Category Archives: Mauritius

Bank Roundup: January 2019

The boards of NIC and CBA banks confirmed their plans to go ahead with a merger to create the largest bank in Africa by customer numbers. Serving over 40 million customers in 5 countries, the combined entity will have Kshs 444 billion in assets (~ $4.4 billion).

Currently, they are both at 115 billion of loans and have differences in deposits with 145 billion at NIC to 191 billion at CBA and customer numbers of 142,000 at NIC to 41 million at CBA. They had relatively similar customer numbers prior to CBA’s launch of M-Shwari in partnership with Safaricom. 

Going forward they aim to obtain shareholder approval in Q1, obtain regulatory approval in Q2 and have the new entity commence operations in Q3 of 2019. Currently, NIC has 26,000 shareholders and is listed on the Nairobi Securities Exchange (NSE) while CBA has 34 shareholders (20 individual, 14 corporations) including Enke Investments (24.91%), Ropat Nominees (22.50%), Livingstone Registrars (19.90%) and  Yana Investments (11.14%). The merger will be effected through share swaps that will result in NIC shareholders owning 47% and CBA shareholders 53% of the new entity whose shares will remain listed on the NSE.

MCB in Kenya:  Leading Mauritius Lender MCB Group has officially opened its representative office in Nairobi. The largest and oldest bank in Mauritius, with $12 billion in assets and a presence in nine countries, it had been licensed in Kenya back in 2015 and it will bank on its new office to gauge opportunities in the Kenyan market and build strategic relationships.

The 19th largest bank in Africa by assets, it is listed in Mauritius and has 19,000 shareholders. It has a strategic objective of growing its international footprint and expanding non bank activities. It has 1 million customers, 3,500 employees and 55 branches but, as it was communicated at the launch, they have no intention of opening branches in Kenya or East Africa.

Ethiopia Bank summary: Asoko Insight gave a summary report of the Ethiopian banking sector, parts of which are only available to subscribers. While some foreign investment is expected in Ethiopia, the banking sector is already privatized with fifteen of the country’s eighteen banks all having private local owners. The state-owned Commercial Bank of Ethiopia is the largest bank in the East Africa region with 1,280 branches and earns 67% of the sector profits in the country.  It has revenue of $1.3 billion, while 11 (other) banks, have revenues of between $50 million and $500 million, suggesting a more concentrated market in terms of size.

Tanzania:  NMB bank has waived several bank charges for their customers from February 1 including account opening, monthly maintenance, transaction fees, dormant account reactivation, and internal transfers – all in a bid to promote finance inclusion in the country.

Meanwhile, several Tanzania banks have a series of new managing directors including NIC Bank, Akiba Commercial Bank and Bank of Africa Tanzania

Family Bank pled guilty in the NYS case:

Diamond Trust CEO questioned.

Scangroup and Russell in Kshs 926M Mauritius Share Swap Deal

WPP Scangroup and its subsidiary Russell Square Holdings (Russell) and have entered an agreement for the purchase of Russell’s 3,660 shares in Research &  Marketing Group – a market research firm in Mauritius, that is owned by Russell. The shares represent 70% of the shares of the target firm and payment will be by way of 53.29 million shares of Scangroup which Russell Square Holdings (Russell BV) has subscribed for. 

It’s been a decade since the WPP deal to buy Scangroup and the new deal with Russell is meant to improve on client services at one of the largest marketing and communication groups in Sub-Saharan Africa.

WPP owns 50.1% of Scangroup, and after the share deal valued at Kshs 926 million (~$9.26 million), will own 56.25% of the company. Scangroup shareholders must approve the deal and WPP will also seek an exemption from being required to make a formal takeover offer as their increased equity position is the result of the strategic investment in Mauritius restructuring  their balance sheet. They also intend for the shares of Scangroup to remain listed at the Nairobi Securities Exchange (NSE).

Scangroup reported revenue of Kshs 4.1 billion (from billings of Kshs 14.1 billion) compared to 2016’s revenue of Kshs 4.8 billion (from billings of Kshs 16.3 billion) and a pre-tax profit of Kshs 696 million (compared to Kshs 725 million in 2016). The decline was attributed to the economic crunch and prolonged electioneering period in Kenya. Revenue from outside Kenya also declined due to cutbacks by clients, while digital and public relations were bright spots,  providing the greatest growth for Scangroup in 2017.

WPP Scangroup was trading at Kshs 16.95 per share on the NSE today and the deal comes a few years after the group also bought into Ogilvy across Africa. Scangroup has a Mauritius company that is the holding company for other subsidiaries incorporated outside Kenya including STE Scanad DRC, Scanad Burundi SPRL, Scanad Rwanda, JWT Uganda, Scangroup (Malawi),  Scangroup (Zambia), and Scangroup Mozambique.

$1 = Kshs 100

Depositary Receipts for Afreximbank Investors

Afreximbank, an African multilateral financial institution, is raising equity of up to $300 million and expanding its shareholder base by selling depositary receipts backed by Class D shares which will be listed and traded on the Stock Exchange of Mauritius.

The African Export-Import Bank (Afreximbank) depositary receipts private placement which opened on July 25, and today in Nairobi, representatives of the bank, State Bank of Mauritius (SBM Holdings), and CBA Group (Kenya) met institutional investors as Kenyan pension and fund managers are a key target for the offer. The depositary receipts have also been marketed to Nigerian investors.

Mauritius has long been a financial gateway to India, with over 1,000 funds there overseeing investments in India. But SBM Holdings Chairman Kee Chong Li, was proud to  say that the depositary receipts arrangement was a historic first for shares of  a pan-African bank, arranged by African advisers, to be listed on an African stock exchange.

Afreximbank, headquartered in Cairo, aims to narrow the trade financing gap in Africa, estimated at $120 billion annually by offering intra-Africa trade finance products including local content finance (Nigeria and Angola oil) , special risks finance, a countercyclical trade liquidity Facility (COTRALF – which has provided $8 billion to African central banks and commercial banks in 2016) guarantees, construction & tourism finance, and one for medical tourism.

Afreximbank has 135 shareholders in four different classes: Class “A”- comprising African governments, central banks (include Central Banks of Egypt (9.83%) and Nigeria (7.33%), Reserve Bank of Zimbabwe (6.74%), banks of Uganda and Ghana, governments of Nigeria (6.17%), Cote d’Ivoire and Kenya –  in total, 43 Class A shareholders  own 63% of the bank), Class “B” – African financial institutions (including SBM Holdings, Nigeria, Egyptian banks – National (6.62%), Misr and du Caire – who combined own 26%), Class “C” made up of non-African financial institutions (13 shareholders own 10% including China Eximbank (5.48%), Standard Chartered) and a new Class “D” open to individuals that was created in 2012.

Afreximbank has a $12 billion balance sheet which includes $10 billion of loans. For 2016, net interest income was$273 million, and net earning were $113 million – of which they paid $37 million dividends. In terms of their exposure, 68% of lending were to financial institutions, then 16% to the energy sector, while geographical, lending is 43% to West Africa and 42% to North Africa, then 7% to Southern Africa and 4% in East Africa.

About the depositary receipts:

  • New class D shares and the depositary receipts are aimed at sophisticated long-term investors such as pension funds and wealthy individuals.
  • The depositary receipts will be listed on the Stock Exchange of Mauritius.
  • The 6,977 Afreximbank Class D shares are the form of 69.77 million depositary receipts (every 10,000 depositary receipt supports 1 class D share).
  • This is a private placement, and the minimum investment is $30,000. It runs from 25 July to 22 September.
  • The listing will be on 4 October at Mauritius. Currently, Afreximbank shares are not listed anywhere, but, after Mauritius, they may consider listing the depositary receipts in Nairobi and Lagos.
  • Holders of depositary receipts will be entitled to receive dividends as class D shareholders
  • The shares are dollar-denominated which is a stable currency. The placement in Mauritius where there are no capital gains or dividend taxes, and, in addition, the SBM Chairman said that Mauritius will grant residency to (large) investors who buy $500,000 worth of depositary receipts.
  • The target for the Class D depositary receipts was $100 million from African investors, but they got very positive response from beyond Africa that’s more than double.
  • The deal is being handled by SBM Mauritius Asset Managers as the lead arranger, and co-transaction advisors are CBA Capital and Lion’s Head Global Partners.

SBM buys Fidelity Bank for $1

Yesterday there was an announcement that the SBM Group of Mauritius would acquire Fidelity Bank for the sum of Kshs 100 (~$1) and inject capital worth Kshs 1.45 billion into the bank afterwards.

This has also been confirmed and welcomed by the Central Bank of Kenya which notes that SBM Group is the second largest company listed on the Stock Exchange of Mauritius. As at September 30, 2016, it had an asset base of about Ksh.417 billion (US$4.2 billion).

The 29th largest bank at the beginning of the year with Kshs 15 billion in assets and a pre tax loss of Kshs 4 million. It had Kshs. 10.4 billion in deposits, and Kshs. 9.6 billion in loans and 14 branches. Fidelity has had a bumpy year as it was briefly linked with legal cases after the shutdown of Imperial Bank. Earlier in the year it announced talks with Duet Capital to invest Kshs 1.9 of capital in the bank as CBK also moved to quash social media rumors that the bank was being placed under receivership. This all now seems in the past with this buyout of the shareholders of the bank at no cost.

$1 = Kshs 101.

ALU: Africa’s University of the Future

The African Leadership University (ALU) is a pan-African university, which aims to prepare students for jobs that don’t exist today. Their programs aim to equip students with necessary skills including entrepreneurship, leadership, critical thinking, and project management – right from their first term. They have an intense online engagement process to monitor student performance that starts right from the time students apply and then right through admissions, assignments, courses, exams and assignments.

Their current degrees on offer at their Mauritius campus are Computing (Bsc), Business Management (BA), Social Sciences (BA) and Psychology (Bsc). It opened in September 2015 and has over 200 students from over 30 African countries.  Every year, students can get up to 4  months of internship at one of the ALU partner organizations which include Cellulant, Coca-Cola, McKinsey, Tiger, IBM, PWC, Thomson Reuters,  Pernod Ricard and Swiss Re. The partners also help subsidize the cost of education at ALU where a year of tuition and accommodation is about $7,000 – a modest amount compared to the cost of university education in many countries.

They also have a study abroad program that takes 4-12 months and ALU will have an MBA program at a new campus that will soon open in Rwanda, and for which they are already accepting applications. ALU is part of the Africa Leadership Group, and has founders including Fred Swaniker, Graca Machel and Donald Kaberuka. Eventually, they plan to have  25 campuses across Africa that can host 10,000 students a year.

ALU teams are currently on road shows to promote the university in Accra, Nairobi, Johannesburg, and Lagos. They have workshops, schools visits, and other events this month as they promote the university, and they are accepting applications up to a deadline on June 5.