Category Archives: FastJet

FastJet Finally Get Kenya License

The three-year journey to get low-cost airline FastJet into Nairobi now seems to be nearer to its goal following the licensing of FastJet Kenya to operate domestic air services between Nairobi and Mombasa, Kisumu, Eldoret, and Wajir.

However, they were not granted other rights they had applied for to fly from Nairobi to international destinations including Lusaka Harare Lilongwe and Entebbe that they serve from their current base in Dar es Salaam, Tanzania.

Still, it’s a start. In the three years since they were established JamboJet (one by Kenya Airways) has established itself as a reliable true low-cost carrier in the country, while one of the main local airlines Jetlink has since gone out of business, leaving Fly540/Fly-SAX as the only other domestic airline with regular services to the main airports around the county. JamboJet also have designs on flying to neighboring countries, but an approval discussion was deferred in their case.

Sunday, November 08, 2015

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.

Lady Lori & FastJet?

The latest round of airline license applications has a curious addition with Lady Lori previously known as a successful helicopter charter company applying for a variation of their current license.

Lady Lori are seeking to introduce domestic flights between Nairobi and Mombasa as well as to obtain rights for international routes from Nairobi to Dar es Salaam, Juba, Kigali, Entebbe, Maputo and Lusaka.

Across the border is successful FastJet who have not been shy about their ambitions for Kenya. But their license to operate which they intended to obtain via an investment in Kenya’s Fly540 airline has been stuck somewhere in the government red tape while their Tanzania business has thrived and they are now the leading airline there. Recently, FastJet came to a settlement with Fly540 ending their acrimonious relationship. 

Could Fastjet now be starting afresh with an established and licensed operator? Lady Lori is applying for the above routes with the intention to fly Airbus A320 aircraft – which happen to be the only aircraft flown by FastJet.

FastJet, as a low cost operator has made the A320 the only airline in it’s fleet and one that made a few people wondered how Fly540 with a mix of ATRs and Bombardiers would integrate.  Lady Lori offers a fresh start in this regard.

Understanding Low Cost Flights

Though FastJet and JamboJet applied at about the same time for aviation licenses to fly in Kenya, FastJet started in Tanzania in November 2012, and a year and a half later,  JamboJet, a Kenya Airways subsidiary has launched flights in Kenya. 

As low cost carriers, there are some differences which passengers here, especially current Kenya Airways customers, may not be able to understand.
  • Cost of tickets:  Going