Category Archives: Diageo

Award Season Part Deux

This is a continuation of a series highlighting some open awards, that may be about to close in the next few weeks.

The Acumen Fund East Africa Fellows Program aimed at entrepreneurs or people working on ground breaking programs with social impact in east Africa and will receive training in leadership , and is modeled around an executive MBA. D/L is 15 April for launch in July 2011

The Africagrowth Institute 2011 SMME Awards that recognizes small, medium or micro enterprise (SMME)companies that are growing sustainably and contributing to economic growth. D/L is 30 June

(For Women): The Anita Borg Agent Award for ladies who demonstrate use of technology to change lives. Sponsored by Google, it has prizes of $5,000 in travel reimbursement to attend the Grace Hopper Celebration of Women in Computing. D/L is May 2

(For Women): The annual Business Daily Top 40 Women Under 40 award series in Kenya that recognizes women achievers in the world of business. D/L is 10 April.

The Diageo Africa Business Reporting Awards that recognize outstanding journalists, editors, blogs, and other media that feature coverage of the African businesses scene. D/L is 27 March.

(For Writers): The Golden Baobab Prize for Literature is a Pan-African literary award. Details here.

The Nestle Prize that recognizes projects in the fields of nutrition, clean water, or rural development that create shared value. D/L is 30 June.

The Shuttleworth Foundation for people ready to commit to undertake social change through innovation. They review applications in May 2011 for September intake.

(For Journalists): The United Nations journalism fellows program Dag Hammarskjöld Scholarship Fund program aimed at developing country journalists with an interest in international affairs and winners get to travel to and report on the United Nations from New York. D/L is 6 April.

(For Writers): The World Bank Essay competition open to people aged 18 – 25 to write about youth migration. Details here but the deadline is tomorrow – 17 March.

EDIT: PIVOT 25 competition for developers in June 2011 with prize money of up to $75,000. Deadline is April 15.

The Nairobi Stock Exchange young investors challenge whose registration period is on-going through April.

Any other awards that can be highlighted here?

DABRA 2011

The 2011 Diageo Africa Business Reporting Awards – DABRA were launched today in Nairobi, Kenya and entries are invited from all African countries for the winners to be announced in London later this year.

The 2011 DABRA’s will feature entries for blogs, podcasts, online content, print, radio and TV entries, published or broadcast between 18 April 2010 and 20 March 2011. Entries can be submitted in eleven categories – ICT feature, finance feature, infrastructure feature, agribusiness / environment feature, tourism feature, use of new media in a story, business news story, business feature story, newcomer, media of the year and journalist of the year and the deadline is March 21 2011.

The 2010 awards attracted 750 entries that were narrowed down to the finalists including this post.

Reading the Bralirwa Tea Leaves

Brasseries et Limonaderies du Rwanda Limited – (Bralirwa) is Rwanda leading beer brewer and which is now offering shares to the public in an IPO. In the spirit of the East African Community, the shares are offered to residents of all member countries (Read that Tanzania).

In the past, cross-border opportunities have been in the case of Safaricom (Kenya) and Stanbic (Uganda) IPO’s as well as with cross-listing of a half-dozen Kenyan companies across the exchanges of Kenya, Uganda, Tanzania and soon Rwanda.

from reading the information memorandum (IM)

On Offer: – 25% of company is for sale; being 128.57 million shares at 136 RwF per share (~Kshs 18) and minimum shares are 100, with units of 100 thereafter
– IPO allocation will be 35% retail (Rwanda and EAC nationals), , 5% employees & distributors, 30% international investors, and 15% to Qualified Institutions (insurance, pensions firms) in Rwanda and in EAC – if oversubscribed Rwanda nationals will get 60% in retail pool
– Runs from 23 November to 17 December and trading begins in February 2011

About Bralirwa: – Current shareholders are the Heineken group with 75% and state of Rwanda with 25%; the shares were split by 5000:1 ratio in November 2010 to facilitate this IPO
– The IPO represents a complete divestment by Rwanda government
-Heineken, the no. 2 brewer in Africa controls the group.
– The company is largest taxpayer in Rwanda – accounting for 12% of domestic tax revenue
– Sales in 2009 were $60 million and with a net profit of $11 million
– Subsidiaries include Coglegas (62% of company exploiting methane in Lake Kivu) and Bramin (50% of a maize processing company)
– Bank borrowing is a fixed interest rate of 12.25% and Bralirwa has unsecured borrowing facilities from Bank of Kigali, Commercial Bank of Rwanda, Fina Bank, Kenya Commercial Bank and Access Bank which have a combined facility limit of Rwf 3.5 billion ($5.8 million)
– Staff benefits for 528 (45) staff listed in IPO include performance-based bonus scheme insurance scheme, subsidized mortgages vehicle leases, medical treatment (free of charge), uniforms for school going kids of employees, school fees for orphans of staff killed in 194 and drinks for employees at special occasions
– The company’s supply chain is via the port of Mombasa for clearing and transportation of inputs, and a 1000 KM along the northern corridor through Uganda which takes 3-4 weeks and they use SDV Transami
– Regional competitors – EABL Kenya (Central Glass) and KIOO Tanzania – provide the company with bottles
– Competitive strengths include the fact that importing beer from Kenya or Uganda is uncompetitive owing to freight, fuel and insurance costs however high energy costs of US cents 22/kkwh are a challenge.

Incentives: – While effective income tax in the country is 32% in 2011, it can drop to 8% (over 5 years) for companies that sell over 20% of their shares to the public
– 2009 divided was 5.1 billion RwF ($8.5 million) or approximately RwF 50 per share (Kshs 6.5)
– No capital gains tax
– Withholding tax is 5% for Rwanda and EAC residents (but elsewhere IM says all dividend subject to 15% withholding)

Market: – Bralirwa market share in Rwanda in 2010 is 94%
– Rwanda has a Population of 10.5 million people, but per capita beer consumption of 9 litres trails Kenya (11 litres) and Burundi (18 litres!!)

Kenya Links: Bralirwa will be Rwanda’s first listed company, joining Kenya’s KCB, which is the only equity, trading on the Rwanda Stock Exchange. Kenyan influence is strong in the form of KCB (collecting agents), Dyer & Blair (transaction advisors), Faida Securities, Renaissance Capital, Muriu Mungai advocates (legal advisors), and the Central Depository & Settlement Corporation – CDSC (registrars). However Kenyan investors may be currently pre-occupied with their own KPLC rights issue and Deacons private placement

Governance & Registry: – Votes at annual general meeting shall by poll and articles explicitly state not by show of hands
– Company may buy its own shares
– All directors signed the IM document
– IM declares none of the directors are involved in bankruptcy proceedings or been convicted under criminal proceedings or been judged by a court to have been fraudulent or dishonest (Ethics Kenyan corporates can learn )
– Articles also state – if a shareholder dies, their survivor, executor and administrators only persons recognized to have an interest in the shares

EABL & Serengeti

East African Breweries is seeking shareholder endorsement of their decision to purchase 51% of Serengeti Breweries of Tanzania. They have sent out a shareholder circular produced by Merrill in London that outlines the nature of their investment.

Partnership: Serengeti will distribute EABL brands exclusively in Tanzania (except duty-free shops). Also Serengeti will brew EABL beers but this has not yet started
– EABL will distribute Serengeti products worldwide (they include Premium Serengeti Lager (PSL), The Kick and Uhuru Peak beers, as well as the non-alcoholic Vitamalt Plus)

(image from Christian site writing about beer)

– The deal is contingent on EABL selling its 20% stake in Tanzania Breweries (presumably to Tanzanians), not closing any Serengeti plants while continuing to produce certain Serengeti beer brands for the next five years. (SABMiller still have a 20% stake in Kenya Breweries)

Payment: The EABL Board estimates that it will make a cash payment of US$61 million (equivalent to Kshs 4.95 billion) to acquire its 51% stake using reserves or bank facilities (no recourse to shareholders). They will retain $10 million to deal with any shortcomings or deviations in concluding the deal.
– Diageo (EABL’s largest shareholder) has the option to in four years time purchase the remaining stake 49% in Serengeti (not held by EABL) for not more than $600 million. The price is higher but the reasoning is that EABL is investing at an early stage while Diageo will be investing at a latter stage when capacity and synergy gains will have been achieved at Serengeti

Partner: Serengeti is the second largest brewer in the country with a 15% share behind Tanzania breweries (EABL’s previous partner) who have a 72% share of the branded brew market. however unbranded beers command a significant majority of the alcohol consumed in Tanzania – and these include fermented drinks and local beers like Kimpumu (millet beer, is that Tz busaa?), cassava beer, Tekawima (maize beer, is that Tz changaa?) which are highly popular. Serengeti has plants in Dar es Salaam and Mwanza and is developing one in Moshi.
– Serengeti ‘s balance sheet has assets of about Kshs 4.4 billion (compared to EABL Kshs 38 billion). Their accounts summarized in the circular show drastic changes when produced under Tanzania GAAP generally accepted accounting principles) and international financial reporting standards (IFRS) mainly from changes to the treatment of bottles and crates (& their deprecation), and revaluation on land & buildings resulting in larger assets and smaller profits under IFRS compared to Tz GAAP
– Current shareholders of Serengeti are Union Brewery holdings, Negus holdings (exiting), Napster group, and V. Mehta (exiting), CMG investment, Mark Bomani and Henry Mosha.