Category Archives: IMBank

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 snap transaction 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.

1 KES = 7.93 RWF and 1 USD = 823 RWF

M&A Moment: June 2016

Various deals in the last few weeks and months in East Africa

Banking:

  • 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)

Other

  • 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)

Rumours

  • Tigo to buy out of Airtel Kenya?
  • Gossip blog Ghafla Kenya gets acquired by Ringier (via Techweez)

Industry Stuff

  • 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.

$1 = Kshs 100

Cement Moment: CDC Buys into ARM

ARM (Athi River Mining) Cement seems to have been grappling with a short-term debt burden. It was reported that an Indian firm Ultratech were interested in investing $125 million, a few weeks ago for a stake in the firm. But today’s results announced by ARM, which show a full year loss of Kshs 3.5 billion, 9blamed on an unrealised exchange loss  of Kshs 3.7 billion) also came with a notice that the CDC Group, the UK  government-owned development finance institution, has committed to invest Kshs 14 billion (~$140 million) for equity in the listed company.

CDC will become the largest shareholder in ARM, and the company will use $110 million of the new funding to reduce their short-term debt (payments stand at about $1.5 million per month) and which totaled $200 million at the end of 2015. ARM shares have lost 2/3 of their value, now at 30 after trading as high as 80 in 2013

A few days ago, CDC also announced an acquisition 10.7% of I&M Holdings, the parent group of I&M Bank. More detail here about ARM’s debt and fund-raising history, and when they kicked Bamburi, then a large shareholder, off their board.

Other Cement Companies

An Oxford Group report notes that The growth in (Kenya) construction activity has been a boon for producers, but the scope for further increases in the near term is sizeable, given that Kenya’s per-capita consumption remains well below that of other major economies on the continent. Annual per-capita demand for cement averages 100 kg, according to sector players, compared with 506 kg in Egypt and 230 kg in South Africa…However, the rise in domestic demand has not necessarily translated to a healthier balance sheet for the country’s producers. The average net profit margins for Kenya’s cement firms hit an all-time low of 11% last year, according to ARM Cement.

  • Bamburi: A recent investor note about Bamburi mentions that it’s shares have gained 25% in the last year and it increased its’ profit by 45% in an industry which recorded a decline in average net profits.Bamburi also has a generous dividend policy and has paid an increasing level of divided since 2011.
  • EAPCC East African Portland Cement is said to be trying to negotiate with the government to use some of their vast land holdings in Athi River / Kajiado area to restructure the company.
  • Dangote: Is still interested in investing in Kenya? Media reports say there’s a grinding plant in Kenya with others planned.
  • Savannah Cement completed a major plant upgrade to boost the firm’s production and efficiency.

Kenya Bank Rankings 2015: Part I

Ranked by assets (and placing in 2014)

1 (1) KCB [Assets of Kshs 467 billion ($4.59 billion), and profits of Kshs 23.44 billion ($230 million)]

2 (3) Equity Bank

3 (2) Cooperative

4 (4) Barclays

5 (5) Standard Chartered

6 (7) CFC Stanbic Bank

7 (6) Commercial Bank of Africa

8 (8) Diamond Trust

9 (10) NIC

10 (9) Investment & Mortgages

==

Two banks in the news over their FY 2015 results

11 (12) Chase: Assets of Kshs 143 billion ($1.4 billion), and a pre-tax loss of Kshs 1.1 billion ($10.8 million)

12 (11) National: Assets of Kshs 125 billion $1.22 billion) and a pre-tax loss of Kshs 1.68 billion ($16.5 million)

$1 = Kshs 102

 

I&M acquires Giro Bank

Fast growing I&M Bank is acquiring Giro Bank.

Kenya’s 9th largest bank institution with 2014 assets of Kshs 137 billion ($1.5 billion) is buying Giro, which is the country’s No. 31 bank and has 7 branches (5 in Nairobi). Parent, I&M Holdings is going to merge the banking business of Giro with I&M bank after all regulatory approvals are received

Kenya’s Parliament may have stalled the government’s move to raise the minimum bank capital from Kshs 1 billion to 5 billion (~$55 million), but it’s more likely that the loan to deposit ratio was a pressure point at Giro which had the highest difference last year (the next highest was Dubai bank).