Category Archives: NIC

Relief for Imperial Bank Depositors – Part III

This week, depositors at the closed Imperial Bank got some welcome news with the announcement that a third payment was going to be paid to them.

This comes after a first payment last December of up to Kshs 1 million per depositor that was paid through KCB and Diamond Trust banks and another one earlier this year of up to Kshs 1.5 million that was paid out by NIC bank.

This third payment is unique in that it targets the remains depositors many of who are believed to be large depositors.  After the first payment, the CBK had expressed concern that some  depositors had not bothered to claim the funds offered. But assuming that someone has funds of ~Kshs 50 million to Kshs 100 million at the bank, they were unlikely to be elated to received 1 million in the first or second rounds.

This time depositors can access up to 10% of the deposits, so the people above would get Kshs 5 or 10 million – still small, but much better- and depositors have a month to file claims at any NIC bank branches to receive the payments  (deadline 31 Jan 2017).

The news also comes after a few days after newspaper stories that revealed the names and evidence of correspondence of CBK officials  who may have benefited inappropriately from the largesse of the management of the bank that they were supposed to have supervises.

$1= Kshs 102

 

Imperial Bank: The End?

The Central Bank of Kenya (CBK) announced that today that the closed Imperial Bank (IBL), will not reopen. In fact it will be liquidated by NIC Bank, Kenya’s 9th largest bank.

This all started 9 months ago, on 15 September 2015, when the Imperial Bank group managing director (GMD), Abdul  Janmohamed passed away.  The bank directors then discovered fraudulent transactions that the GMD has orchestrated at the bank. They presented their findings to the CBK, who then shut the bank.

While the CBK blames the board and shareholders, the, the shareholders/directors say they were innocent of the wrong-doing perpetrated by the GMD; they had a hands-off role (complying with CBK rules for non-executive directors), and that their external auditors and the Central Bank were lax and should have flagged the 13 year fraud. The shareholders of the bank were optimistic that a strategic investor would buy the bank within 12-18 months of reopening. But it’s not clear if NIC has been selected to do that by the Kenya Deposit Insurance Corporation (KDIC). NIC will also assume the majority of IBL staff and branches, and announcements on the way forward will be made in the near future. 

Imperial Bank logo

  • NIC will pay Kshs 1.5 million to all depositors. Thereafter, it is expected that at some point, NIC will pay any remaining depositors about 40% of their proven deposits (there are individuals and institutions who had tens or hundreds of millions of shillings as deposits) (Last year, KDIC used KCB and Diamond Trust banks to refund Kshs 1 million to each depositor at Imperial Bank)
  • NIC will get access to operate the 26 branches in Kenya. But the 2015 bond information memorandum noted that Imperial owned no property. The Bank owns no Properties. It leases all the premises used for its business operations. In Uganda, the 5 branches there were disposed of in a sale.
  • It’s not clear how many of the 600 employees at Imperial are still around, waiting for jobs
  • The CBK statement notes that a forensic audit is almost complete. This is an exercise that the directors of the bank began after the GMD died to determine the extent of the hole in the bank.
  • Court cases will continue and KDIC will retain other assets of the bank (..cash, collateral, government securities, loans..)
  • If it heads to liquidation, the name Imperial Bank (name) will disappear.

$1 – Kshs 101

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

 

Chevrolet Tembea Kenya – Part II

The Chevrolet TrailBlazer that is being used to support for the Tembea Kenya Maina Kageni Road Trip Tour is a 2015 model, new vehicle, that General Motors is showcasing around the country. In line with the current Chevrolet theme of finding new roads, the Trail Blazer caravan has been to many place likes Lamu, Lukenya, Amboseli, Nyeri, Baringo, Nakuru.

Chevrolet Trailblazer in Mbuinzau

And while new highways and roads are built around the Kenya, the reality is that there are many parts of the country still unpaved and road maintenance is poor as it’s only done every few years. This means that drivers  often encounter potholes, mud, wet roads, and high bumps in Nairobi and other towns all the time, and a tough vehicle with a high clearance is ideal.

Chevrolet is a strong brand world-wide for GM which remains the USA’s largest auto maker with 18% in 2015. In Kenya, General Motors East Africa (GMEA), was started in 1975 as a joint venture between the Government of Kenya and General Motors Company, and is one that is currently 18% owned by Centum, and which is a leading exporter of new vehicles to countries in the greater East Africa region.

And while, in Kenya, it seems that every other car is a Toyota, GMEA is actually leading supplier of new vehicles into the Kenya market with about 6,700 new vehicles (33%) supplied in 2015. GMEA  assembles, markets and sells Chevrolet, Opel and Isuzu vehicles and parts in Kenya and the Eastern Africa region. In Kenya, their Isuzu brand is strong, dominating the bus, truck, and pickup market, but they don’t want to rest on their laurels – hence the introduction of the Chevrolet Trailblazer in the growing SUV category.

 The 2.8 litre diesel, automatic model Chevrolet Trailblazer used in the Tembea Kenya campaign retails for about Kshs 5.1 million ($50,000) [but can be had for much less for embassies and government offices who don’t have to pay Kenya’s hefty new vehicle taxes].

The Trail Blazer is available in 8 different colours, and has 7 seats spread over three rows. Some of the nice features it has include individual overhead lights & A/C setting for each row, side steps, leather seats, rearview view camera with parking assist (useful at Nairobi malls), anti-theft /  immobilizer system,  a touch screen infotainment system that links to the phones via bluetooth or USB,  multiple, charing ports, steering wheel controls, and two setting of four-wheels drive (4WD) that the driver can adjust by simply twisting a knob.

Chevrolet Trailblazer in Mbuinzau 2The TrailBlazers come with a 5-year service plan or over the first 90,000 kilometers which is virtually the life of a typical car owner in Kenya. Servicing is set for every 15,000 kilometers, and owners also have the comfort of a warranty and roadside assistance over the first 120,000 kilometres.

Last week, GMEA signed a deal with Kenya’s leading asset financier, NIC Bank, to enable buyers of Chevrolet and Isuzu vehicles to get up to 95%, at an interest rate if 15.5% which can be repaid over 6 years . This promotion lasts till end of March 2016 and is available at all GMEA locations across the country.x

East Africa M&A Moment: June 2015

Recent stuff in the newspapers (mainly the Business Daily), Kenya Gazette  (some of the just-approved deals were first announced two years ago) and press releases. $1 is about 95 Kenya shillings (and about 90 when deals were formulated)

Overall

Earlier this month, the Financial Times (FT) reported that mergers and acquisition (M&A) activity in Africa has fallen to its lowest level in more than a decade, as a result of collapsing commodity prices, political volatility and an anticipated rise in US interest rates. The value of African deals so far this year stands at $9.2 billionn — 23% lower than the same period 12 months ago and the lowest level recorded since 2004, according to data from Dealogic.

– Burbidge Capital also found that Kenya’s merger & acquisition deals slowed down in 2015 – with 11 M&A deals so far compared to 17 in the first four months of 2014. This year, the largest concluded deals have seen Helios sell a stake in Equity Bank to Norwegian funds and and Old Mutual’s purchase of a 60.7% in UAP Holdings.

Banking/Finance

More mergers are expected in the Kenyan banking sector as the Treasury Secretary announced that an increase in the minimum capital to strengthen banks’ capital base and increase competition…progressively from the current Kshs 1 billion to Kshs 5 billion (~52 million) by 2018. 20 banks are below the Kshs 2 billion mark.

–  Helios cashing out;  Norfund & Norwegian private investors are acquiring 50% of Helios partners investment in Kenya’ Equity Bank Group and will now own 12%. And today, Uganda’s National Social Security Fund has bought a 2.44% stake in Equity Bank Group from Helios Investors at Kshs 50 per share – and the new deal is worth ~$50 million.

– National Bank management said it has not been briefed on any merger plans with its State-owned rival Consolidated Bank. Treasury secretary Henry Rotich said National Bank would be merged with another bank before it’s planned rights issue. The government is the biggest shareholder of National Bank controlling about 79% shares consisting of Treasury and NSSF stakes. As part of a rights issue it is expected that NBK will retire its preference shares (held by the Treasury and NSSF) by converting them into ordinary shares.

– High-level talks regarding a merger between NIC Bank and Commercial Bank of Africa are  reportedly taking place but Mshwari may be spun out of any resulting entity. Both are mid-tier banks with quite a focus on corporate and high-end clients.

– While Mwalimu SACCO is acquiring 51% of Equatorial Commercial Bank (ECB), the Society is not converting into a bank nor merging with ECB.

– Kenya’s Nairobi Securities Exchange is acquiring the 77% of their associate company CDSC, which they own with stockbrokers, in a deal worth~Kshs 260 million.

– Barclays Africa advised on the largest sale of an African Bank in 2014 – a deal, in which Nigeria state-owned Asset Management Corporation of Nigeria (AMCON) sold Mainstreet Bank to Skye Bank.

Equity Group Holdings agreed to acquire 79% of ProCredit Bank Congo, the 7th largest bank (by assets) in DRC. ProCredit has total assets of $200 million, a customer base of over 170,000, and has KfW (12%) and IFC (9%) amongst its shareholders.

 Liaison Financial Services who have just been approved as an investment advisor in Kenya recently acquired the African business of Knutson Global who were involved in asset-backed securities, municipal development bonds and consumer lending.

Insurance

Oxford Business Group expects strong Kenya insurance M&A as companies merge to increase market share & meet higher capital requirements.

– The Mauritian Minister for Financial Services, Roshi Bhadain, said the State Insurance Company of Mauritius (SICOM), would take over the 23.9% stake (valued at more than Kshs 13 billion) held by Businessman, Mr. Dawood Rawat, in financial services firm British-American Investments Company (Kenya)  – a.k.a. Britam. This comes after the government of Mauritius placed Rawat’s firms in receivership over alleged financial impropriety charges.

UAP and Old Mutual agreed on a merger ahead of listing. This comes after Old Mutual raised its shareholding to 60% from 23% after buying 37% from private equity (PE) firms Aureos, Africinvest and Swedfund for around Kshs 14 billion. Old Mutual will not buy out the other 1,000 minority shareholders (who are staff & agents).

Old Mutual first bought into UAP in January by acquiring a 23.3% stake from Centum Investments and businessman Chris Kirubi. Centum sold its stake to get funding needed for its massive real estate, financial services and power projects.

– Also, the competition authority approved the acquisition 60% of UAP Holdings by Old Mutual Holdings and Old Mutual Life Assurance.

Barclays Africa will acquire 63% of First Assurance, Kenya’s No. 10 insurer, for Kshs 2.8 billion (~$30 million).

KCB Group is said to be considering a takeover of Madison Insurance.

– Pan Africa Insurance shareholders approved the acquisition of at least 51% percent of Gateway insurance. Through this acquisition, the company will enter into the general insurance business.

– Kenya’s competition authority approved the acquisition of 61.2% of Resolution Health East Africa by Leapfrog II Holdings.

Hotels/Tourism

– The Heron Portico, which is managed by Indian hospitality group Sarovar Hotels & Resorts, says the acquisition of rival Zehneria Hotel in Nairobi’s Westlands in a Kshs 1 billion buyout to expand its market share in conference tourism and hospitality industry in Kenya. The Heron Portico financed 80% of the purchase price using debt while the rest is self-financed.

– Minor Hotel Group of Thailand, and Elewana Afrika, are acquiring 6 camps spread across national parks in Meru, Samburu and Narok counties. Stefano and Liz Cheli (Cheli and Peacock Group), the founders of the camps, will continue to run the resorts and focus on business development.

– Kenya’s Competition Authority approved the acquisition by Fortune Hotels of Paradise Safari Park and 85% of Paradise Investments and Development Kenya held by Paradise Company.

– TPSEA (Serena) acquires 25.1% of TPS (D) that was set up to run the Movenpick Hotel in Dar, now known as the Dar es Salaam Serena Hotel in Tanzania.

Logistics/Transport

Frontier Services Group (FSG), a Nairobi-based logistics firm, has completed its purchase of Cheetah Logistics SARL – Congolese transport company as part of central and western Africa expansion plan. Kenya’s competition authority also approved the acquisition of Phoenix Aviation by Frontier Services Group as well as the acquisition of 55% of Tradewinds Aviation Services by NAS Africa Aviation.

– UK logistics and engineering firm Atlas Development says it is in advanced stages of discussions with potential takeover targets in Kenya, Tanzania and Ethiopia.

– Part of Best Wing Cargo operations at JKIA have been transferred to Suppercare Freight Services.

–  Part of  Fastlane Freight Forwarders  operations at JKIA have been transferred to Airwagon Cargo Movers.

Energy

Norfund to acquire a stake in Globeleq Africa from Actis for $225M and partner with CDC to pursue power generation opportunities.

UAE’s Gulf Petrochem Group acquires Essar Petroleum East Africa and renames it as Aspam Energy (Kenya) in a deal to enhance the group’s integrated services and products for the downstream supply chain in the oil and gas sector in East Africa.

Media/PR

Scangroup dropped a bid to acquire 80% of Experiential Marketing, as approvals were not granted in time. Scangroup shareholders later renamed the company WPP Scangroup signifying that WPP Scangroup and WPP plc. are now fully together, with a shared vision for developing marketing communications across Sub Saharan Africa.

Hill+Knowlton Strategies (H+K), and Buchanan, one of the world’s leading financial communications consultancies, joined forces to launch H+K Financial, a specialist financial communications division dedicated to the Middle East and Africa.

Telecommunications/ICT

Millicom is to acquire 85% of Zanzibar’s Zantel for $1 and take over $74 million of its debts. Zantel is the leading Telco in Zanzibar (but just 5% to Tanzania’s total) with $82m in revenue and 1.7m customers.

– Kenyan innovation, Wezatele, was acquired for $1.7 million by AFB Kenya.

Techno Brain acquired the trips™ suite of integrated customs &revenue software from Crown Agents to provide tax and customs solutions that target the broader financial management needs of government.

Akvo Kenya transfers the business of building open source intemet and mobile software to support international development partnerships to Akvo Kenya Foundation.

Industry

– A Paris-based PE fund bought 30% of Ramco Plexus, a subsidiary of Ramco Group that has an annual turnover of Kshs 5.5 billion. The Ramco Group was started in 1948 as a hardware store, and has grown into a 34-subsidiary strong business, which employs 3,000 people.

– The competition authority approved the acquisition of 51% of Bullpark by Nampak Holdings.

 Pharmaceuticals

Business transfer:  Antipest Kenya Limited, has transferred to Modern Ways.

Business transfer: Unicorn Pharma Kenya has been sold and transferred to Medisel (Kenya)

– The competition authority approved the acquisition of the assets of European Perfumes and Cosmetics by Charm Industries. The deal excludes the debts of Varanasi Deepak, and Chirag Savia The

 Agri Business/Food Business

–  Syngenta rejected Monsanto’s $45 billion merger offer. An eventual agreement will have an impact on Kenya’s agricultural sector.

– Shareholders of REA Vipingo Plantations approved sale of the firm’s land at Vipingo to Centum Investments as agreed upon in a settlement with R.E.A Trading.

– Giant milk processor Brookside Dairy has bought out Sameer Agriculture & Livestock business in Uganda for Sh3.5 billion (~$38 million). The government of Uganda, which owns 49% (of Sameer) confirmed this on March 25.

Business transfer: Pure Imported (formerly European Foods E.A. Limited) (which was in the business of importing & selling deep frozen foods and supplying fresh juices) to European Foods Africa

– The Competition Authority exempted the production, bottling supply and distribution business between Distell and Kenya Wine Agencies Business transfer: for 5 years.

Business transfer: The ice cream production & trading business of Alpha Dairy Products is being transferred to Razco.

The Tanzania’s competition commission may reverse it’s decision approving for EABL to merge with Serengeti Breweries, as Serengeti’s performance failed to meet expectations.

– The competition authority approved the acquisition of an additional 30% in Largo Investments by NAS Holdings

– The competition authority approved the acquisition of the brands and assets of Chirag (Kenya) by Chirag Africa. Elsewhere these were acquired by newly-listed Flame Tree.

– The competition authority approved the acquisition of 52% of Ennsvalley Bakery by Unga Holdings.

– Norwegian private equity fund, Norfund, has bought shares in agriculture firm Vertical Agro in a Kshs 476 million (38.7 million Norwegian krone) deal. Vertical Agro is the parent company of Sunripe and Serengeti Fresh which makes it the largest exporter of organic vegetables in the country. The company produces 6,500 tonnes of fruits and vegetables annually from its farms in Kenya, Tanzania and Ethiopia.

Property

– Kenya’s competition Authority has approved (i) The acquisition of 50% of Equatorial Commercial Bank Centre by Fidelity Shield Insurance  (ii)  The acquisition of Parkway Investments by Mt. Kenya University Trustees (iii) The acquisition of Endebees Estate (Kilifi Holdings) by Balloobhoni Chhotabhai Patel.