62,000 square meter site in Ruaka that sits on 100 acres.

Tuskys: is focusing this year on staff welfare and streamlining customer service delivery through deployment of  digital platforms for e-commerce. Shareholders are also trying to settle issues in readiness for a listing at the NSE by 2018.

Uchumi:  Is under new management and, once again, in search of a restructuring deal that involves working with suppliers, sale of assets (such as Ngong Road and Langata branches) and a share sale to a new anchor investor for about Kshs 5 billion. This has been complicated by some suppliers who sued to wind up the company, but talks are ongoing with the government, and it  appears that majority of the  suppliers will agree to convert Kshs 1.8 billion of the dent owed to them into equity at Uchumi.

Ukwala was bought by Choppies of South Africa. The deal was completed after an tax agreement deal  was reached with the Kenya Revenue Authority who were demanding back taxes from Ukwala.  Ukwala had admitted to owing the taxman Kshs 101 million, but appealed the additional Kshs 845 million that KRA was demanding. 

Finally, suppliers,  have complained about delayed payments by supermarkets retail chains. This was highlighted in letter from the Kenya Association of Manufacturers (KAM) to Tuskys, Nakumatt and Naivas.

$1 = Kshs 100

M&A Moment: BritAm, Centum, other East Africa deals

Britam and Centum have had a busy few weeks.

BritAmEA (i) Had an oversubscribed bond at the NSE that saw them raise Kshs 6 billion (ii) Completed the acquisition of 99% Real Insurance – giving them access to Mozambique, Malawi and Tanzania (the Competition Authority approved this deal with a caveat that they retain at least 85 of the 105 employees of Real) (iii) Established an office in Rwanda (IV) Britam will also pay about Kshs 2 billion for Equity’s 25% in Housing Finance.

Centum (i) Are proposing to acquire an additional 66% shares in K-Rep Bank (ii) Are seeking shareholder approval to create a Mauritius company, set up Kings Beverage, Bakki, Shefa subsidiaries, and also ratify the acquisition of 73% of Genesis & 30% of Broll (real estate) (iii) Ceded 42% of Two Rivers venture to investors at Kshs 6 billion, (iv) Are still in the running for Rea Vipingo offering Kshs 75 per share, over the Rea bid of Kshs 70 per share to other shareholders (v) Key Centum shareholder, Chris Kirubi said he wants to be a dollar billionaire

Other recent deals include

Airlines
  • Kenya Airways to give Tanzania’s Precision Air a $10 million bailout. 
  • Waiting to see who will officially be FastJet’s partner will be for their renewed push to enter the Kenyan aviation market.
  • Hong Kong listed Frontier Services Group completed acquisition of 49% of Phoenix Aviation for $14 million (Kshs.1.2 billion).
Autos
  • Al Futtaim Auto to compulsorily acquire the remaining 8.4% of CMC shares from minority shareholders
Banking & Finance
  • Actis to acquire Compuscan, the largest independent credit bureau in Africa & run it as Credit Service Holdings with Michael Jordaan as chair.
  • Diamond Trust has an ongoing rights issue to raise Kshs 3.2B ($42 million) from shareholders at Kshs 165 per share.
  • Ecobank got investment bank approval in Kenya following their buyout of Iroko buyout and will target oil & gas, infrastructure & commodity deals. 
  • KCB is now holding company, and is said to be interested in buying an insurance entity
  • (edit) Kenyan Women Holdings will sell 25% of the shareholding of Kenya Women’s Finance Trust to their 600,000 members between September and October 2014. 
  • NIC Bank to have a corporate bond and rights issue during 2014
  • Atlas Mara to buy 77% of Development Bank of Rwanda 
  • National Bank shareholders to vote on if money from their upcoming rights issue can go to pay off preference shareholders
  • Western Kenya politicians have support the creation of a new Mulembe Investment MFI bank, that will be part-funded by counties to serve 5 million people. 
Building & Cement
  • Holcim is set to acquire effective control of Kenya’s Bamburi Cement as part of the planned merger between Holcim and Lafarge. “The parties do not wish to see any change to the status of Bamburi as one of Kenya’s leading industrial companies listed on the NSE.”
Food & Beverage 

  • Danone bought 40%of Kenya’s dairy processing company Brookside which had revenue of Kshs15.4 billion (€130 million) i in 2013. It was previously 90% owned by the Kenyatta family with Abraaj owning 10%. Brookside collects milk from 140,000 farmers and has 3,000 employees.
  • Distell of Stellenbosch South Africa got privatization approval from the Kenya government to acquire of 26% of KWA Holdings E.A. that was previously owned by ICDC  for Kshs 860 million (about $10 million)
  • Kenya Wines will also their Kshs126 millionUchumi Supermarket stake.

  • See Centum (above)
  • South African food company, Tiger Brands has dropped plans to acquire Kenya firms Rafiki Millers for $25m.

Health & Beauty

  • Procter & Gamble merged India, the Middle East and Africa into one IMEA region to improve execution 

Hotels & Tourism
  • The Kenya Competition Authority approved the acquisition of 100% of Fairview Hotel by City Lodge Hotels.
  • Kempinski Hotels, Europe’s oldest luxury hotel group has officially taken over Hôtel Des Milles Collines in Rwanda.

Insurance 
  • See Britam above
  • CIC had dropped plans for a rights issue in favour of a corporate bond
  • Liberty Kenya proposed to pay a Kshs 1/= scrip dividend, but shareholders can opt for cash.  
  • UAP had an oversubscribed bond that raised Kshs 3.1 billion against a target of 2B. 
  • Africa Report magazine listed insurance companies as the top performers at the NSE in 2014 (see table).
Legal
  • Kenyan firms Hamilton Harrison & Matthews (HHM) and Oraro & Company have announced they are to merge pending regulatory approvals.
Media & Communications
#RIPCareyEaton

  • The $35 billion Publicis-Omnicom merger fell apart. The deal to combine the world’s largest advertising company was foiled by myriad difficulties, including who would run the new firm. The collapse of the deal is a win for WPP CEO Martin Sorrell, who campaigned aggressively against the merger of two of his biggest rivals.
  • A few months after his big deal with One Africa Media consolidating operations in Kenya, Uganda and South Africa, co-founder, Carey Eaton, was killed in Nairobi. See some tributes to Carey Eaton. The Economist also ranked the largest internet companies in Africa and One Africa Media topped this at $80 million, followed by Mobile Planet ($15 million) and Kopo Kopo ($10 million) 
  • passed away – some tributes 
  • Scangroup agreed to acquire a majority stake in a pan-African firm – the Experiential Marketing Group (EXP) 
  • The  Safaricom and Airtel buy out of (and split of) Yu appears to have stalled. 
Oil & Mining
  • In the last year, Tullow Oil and Base Resources have paid the Kenya government $22 million and $16 million respectively . 
  • Tullow received a  judgment in its favour over capital gains tax payments that Tullow had made onHeritage’s behalf to the Uganda Revenue Authority. In August 2013, Tullow received $345.8 million from Heritage in satisfaction of this High Court judgment.
  • Swala Oil & Gas completed their Tanzania IPO which was oversubscribed and will now proceed to list on the Dar es Salaam Stock Exchange (“DSE”). The placement of 13.3 million shares with 1,869 new and existing shareholders also allowed Swala to keep excess funds from Dar IPO.
Transportation & Utilities
  • Transcentury sold their 34% in Rift Valley Railways to Citadel Capital for $43.7M recovering their cash, but below fair value..they cited the delayed turnaround of the railway consortium as reason for the sale
  • Actis confirmed sale of its stake in Umeme for $85.5 million to 20 institutional investors including Investec and Uganda’s NSSF
  • Kone Kenya acquired the business of Marryat & Scott, an elevator installation company.
Other Peoples Money
  • The Australian Navy seized heroin worth $296 million from a wooden boat off  the Kenyan coast.
  • The Karen Blixen house was put up for sale for $9.5 million 
  • Kenya’s NSSF had $600 million (Kshs 51 billion) in quoted securities as at June 2013 topped by Bamburi EABL and KCB.
  • The Competition Authority fined Tusker Mattresses (Tuskys) and Ukwala supermarkets Kshs 5.3 million while allowing them to continue pursuing a supermarket consolidation deal.

Shares Portfolio August 2012

Comparing to last quarter and a  year ago.   
The StableBarclays ↑
Bralirwa (Rwanda) ↑
Diamond Trust Bank ↓
East African Breweries (EABL) ↑
Equity Bank ↔
Kenya Airways ↓
Kenya Commercial Bank (KCB) ↑
Kenya Oil Company (Kenol) ↑
Safaricom ↑
Scangroup ↑
Stanbic (Uganda) ↓
 
Review 
The portfolio, excluding new shares, is up 11% since May 2012 while the Nairobi Shares Exchange main index is up 6% over the same period.
  • Best Performer: Kenol (up 23% in 3 months), Bralirwa 14%)
  •  Worst Performer: Diamond Trust (down 8% in 3 months), Kenya Airways (after the rights issue that yielded
  • In: Equity Bank – read a recent  Equity Bank analysis report.
  • Out: Britak, Uchumi
  • Increase: Took up all of the Diamond Trust Bank rights
  • Decrease: none
  • Unexpected gains/losses: Kenol suspension was listed, Bonus share of Stanbic Uganda bonus was issued (4 new for every existing share)
  • Looking Forward to more listings like the one announced today from Umeme – a monopoly electricity distributor from Uganda that is 100% owned by Actis,  and which plans to have an IPO in Uganda and Kenya later this year.

Nairobi Business Park Expands

At the entrance of the Ngong Racecourse is a set of office blocks that blend with the trees and grass of the racecourse comprise the Nairobi Business Park. It is part of the $300 million portfolio of Actis.
The first phase of the park was completed in 2004 and  has attracted ‘blue chip’ tenants including DHL, Finlay, Nokia, BAT, and Coulson & Harney advocates. The next second will be 15,000 sq. metres of buildings to house cafes, restaurants, banks fitness centers, shops and is budgeted to cost $22 million.

 The investors
aim for the Park, which overlooks the race track , golf course and forest complex to comprise green buildings that meet US green building council standards through measures like water recycling, rain water harvesting, solar lighting , and even eliminating air conditioning. Also to keep the green look, the Park which has one of the most generous parking rations per occupant, will have parking spaces underground. 

The Park is expected to benefit from the future expansion of Ngong road to dual carriage way and completion of a bypass road that is about 2KM away (by Lenana School) – and when all the road are done, a drive to Jomo Kenyatta airport could take 30 minutes, and Westlands, 10 minute drive. 

 Actis ,
which developed both phases of the Junction mall and recently acquired 32 acres from East Africa Breweries on Thika Road to develop Garden City, with the largest mall in East Africa, also own a majority stake in the Mentor Management that develops, sells and manages properties from concept through to investor exit.  Other partners in the Park are the Association for the Physically Disabled of Kenya and the Jockey Club of Kenya.
 
Separately,  an article in the Star last week about the lure of office space in the suburbs, noted that the current cost of construction for high-end office buildings in Nairobi is about Sh60,000 (~$705) per square metre and that developers could yield a 100% return on sale or rent.