Update on NSE Bonds or bonds listed at the Nairobi Securities Exchanges and other bonds, since the last bond moment in May 2015 http://bankelele.co.ke/2015/05/bond-moment-may-2015.html.
Globally, the bond market is bigger than equities one, and according to the latest CMA Kenya quarterly statistics (PDF), bond market turnover in Kenya has been larger than the equities one since 2009 mainly due to government bonds. In 2016, equity market turnover was Kshs 147 billion (down from 209 billion) in 2015. Bond market turnover was Kshs 433 billion (~$4.2 billion) in 2016 (up from 305 billion in 2015). Turnover has been 99% due to government treasury bonds, while that of corporates is less than 1% of bond turnover in a year – except in the years 2010 and 2011.
If one doesn’t want to buy NSE bonds directly, there are CMA-approved bond funds for investors including the Apollo Bond Fund, Co-op Bond Fund, Diaspora Bond Fund, Dyer & Blair Bond Fund, ICEA Bond Fund, Madison Asset Bond Fund, and the Old Mutual Bond Fund. These fixed income /bond funds total Kshs 1.4 billion (or 2.5% of the 57 billion) of funds management by fund managers in Kenya.
M-Akiba: Following the successful launch of M-Akiba, Kenya’s Kshs 150 million , 10%, tax-free, 3 year bonds that were entirely sold via mobile phone (the minimum investment was Kshs 3,000 (~$30)) another Kshs 4.85 billion (~$47 million) is to be floated in June 2017.
Following the launch of a green bonds program, banks, under the ambit of the Kenya Bankers Association (KBA), have partnered with Nairobi Securities Exchange (NSE) towards raising the country’s first bank-supported climate change-aligned corporate debt instruments in the next six to eight months. The capital flows from the green bonds in Kenya will go towards funding bank clients that require finance for clean and sustainable development projects in the priority areas of energy, agriculture, transport, infrastructure, building and urban planning, and water and waste management…so far, banks operating in South Africa and Morocco are already tapping the green finance opportunities in partnership with local municipalities and development finance institutions. projects. Also in South Africa, the World Bank’s International Finance Corp (IFC) successfully raised a 9-year, 1 billion Rand Green Bond via the Johannesburg Stock Exchange. More on the Kenya Bankers Association Sustainable Finance Initiative.
The Kenya Government finance bill 2017 will give Islamic finance bonds the same treatment as conventional bonds and also allow Islamic finance products in the cooperatives sub-sector.
The Rwanda government is about to issue a 10 billion Rwanda franc (~$12 million), 7-year Treasury bond. It will be issued on May 24 and the funds will be used for infrastructure project and capital markets development. The bonds will be listed at the Rwanda stock exchange and trade in multiple of 100,000 francs (~$120).
Nigeria has asked Goldman Sachs & Stanbic IBTC Bank to advise it on the sale of a debut “diaspora bond” targeted at Nigerians living abroad. – via @kenyanwalstreet
Corporate NSE Bonds:
Centum announced a Kshs 2 billion one year 14.5% note for the Two Rivers Development.
Cytonn is seeking advisors for their medium term notes to raise Kshs 5 billion from the public towards the financing of Cytonn real estate’s (CRE) projects including Taraji Heights in Ruaka and The Ridge in Ridgeways.
On Monday EABL listed the Kshs 6 billion (~$58 million) of bonds at the Nairobi Securities Exchange (NSE) as the second and final tranche of its Kshs 11 billion shilling medium term note program that was launched in 2015. The tranche attracted bids worth Kshs 8.4 billion, representing a 41% over-subscription. The bonds maturing in March 2022 will pay an annual fixed interest of at least 14.17% and the raised funds will go towards optimising operations and restructuring the brewer’s balance sheet. “This is the first corporate bond to be listed on the bourse this year, and we are confident that its success, a subscription rate of 140.9% will open the doors for more listings in the course of this year.” said Nairobi Securities Exchange CEO Mr. Geoffrey Odundo. Citi upgraded EABL as a buy, due to its low price – seeing value even as the beer market was flat. The first half of FY17 (ended December 2016) showed decent volume growth for EABL (+5% YOY) but weak sales growth (-6%) as beer demand continued to shift from mainstream to value. EABL is doing well in spirits but struggling in beer, and Tanzania continues to present a challenge. – Citi report.
A South African credit-only micro-finance institution Real People Investment Holdings which issued a multi-billion bond in Kenya late 2015, has received a negative rating. Global Credit Ratings (GCR) said it had downgraded the primary and special servicer quality ratings assigned, with the outlook accorded as negative.
Transcentury bond holders lost 50% in a restructuring buyout deal.
The African Development Bank had led the establishment of an African Domestic Bond Index and a $200 million African Domestic Bond Fund to deepen liquidity in local bond markets. It has also issued local currency bonds in 11 countries, including Kenya, South Africa, Egypt, Ghana, Nigeria, Botswana, and Uganda. leading the African Union in mobilizing domestic resources required to execute the Bank’s five developmental priorities dubbed the ‘High 5s’. – Light up and power Africa, Feed Africa, Industrialize Africa, Integrate Africa and Improve the quality of life for the people of Africa.
The Africa Finance Corporation issued a US$500 million 7 year Eurobond. The senior, unsecured Eurobond which carries a coupon of 3.875% was priced to yield 4.000% and matures in April 2024. It attracted orders of US$2.4 billion, representing about 5 times over-subscription from 231 investors. The bond will be listed on the Irish Stock Exchange. The Eurobond was distributed to investors in Europe (29%), United States (25%), United Kingdom (24%), Asia (18%) and the Middle East (4%). Citi, J.P. Morgan, MUFG and Standard Chartered Bank acted as Joint Lead Managers and Bookrunners for the U.S. dollar-denominated issue.
FSD Africa (Financial Sector Deepening Africa) and KfW Development Bank will invest £15.3 million (~$19.8 million or Kshs 2 billion) in the African Local Currency Bond Fund enabling it to step up its engagement with developmentally important industry sectors such as green energy and housing and take on investments in fragile and conflict-affected states. ALCBF is managed by Lion’s Head Global Partners (LHGP) Asset Management LLP.
Bonds, Loans & Sukuk Africa “the continent’s only Pan-African debt event” takes place on 13th & 14th March 2018, at the Cape Town International Convention Centre.
This week Centum investments announced a Kshs 2 billion one year 14.5% note for the Two Rivers Development Limited – which is 58% owned by Centum, 39% by Avic, and 3% by ICDC.
Two Rivers had a facility of Chase Bank to finance infrastructure developments, which they had drawn on partially when the bank closed. They also had Kshs 650 million of deposits at Chase.
Two Rivers owns 50% of Two Rivers Lifestyle Centre and 100% of phase two of Two Rivers, apartments, and offices. 50% of the mall, the largest in Sub-Saharan Africa (i.e. outside South Africa) which opened on Valentines’ Day was sold to Old Mutual in 2015 for Kshs 6.4 billion. Two Rivers Development was valued at Kshs 41 billion in March 2016.
To pay for the retirement of the bond, they are selling 11 plots of land (some residential, some mixed use, one for a hotel) which have a combines market value Kshs 6.6 billion, and a mortgage value of Kshs 5.6 billion. Interest will be paid at maturity, and the note is guaranteed by Centum Investments.
The Centum investor briefing (PDF) for 1Q2107 identifies education, leasing, and agribusiness as key areas of growth at Centum in the future.
Three companies that had their year-end in March 2016 have just published their annual reports which are now found on their individual websites. On Thursday both Centum and Kenya Airways boards will face their shareholders at the annual general meetings (AGM’s). Centum is ending a 9 year dividend drought, and Kenya Airways which had another a record-breaking loss, now believes the worst os now behind them. Meanwhile Safaricom will create 6 ‘mini-Safaricoms’ that operate in six Kenya regions and create more segment products like Blaze.
Has a (massive 192) page annual report (up from 160 pages), and the company has 37,325 shareholders.
Will pay Kshs 665 million in dividend (1/= per share) ending a long dividend drought (since 2009)
Significant joint ventures are Amu Power (51%) and Two Rivers Lifestyle Center (50% – following a partial disposal). Old Mutual advanced Kshs 5.7 billion to Two Rivers with the debt convertible to 40% in the equity of Two Rivers, with shareholders loans previously held by AVIC and ICDC offset against the consideration. Further developments at Two Rivers include luxury apartments, a five-star hotel and residences, a healthcare facility and additional structured parking. Property owners who have purchased plots at Two Rivers include South Africa’s City Lodge Hotel group who are establishing a three star hotel; and Victoria Bank, who are constructing an office block.
The completion of the transaction on disposal of interest in Two Rivers and the acquisition of additional interest in Kilele, Sidian Bank and Almasi resulted in a net gain on disposal recorded in equity of Kshs 2.5 billion.
The half-year report will be available online to shareholders who register.
NAS, where they own 15% will continue diversifying its income streams by launching two Burger King restaurant franchise outlets in Kenya.
Will enter the healthcare business with a significant investment this year
Centrum plans to build 20 schools across Africa in the next three to five years, as part of a tripartite consortium with SABIS and Investbridge Capital. The consortium has acquired a suitable site along Kiambu Road that will host the first SABIS school in Sub-Saharan Africa, offering both 8-4-4 and K-12 education curricula with a capacity of up to 1,700 students.
In agri-business, Centum incorporated Greenblade Growers and acquired a 120 acre farm in Ol Kalou that will be used for value addition and will have a capacity to process 10 tonnes of fresh produce per day, to key export markets of Netherlands and later the UK.
Energy: to date, the company has invested Kshs 3.1 billion in the development of two landmark projects – Amu Power and Akiira One Geothermal.
At the AGM, Centum Chairman James Muguiyi, retires after 13 years and also the Principal Secretary – Ministry of Industry, Trade and Cooperatives, (representing the Kenya government) will retire from the board and not seek re-election.
Shareholders will be asked to approve the incorporation of Zohari Leasing, Rea Power Company, Le Marina (Uganda) and Two Rivers Development Phase Two. Also that the acquisition of 100% shares of Vipingo Estates and an additional 29% of Longhorn Publishers be ratified (they paid Kshs 393 million for the new shares).
Shareholders will also approve a name change from Centum Investment Ltd. to Centum Investment PLC.
Shareholders will approve an indemnity of the company directors .. against all relevant loss including any liability incurred by him (her) in defending any civil or criminal proceedings.. the directors may decide to purchase and maintain insurance, at the expense of the company.
Kenya Airways (KQ)
The report is 149 pages (up from 130 pages) and KQ has 78,577 shareholders (a slight increase as their share price has dipped)
The Group operates domestic flights and flies to 53 destinations in Africa, Middle East, Asia and Europe.
After their 31 March 2016 year-end, they received Kshs 10 billion from the Government of Kenya, (being the second and final tranche of the KShs 20 billion (US$ 200 million) bridge financing that has been on-lend from African Export–Import Bank (Afreximbank), and they sub-leased two Boeing 787 & three Boeing 777-300 aircraft as part of the turnaround initiatives in order to improve its liquidity position.
JamboJet tax losses stood at Kshs 856 million, and Kenyan income tax laws allow for carry forward of tax losses for a maximum period of 10 years.
Short term facilities were drawn down from Equity Bank, Jamii Bora Bank, Kenya Commercial Bank, Commercial Bank of Africa, I & M Bank, Chase bank, National Bank of Kenya, Diamond Trust Bank, Co-operative Bank, NIC bank and Eco bank. During the year, the airline negotiated for extended repayment periods for all short-term loans ranging from 4 – 7 years except for Kenya Commercial bank. The Government of Kenya Loan is at 10.20% far much more than previous financing that was at 4-7%. Citi JP Morgan Kshs 78 billion is at 1.5% , Afrexim Bank 23 billion is at 4%, while other short-term Kshs 22 billion is at 9%
In addition to the Kenya government, KLM, and IFC, top 10 shareholders now include Mike Maina Kamau, Vijay Kumar Ratilal Shah, Gulamali Ismail and Galot International.
They implemented a business class upgrade system in January 2016, under which economy class passengers can bid & buy upgrades to fly on business class.
A total of 63 bird strikes were reported in the year (down from 77 last year).
The report is 172 pages (up from 136 pages) and the company has 600,000 shareholders (down from 660,000).
At the AGM a few weeks ago, shareholders approved payment of a dividend for Kshs 0.76 per share for 2016 and also a special bonus dividend of Kshs 0.68 per share.
According to a True Value report (they commissioned it, and it was done by KPMG), the total value the company contributed to Kenyan society in FY15 was Kshs 315 billion and they sustained over 682,000 jobs.
Bonga points totaling Kshs 3.2 billion are a liability to be converted to revenue as customers utilize their points
Lent Kshs 500 million to Safaricom money transfer services, a subsidiary that derives revenue from international money transfer services.
The license fee for M-pesa dropped from 10% to 5% from August 2015.
Donated Kshs 414 million to the Safaricom foundation
Spent Kshs 9.3 billion on the National Police Service communication project that’s now 92% complete.
They now require all new business partners to sign up to the “code of ethics for businesses in Kenya” during the on boarding process, and 269 companies have signed this.
They were fined Kshs 157 million by the Communications Authority of Kenya for not complying with its quality of service thresholds.
Centum Investments, which recently announced a record profit, and the end of a seven-year deliberate dividend drought, has been running ads in the newspapers and online, asking shareholders to register their names & details via SMS to ensure that they get their payments on time.
At the same time, Centum has also published a list (PDF), on its website, of shareholders who have not claimed their dividends. The list has about 9,000 names, and that’s a shocking stat, considering that Centum has about 37,000 shareholders.
No shareholder likes to lose out on a dividend or an investment. And regular shareholders who attend AGM’s have also been aware about resolutions at companies to comply with a legal requirement to surrender unclaimed assets, including dividends, to the government.
Almost all large public companies, except those which listed recently, list & highlight their liability from unclaimed dividends (owed to shareholders) for many years in their annual reports. But if 25% of Centum shareholders, have not claimed their dividends, totaling Kshs 78 million after almost 8 years, it raises many questions about why this situation exists. But one reason could be that shareholders have been unable to receive their dividends because some companies and their registrars have made it very difficult for shareholders to prove, claim and receive their rightful dividends.
$1 = Kshs 100
A registrar is an institution, responsible for keeping records of shareholders..and when an issuer needs to make dividend payment to shareholders, the firm refers to the list of registered owners maintained by the registrar.
Centum ads say the registration is free, but normal SMS costs seem to apply.
Various deals in the last few weeks and months in East Africa
Barclays sold 12% of Barclays Africa for $873 million, reducing its’ stake to 50.1%. In Kenya, the Central bank said their feel like `flower girls’ in the Barclays exit for which Barclays says it has attracted ‘over 100’ offers.
At Chase Bank suitors are lining up to buy the bank that’s now out of receivership. KCB and QNB of Qatar are tipped as leaders, but there are as are a few other mid-size banks said to be interested.
Cooperative Bank plans to do a joint ventures to expand into Ethiopia and Rwanda following in the model that was succesful in South Sudan. This will be in partnerships with co-operative societies in those countries.
Credit Bank is seeking an additional Kshs 5.4 billion from an investment group. The bank is wooing Fountain Enterprises Programme (FEP) to buy to 70% of the bank via a private offer priced at Kshs 180 apiece and limited to members of the chama (investment club) which has a large following in the UK and US. (via Biz Daily)
CBK has rejects takeover bids by 7 suitors of collapsed Dubai Bank, as the proposed investors have not provided bona fides.
Equity Bank is completing the acquisition of 79% of Congo (DRC), the 7th largest bank – ProCredit Bank for w Africa. It has 170,000 customers and only about 4% of their 85 million citizens have bank accounts.
The Mwalimu SACCO/Equatorial Commercial Bank combination is going to be called Spire Bank (via Mwirigi)
Fidelity Bank is set to receive an investment from Duet Private Equity who will pay Kshs 1.9 billion to buy into the bank (no shareholders are exiting).
I&M is set to acquire 100% of Giro bank in a deal in which the owners of Giro will get 5% of I&M. Also CDC is set to become the fourth largest owner of I&M after it agreed to fully buy out DEG and Proparco, who hold an 11% stake. The Competition Authority of Kenya has authorized the acquisition 65% of Burbidge Capital by I&M.
Jamii Bora is looking to raise an additional Kshs 3.8 billion, comprising 800 million of debt and Kshs 3 billion from a strategic partner/investor.
Kenya Government: The National Bank of Kenya (NBK), Consolidated Bank and the Development Bank of Kenya will be consolidated into one or two institutions to make them stronger in coming months, to make them stronger, Treasury secretary Henry Rotich has said.
The Kenya government also plans to create Biashara Bank form merging the Youth, Women’s & Uwezo enterprise funds) to cater for start-ups
Tanzania’s Bank M is set to acquire Kenya’s Oriental Commercial Bank, and be listed at the NSE. Bank M, a recent winner of best corporate bank in Tanzania has set up a holding company in Kenya (via Kenyanwalstreet)
Beauty & Pharma
The Competition Authority authorized the acquisition of 100% of Canon Chemicals by Godrej East Africa Holdings
Earlier the Competition Authority cleared the acquisition of the brands of Sigoria t/a Beuty Plus East Africa by Flame Tree Africa – this was part of the acquisition of the ‘Suzie Beauty’ brand and inventories for Kshs 45 million.
Food & Beverage
Centum made an offer to buy shares from some minority Almasi bottling shareholders.
The Competition Authority authorized the acquisition of Sab Miller by Anheuser-Busch Inbev.
Naked Pizza Kenya has been bought out by Pizza Hut (more here)
Coca-Cola Company announced a new streamlined international structure. The company will form a Europe, Middle East and Africa (EMEA) Group, consisting of the business units that currently make up the Europe and the Eurasia and Africa Groups. And, in Africa, two business units will be reconfigured to more closely align operations with bottling operations on the continent, with the formation of a new South and East Africa business unit and a West Africa business unit. (Edit)
Finance, Law, & Insurance
Helios did a deal for Crown Agents key units marking the first time an African-managed fund acquired a UK financial institution.
Ringier Africa Deals group (ex-Rupu) acquired Nigerian online shopping platform DealDey
The Competition Authority authorized the acquisition of an additional 16% of AON Kenya Insurance Brokers Limited by AON UK Holdings giving it a controlling interest of 56%.
The Competition Authority authorized the acquisition of 63% of First Assurance Company by First Assurance Holdings on condition that the merged entity shall retain all 120 employees of First Assurance Company
Resolution Insurance was set to raise Kshs 2.5 billion in a series of transactions that will see new investors join private equity firm Leapfrog Investments in the list of the company’s shareholders (via Biz. Daily)
Two of the oldest Kenyan law firms, Daly & Figgis (1899) and Inamdar & Inamdar (1926) will now practice as Daly & Inamdar.
Plum LLP plans to buy a 23% of insurer British-American Investments(Britam) that had been seized by the government of Mauritius from a disgraced businessman in 2015. (Edit)
Logistics, Engineering, & Agri-Biz
Google agreed to buy a 12.5% stake in Africa’s largest wind project, Kenya’s Lake Turkana, from Danish wind turbine manufacturer Vestas Wind Systems A/S. The 310-megawatt Lake Turkana wind park, controlled by Lake Turkana Wind Power, is set to produce about 15% of Kenya’s electricity needs (via Marketwatch)
The Competition Authority authorized the acquisition of 100% of Schreurs Naivasha by Kongoni River Farm.
The Competition Authority authorized the acquisition of 49% of, and or 100% preference shares in, Seruji Limited by QG African Infrastructure 1L.P.
The Competition Authority authorized the acquisition of assets of Lima by Panafrican Equipment – (Biwott)
The Competition Authority authorized the acquisition of 51% Transmara Sugar by Sucriere Des Mascareignes
The Competition Authority authorized the acquisition of the assets of Afro Plastics Kenya by Ashut Engineers.
Finlays Horticulture Kenya was granted approval by the Competition Authority to buy Skytrain Limited, which provides the essential service to cargo airlines at JKIA (via Biz. Daily)
Swiss logistics giant Panalpina completed the buyout of a majority stake in Nairobi-based air freight forwarder Airflo for an undisclosed amount. (via Biz. Daily)
Craft Silicon will launch the Little Drivers service starting with 2,000 drivers — formerly of Easy Taxi, which exited the Kenyan and African markets last month after a decision by one of its investors, American firm Goldman Sachs, to direct all its investments towards Uber. (via Biz. Daily)
A British engineering firm that designed the iconic Burj Al Arab hotel in Dubai has acquired a Kenyan company, making Nairobi its African headquarters for property, energy and infrastructure deals. Atkins will build on the strong regional market presence of Howard Humphreys East Africa to grow its consultancy business lines including design, engineering and project management. (via Biz. Daily)
TransCentury Group reached a settlement with its majority convertible bondholders, reducing the debt from $80M to $40M as the company has secured an equity injection of $20M from Kuramo Capital, bringing the outstanding bond debt to USD 20M. (Edit)
Real Estate & Supermarkets
The Competition Authority authorized the acquisition of 100% of Vipingo Estate by Centum Investments.
The Competition Authority authorized the acquisition of a further 40% of Two Rivers Lifestyle Centre by OMP Africa Investment Company (Old Mutual.) Also at Two Rivers, Carrefour has signed a 7-year lease that guarantees some exclusivity.
The Competition Authority authorized the acquisition of Yako Supermarket by Nakumatt Holdings, on condition that the merged entity shall retain all two hundred and eighty three (283) employees of Yako Supermarkets.
Suppliers adopted Uchumi’s revival plan that included convert half of the debt owed to them into equity but Uchumi’s largest shareholder, Jamii Bora Bank, said they were duped in investing in the chain two years ago.
Botswana supermarket chain Choppies finally succeeded in its quest to enter Kenya’s retail space through the acquisition of Ukwala
Telecommunications, Media & Publishing
The Competition Authority authorized the acquisition of 70% of Telkom Kenya by Jamhuri Holdings (Helios)
Times Media Group paid a lot for half of the Radio Africa Group, but it mostly went to settle their debt that was $11 million (via #JKL #thismanpike)
Centum increased its stake in Longhorn to 60% in a recent rights issue (it was 31% before).
Bamba TV and Standard Group signed a Kshs 300 million partnership that will see KTN acquire a 50% stake in Lancia Digital Broadcasting, the trademark owner of Bamba TV. (via The Star) (Edit)
Trace TV acquires African VOD Service Buni.Tv which is one of the 3 largest VOD services in Africa alongside Iroko TV and Nasper’s Showmax (Edit)
Longhorn Publishers is set to acquire 74% Law Africa Publishing for an undisclosed price. (Edit)
The Competition Authority authorized the acquisition of 30% of KEG Holdings by Africa Bovine.
The Competition Authority authorized the acquisition of 51% of Universal Corporation by Strides Pharma (Cyprus)
The Competition Authority of Kenya authorized the acquisition of shares in Stellar Investment Holdings by Catalyst OCL Investment LLC , pursuant to the provisions of a convertible debt instrument.
Marriott International have rebranded Protea Hotels to capitalize on the travel aspirations of Africa’s growing middle class and the increased presence of international hotel brands in Africa. The brand is now officially Protea Hotels by Marriott (Edit)
GardaWorld acquires KK Security: The international protective service firm had added KK Security to its global hetwork which now includes 18 African countries, up from 11 before. (Edit)
Tigo to buy out of Airtel Kenya?
Gossip blog Ghafla Kenya gets acquired by Ringier (via Techweez)
An investment banker’s worst nightmare .. buyers in $ billon deals didn’t use financial advisers 26% of the time.
African private-equity deals shrink to lowest level in three years as funds reach record closes?!
Africa private equity exits reach a nine-year high?!
UK business aviation feels that a Britain split from the European Union would be a very bad thing.
The African Development Bank is putting up a fund with $5 billion, specifically to incubate ideas from young Africans.