Category Archives: iHub

M&A Moment: November 2019

A roundup of East Africa merger deals announced, ongoing, or completed in the latter half of the year 2019. Most are drawn from approval decisions from the Competition Authority of Kenya (CAK Kenya).

The deals include:

Airline/ Oil/Energy/Mining M&A

  • The CAK authorized the proposed acquisition of 863,477 Series B preferred shares in Windgen Power USA Inc. by Omidyar Network Fund LLC, Acumen Fund Inc., Stitching DOB Equity and Microgrid Catalytic Capital Partners.
  • Rubis, having completed the takeover of Kenol, are now going after Gulf Energy, the fourth-largest fuel marketer in Kenya with 46 stations.
  • A bid by the owners of IberAfrica, Kenya’s largest thermal power producer, to sell the company to a South African energy firm has collapsed. Read more.

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

  • The CAK approved the proposed merger between Commercial Bank of Africa and NIC Group on condition that they retain 1,872 employees for a period of 12 months. Post-merger, the market share of the entity will be 10.67%, making it the country’s second-largest bank.
  • Equity Group entered a non-binding agreement with certain shareholders of Banqué Commerciale du Congo (BCDC), for the purchase for cash of a controlling equity stake in BCDC, with a view to eventually amalgamating the business of BCDC with that of EGH’s existing banking subsidiary in DRC, Equity Bank Congo.
  • The CAK approved the proposed acquisition of National Bank of Kenya by KCB Group on condition that 90% of the merged entity’s employees will be retained for a period of eighteen months.
  • Fund manager ICEA Lion Asset Management has signed an agreement to acquire Stanlib Kenya’s business of managing funds, assets and investment in Kenya – including the Fahari I-REIT – in a deal valued at Kshs 1.5 billion. 
  • The business of non-deposit taking micro-finance carried on by Kenya Ecumenical Church Loan Fund has been transferred to ECLOF Kenya. 
  • The CAK has authorized the proposed acquisition of 93.57% of  Transnational Bank Plc by Access Bank Plc.
  • Exim Bank Tanzania acquired UBL Bank, a subsidiary of Pakistan’s UBL Bank, as part of its plan to expand nationwide and become a top- five bank in the country. It now has assets of 1.7 trillion Tanzania shillings. 
  • In 2017 private equity firm Capitalworks acquired AON’s shareholding in several African operations, alongside local shareholders including governments in many markets.
  • I&M Holdings unit, GA insurance has acquired 100% of Nova Insurance Company in Uganda. It is part of GA’s plan to expand across East Africa where insurance penetration remains low. (via Kenyan Wall Street).

Agri-Business, Food & Beverage M&A

  • Coca-Cola Sabco (East Africa), which owned 72% of Nairobi Bottlers, has bought 27.6% of that company from Centum Investments, along with 53.9 % of Almasi Bottlers for a total of Kshs 19.2 billion. Centum states that the stakes had a combined value of Kshs 16.8 billion. CAK approved the deals on condition that it continues to operate current bottling plants in Nyeri, Eldoret, Nairobi, Molo and Kisumu for at least three years and retains 1,749 of the 1,760 permanent employees for the same period. Also that Almasi reserves 20% of the storage space in its coolers to SMEs for products (excluding products of Coca-Cola’s three largest global competitors). Coca Cola shall also allow Coastal Bottlers to distribute other non-alcoholic ready-to-drink brands.
  • The CAK approved Vivo Energy B.V.’s proposed investment in Kuku Foods which operates 24 outlets in Nairobi, Mombasa, Nakuru, Eldoret, Kisumu and Nanyuki under franchise from America’s Kentucky Fried Chicken (KFC).
  • The CAK approved the proposed subscription of 33.9% and joint control of Maziwa by Pledge Holdco, which is wholly-owned by Texas Pacific Group (TPG). Maziwa is owned by Bainne and distributes of milk and milk-related products in Kenya, Uganda and Zambia under the brand name ‘Lola’.  The CA determined that the main players in the processed milk market, were Brookside Dairy (40%), New Kenya Co-operative Creameries, (25%), Sameer Agriculture (14%) and Githunguri Dairy Co-operatives (12%) while the merged entity will have a market share of 3.9%.
  • The CAK approved the acquisition of 100% of Aquamist Ltd by Aquapani Ltd. Aquapani is newly incorporated in Kenya as a wholly-owned subsidiary of the Menengai for the sole purpose of this transaction. The deal is being done alongside Aquaplast which manufactures PET bottles, jars and closures and Polycarbonate plastics for refillable water containers mainly for the bottling business of Aquamist.
  • The CA-K approved an investment by Stitching DOB Equity and Acumen Fund into Coconut Holdings which had a turnover of Kshs 162 million in 2018. More here.
  • The CA-K approved the acquisition of 100% of Gilani Butchery by Upland Meat Products. Gilani had s turnover of Kshs 116.9 million in 2017.

Health and Medical, Pharmaceutical M&A

  • The CAK authorized the proposed acquisition of Honos Parent Ltd By Doctor No Parent Ltd
  • US pharmaceutical firm Johnson & Johnson has teamed up with private equity firms, South Africa’s Inqo Investments and London-based Sumerian Partners, to buy out Naivasha-based South Lake Medical Centre in a deal valued at nearly Kshs 100 million. The hospital was acquired from Flamingo Horticulture which had established the facility to serve its low-income farmworkers.  
  • Interswitch has acquired eClat, expanding its reach into Nigeria’s health-tech sector. The move is the latest in a series of strategic investments into Africa’s growing digital marketplace by the firm. Asoko has tracked 8 other deals in the Nigerian health care industry since 2015, of which the eClat deal is the second involving a health-tech firm. Investors were most active in the pharmaceutical segment, with three deals in that space over the period. (via Asoko
  • The CAK authorized the acquisition of 54.23% of AAR Health Care Holdings by Hospital Holdings Investments.

Logistics, Engineering, & Manufacturing M&A

  • The  CAK authorized the proposed acquisition of all ARM Kenya‘s (Under Administration) businesses, assets and properties by National Cement Company on condition that the merged entity ensures continued operation at ARM’s Kaloleni and Athi River plants and retains 95% of ARMs 1,100 employees.
  • The CAK authorized the proposed acquisition of the plastic manufacturing business of Metro Plastics (Kenya) by Metro Concepts East Africa on condition that the acquirer absorbs at least ninety employees.
  • CAK has authorized the proposed acquisition of control of Chemi & Cotex Kenya by Unilever Overseas Holdings B.V on condition that the acquirer continues providing the products (Whitedent, Bodyline, Baby Soft, Skin Glow, Siri, U & Me, Lovely, Barnister and Tressa) in the market for at least three years.
  • The CAK approved the proposed acquisition of an additional 47.5% shareholding in Speedex Logistics Ltd by Suresh Naran Varsani. The transaction will result in a change of ownership from joint to sole control.
  • The CA-K approved the acquisition of direct control by Tuffsteel in Hwan Sung Industries Kenya which has a turnover of Kshs 5.8 million in 2018.

Real Estate, Tourism, & Supermarkets M&A

  • The CAK approved the proposed acquisition of 100% of Quick Mart by Sokoni Retail Kenya, which is owned by Adenia Partners of Mauritius, a private equity fund manager. Quick Mart, incorporated in 2006, has 10 supermarket outlets located in Kiambu, Nairobi and Nakuru counties. In October 2018, Sokoni had acquired Tumaini Self Service, another retailer in Kenya with 13 outlets located in Nairobi, Kiambu, Kajiado, and Kisumu counties. EDIT Quickmart has recently undergone a merger with Tumaini Self service stores and the merged entity will be the third largest retailer in Kenya, backed by a strong institutional investor, with plans to open 6 stores over the next year.
  • The CAK approved the proposed acquisition, with controlling rights, of 22.32%  of the Riara Group of Schools by Actus Education Holdings AB. Riara operates six learning institutions in Kenya which offer the 8.4.4 and British Curriculum education systems. The CA found that of the schools offering British Curriculum, Braeburn Schools with 10.2% of the students, Aga Khan Academy 7.1%, Srimad Premier Academy 3.8%, and Oshwal Academy 3.4%. The CAK has approved the acquisition of 100% of the shares in Abercrombie & Kent Group of Companies by Heritour Ltd. One of Abercrombie’s Kenya subsidiaries is a tour operator that offers tourist accommodation in the Maasai Mara.

Telecommunications, Media & Publishing M&A

  • The CAK authorized the proposed acquisition of 100% shareholding in Eaton Towers Holdings by ATC Heston B.V 
  • BRCK has acquired the Surf Network. BRCKs Moja Network passed 300,000 unique monthly users in January, with 1,500 mobile nodes in buses and matatus across Nairobi and Kigali. The new acquisition takes them close to 500,000 active monthly unique users,  and they state this is the largest public Wi-Fi network in East Africa, and second-largest on the continent. 
  • Co-creation Hub (CcHUB), the leading technology innovation centre in Nigeria, acquired Kenya’s iHub for an undisclosed fee. The deal will see the iHub become part of the CcHUB’s network, while retaining its name and senior management structure.  The move comes seven months after CcHUB expanded into Rwanda, with the launch of its Design Lab. 
  • The Airtel-Telkom merger is still ongoing. Kenya’s Parliament has raised some queries about the transfer of government assets and shares as has the Ethics and Anti-Corruption Commission. Rival Safaricom also stepped in and pressed for the two companies to settle a combined debt of Kshs 1.3 billion they are owed before the transfer is completed. They also argue that the merged entity will have an outsize frequency allocation (77.5 MHz of spectrum serving 17.3 million customers) compared to Safaricom (who serve 31.8 million customers with 57.5 MHz) and ask that this is rebalanced.
  • The CAK authorized the proposed acquisition of 100% of  De La Rue Kenya by HID Corporation on condition that all existing contracts De La Rue has with the Kenyan Government are honoured.
  • The CAK has authorized the proposed establishment of a joint venture and the acquisition of control of certain assets of Kul Graphics, The Rodwell Press, Printfast Kenya, Digital Hub and Colourprint by The Print Exchange on condition that the parties retain 100 permanent employees of the merger parties for a period of one year after completion of the transaction and the 72 contractual employees serve to the end of their contracts.  In May 2019, the directors of the six companies had announced plans to merge due to the printing industry’s price sensitivity and demands for new technological innovations that had created financial and operational challenges for them.
  • The CAK has approved the acquisition of 80% of iWayAfrica Kenya by Echotel International Proprietary. iWayAfrica Kenya provides a range of ICT services. The CA estimated market shares for the main providers of retail Internet access services to be Telkom Kenya (28%), Liquid Telecom (25%), Safaricom (14%), Internet Solutions (13%) and Simbanet (4%). iWayKenya is at 1.2% and Echotel at 0.6%.
  • It was announced this week that two of Tanzania’s best-known telecommunications companies – Tigo and Zantel – have completed there merger, combining their operations on both mainland Tanzania and Zanzibar. (via Arden Kitomari)
  • The CA-K approved the acquisition of direct control of Digital Packaging Innovation Holdings and A-One Plastics by Rifts Investments.
  • ScanGroup is set to sell two of its subsidiaries for more than Sh2.4 billion in a deal that was triggered by a related transaction involving its London-based parent company WPP Plc with Bain Capital. Read more.

Other M&A

  • The business carried on by Pa’shante Enterprises in Nairobi has been sold and transferred to Pashante Greens Africa.
  • The assets and inventory of Mapflex East Africa at Airport North Road will be transferred to Actiflex Ltd. 
  • The business of a barber and spa carried on Crystal Barber and Spa on Kiambu Road has been sold and transferred to Esther Kinya Guantai. 

Since the last update in January 2019

Startup Battlefield Africa by Techcrunch and Facebook

The Techcrunch Startup Battlefield Africa, supported by Facebook, was won by Lori, a logistics platform being developed to simplify the movement of cargo in Kenya.

At the TechCrunch event in Nairobi, 15 startup companies pitched and demonstrated their concepts in between chat sessions on the unique business climate of Africa that featured other seasoned entrepreneurs, advisors, and funders, with moderation by Facebook and TechCrunch staff.

The competing companies were drawn from sectors like finance (WeCashUpAbacus), data collection (Form+Delivery Science), logistics (Lori Systems), sales (Sellio,  SynCommerce), entertainment (Big5 Games, Tango TV, Gazkar from Lomay), health – ConnectMed,  education (M-Shule, Dot Learn), recruitment – Talent2Africa and agri-business – AgroCenta.

Lori won the day and walked away with $25,000 and an all-expense paid trip for two to compete in  TechCrunch’s flagship event: Disrupt SF 2018

Winners will join TechCrunch’s Startup Battlefield Alumni Network. Alumni have collectively raised nearly $7 billion and produced nearly 100 exits and IPOs to date.

Some excerpts from the day:

  • Brands are creating collections and Michele, Beyonce, Rihanna are wearing African brands – that’s opportunity @KISUAonline #TCBattlefield
  • Most lucrative buyers for @agrocenta are big companies such as breweries, animal feed, soya oil #TCBattlefield
  • Logistics is a $500B market for innovations that eliminate middle-men and make food supply and demand efficient – @agrocenta #TCBattlefield
  • 80% of farmers don’t have access to direct markets and logistic inefficiencies lead for 25% of food being wasted – @agrocenta #TCBattlefield
  • Black Africans in tech are not getting a lot of the money coming into tech – @africatechie #TCBattlefield
  • I’m in Silicon Valley; I may be on a board, but I’m not at the birthday party or talks for the next round – @africatechie #TCBattlefield
  • @big5games builds localized data-optimized easy-to-play games on sports, farming, stocks with partners like Kwese & telcos – #TCBattlefield
  • If you arrange for 20 cargo trucks between Nakuru to Eldoret, 15 will commit, 5 agree on price, but 2 will show up – Lori #TCBattlefield
  • A typical lorry takes 3 days to load its cargo, to make a 12-hour journey, then another 3 days to unload – Lori #TCBattlefield
  • Products cost more in Kenya as the logistics chain is broken; trucks are empty or idle 93% of the time – Lori #TCBattlefield
  • Today @AbacusKe launches Kenya’s first automated investment service – using algorithms to personalize advice – @TheMacharia #TCBattlefield
  • @AbacusKe aims to be Africa’s e-trade; local & foreign investors can make stock debt property & unlisted buys – @TheMacharia #TCBattlefield
  • @wecashup does 1M transactions per month of ~10 euros and partners with banks so they don’t need a license for every country #TCBattlefield
  • @wecashup 2.0 integrates payments whether cash, mobile money, cards, crypto-currencies in 42 countries, and own 6 patents #TCBattlefield
  • You can build a $50M business serving a Lagos neighbourhood; but there’s a daily swing between risk & uncertianity – @EghosaO #TCBattlefield
  • Local investors say – don’t tell me about 10-yr plans when I can bring a container from China and make more money – @EghosaO #TCBattlefield
  • Africa is about iceberg micro-economies; see below the surface – biggest opportunity is organising offline markets – @EghosaO #TCBattlefield
  • Saying Nigeria has 180m people or Africa has 1.2 billion brings wow – but you should think at city levels – @EghosaO #TCBattlefield
  • Our challenges include raisng capital and dealing with regulators & muscled players (non-market forces) – @oviosu #TCBattlefield
  • Nigeria is the biggest market in Africa. River State is bigger than most African countries – @oviosu #TCBattlefield

Co-Founder Agreements for StartUps

Last week there was a talk at the iHub about founder stock agreements i.e. the agreements that people enter with each other as they set up companies. John Freeman, an attorney who has advised on tech startups in the US & Asia, as a venture capitalist and now as an angel investor, said that most founders allocate their shares 50/50 when starting our  or in other equitable ratios.  Barclays Kenya agreement was a Parliament Act

But he said that this was a wrong allocation and that company founders should instead take some time to run a “founders pie calculation” (designed by Frank Demmler) to assess the founders commitment and responsibilities at the companies to determine exactly how much each founder is entitled to get.

He also said’ it’s important not to have too many cofounders (never more than 5) as when they get new investment, their stakes may be diluted to become negligible. As more key people are, added, they should remain employees, but who can earn bonuses and options that vest over several years.

Founders also need to come up with term sheets, employment agreements (e.g. which note that the company owns all intellectual property developed) and shareholders agreements that have clauses such as right of first refusal. (He said if a company does not have this clause,  it is not worth investing). The clause determines who can invest in the company even if a cofounder leaves, dies or gets divorced etc. Founders who leave companies should also sign termination notices.

He said that there is an increasing trend or more convertible debt in lieu of equity investments. The documentation for theses is much faster (he does this in two weeks) and cheaper compared to equity investment, but that many  Kenyan lawyers do not understand the convertible debt  agreements. He mentioned that investor templates could be found at sites such as founders workbench,  startup percolator, cooleygo, ycombinator and orrick.

The iHub event was in partnership with m:lab East Africa and uWakili.

Joi Ito in Nairobi

This week, Joi Ito was in Nairobi as part of a team from the MIT Media Lab where he is a Director. While here, he gave a chat on his time as an academic and an entrepreneur in the technology sector.

(Wikipedia excerpt about him:  Ito is a venture capitalist and angel investor and was an early stage investor in Kickstarter, Twitter, Six Apart, Technorati, Flickr, SocialText, Dopplr, Last.FM, Rupture, Kongregate, Fotopedia, Diffbot, and other Internet companies).

Some points from his talk

There’s a bit of luck in life: He is here because he survived, and because he is lucky. What’s worked for him may not work for anyone else, and while some successful people think they have a magic touch, it’s a bit of luck they have had in their lives.

Advice for young people: 1. Question authority 2. Think for yourself – don’t look for an answer, look for your own provocation, as there’s no single answer for anything

His Learning Process: Some people learn in universities, or apprenticeships, but he learns best when in conversation with other people, not when he is reading. E.g. he apprenticed in a pet store, and on a movie production set. His well-educated sister realized that her uneducated brother (Joi) was doing o.k. – so she studied him and found that the social context is an important reason for learning – and she published these as Hanging Out, Messing Around and Geeking Out

He said the reason women don’t code, is because there is no fun for them, while guys teach other code in a  context they enjoy, but which  girls’ don’t find to be fun and that has to change for. Earlier he commended the AkiraChix for what they’ve done in inspiring and enabling young girls to learn to code, and said they were far ahead of some US institutions that were still made dominated and had not made strides in inspiring girls.

His Mission in Life: This he found was to build community whether at Mozilla while running community commons, or working in a nightclub as a DJ (something he described as harnessing the flow, of the room, all without leading). 

He found that street gangs in Chicago had more compassion and willingness to help people in their community than kids who were competing and studying hard in his physics class at. university – and that he learned more about community and human values on the street than in a class.

Choosing the Right Partners: There’s an alchemy involved when creating a community – and he’s always failed when he picked a person for their skill over their personality. He said investors have ruined more companies than founders – so be very careful who you invest with…he also noted that you may inherit some members of a team /organization like founders who you can’t get rid of.

Agility over Planning  Trends are o.k., but trying to predict when something will happen is foolish, as there is so much complexity. Just be aware of what is happening (use a compass, not a road map), understand what you have, and what’s going on around you and figure out your next move – and if the code/plan is not working, dump it .. E.g. Youtube has gone through many iterations from 2005 when it was a dating site with video, then Flickr with video .. but they always want to be the biggest video site..

Joi Ito once sought $600,000 from a company to set up an ISP in Japan. And that company then spent $3 million on a study to tell them that they would not invest in an ISP (the cost of mapping is expensive, and don’t wait for all the info before making a decision).

Take Risk Early  He was $200,000 in debt when he was 18, as his mum was sick, but he was working in a  tough job at a Japanese company, and was eventually able to pay it back. He’s since taken lot’s of risks, and created a lot of companies that have failed and it’s better to do this early in your career. He was into video games as a kid, learned to code, run bulletin board systems and computer networking (which never made money). But when TCP/IP came out he realized that was the future and he went on to build an ISP, a search engine, then an app company…

Also, the cost of trying things is going down (Facebook and Yahoo grew out of dorm rooms, not out of big capitalized companies ) – and likewise the cost of failure is now cheaper so you can take more risks. What’s important is not to get rid of risk, but to take it well.

World Opportunity:  Joi Ito said he’s a bit negative about Japan which is becoming less relevant with an aging population, worse education system, and conservative politics – but then he’s on the board of Sony because he wants to save the company that’s going through a tough time

Kenya/Africa have young populations and growing consumers, and while there are issues (like incumbent Telco’s) there are also opportunities.  He compared that that to Silicon Valley which is saturated with 100 companies chasing an idea, each with $10m funding. He said it’s possible to connect the networks and thanks to easier communications companies here can find partners in China to enable them to overcome some obstacles.

Bio-Engineering the Future: One big future trend will be bio-engineering. There are now gene hacks being done by school kids, and the cost of hacking genes going down six times faster than Moore’s law. While Monsanto used to spend billions on genetic engineering, the future is not going to be about such big companies..the solution to malaria will not be from a rich guy at Harvard, but it may be from kids hacking solutions in Africa.

Award Season Part Trois

Following on part II

The Anzisha Prize for young Africans (15-20 yrs) who have solved a problem /challenges in their community (via @kenyanpundit)

The Android App competition. in the X.com dev. challenge participants can win prizes of up to $25,000. D/L is 14 May.

The 2nd eLearning Africa Photo Competition runs through April 21.

Facebook’s first hire in Africa – will be a growth manager in Nigeria (via @bellanaija)

The 2011 Freedom to Create Prize main prize and imprisoned artist prize is open to 15 July (via @Kwani)

Various jobs at Google East Africa .

iHub Mentorship program. D/L is 6 April.

Partial scholarships available to attend the 4th Global Forum on Innovation & Entrepreneurship. D/L is April 1

Kenya Government Science & Technology scholarships (29) to study in China, for undergraduates and postgraduates in engineering, medicine, computer science, and pharmacy. D/L April 7.

Connected Kenya Vision 2030 ICT awards from the Kenya ICT Board.

Maisha Filmlab with free screenwriting directing camera sound and production workshops in East Africa. (via @mkaigwa)

Mass Challenge a $1 million start up competition (via @egm_photo)

Panos Eastern Africa media fellowships. D/ L April 6.

Strathmore University’s Mobile Academy . D/L 31 March

Winners of the Nokia Idea storm will have their ideas developed into phone apps. D/L is April 14.

TEDGlobal 2011 takes place in Edinburgh, Scotland in July 2011. It moves from traditional Oxford this and 75 places available, and D/L is April 4.

Africa Youth Trust Young Women Leaders funded by the UN Women Governance and Gender Programme. D/L April 15.

Modern careers: Someone got hired via twitter

Sports: The Watamu Triathlon takes place April 9 & 10 at the Kenya coast. D/L April 4.


Photo is from a blog tracking a Cairo to Cape 12,000 kilometre bicycle expedition (equivalent to 4 Tour de Frances in 4 months). It’s now complete after a tough stint in Kenya.