Category Archives: nigeria

MTN Nigeria Listing

MTN Nigeria has received approval and will proceed to list its shares on the Nigerian Stock Exchange on May 16, 2019. The company entered a settlement in December 2018 paying $53 million to the Government of Nigeria out of $8.1 billion tax demand and the listing is believed to be an extension of this process.

MTN entered Nigeria in 2001 and it has grown to be a key market for the Group. It accounts for 55 million of their total 210 million subscribers in Africa and the Middle East. 25% of their subscribers are in Nigeria compared to 13% in SA. They get 30% of revenue from Nigeria, compared to 29% from SA, with Nigeria growing in the double digits. MTN which has 79 million data customers and 27 million mobile money customers in 2018, plans to introduce mobile money in South Africa, Nigeria, Afghanistan and Sudan this year.

The Group owns 75.81% of MTN Nigeria through a Mauritius company while Nigerian shareholders own 18.7% through special purpose vehicles. 1.76% is owned by the Public Investment Corporation of South Africa.

With its shares introduced at 90 Naira each, based on recent private share sales, MTN Nigeria is valued at about $5 billion. All shares of the company are being listed and all shareholders will be able to trade their shares. MTN plans to get more Nigerians to increase their stake in the company to about 35% through the listing and a public offer that may follow. Besides Nigeria, the Group also plans to increase local ownership of its operations in Uganda and Zambia during 2019.

African Companies Foreign Listings

The listing of Jumia on the NYSE has elicited many discussions about how ‘African’ it is to qualify for the moniker of “first African tech IPO”.

London has been the listing home of many large African companies in the oil, gold, mining space for many years. It has also recently come to attract more banks, Eurobonds and Diaspora bonds. There are 119 African companies listed in London including top Nigerian banks while sovereign bonds of 11 African countries trade on the LSE.

Other recent listings have gone to foreign markets including:

  • Vivo Energy’s LSE listing in 2018, which was the largest IPO of the year in London.
  • In Nigeria, which is Jumia’s largest market, here’s an investor recap of all the listed ‘tech stocks’ on the Nigerian Stock Exchange which include Courteville, Triple Gee, NCR, eTranzact, CWG, Chams, and OMATEK.
  • After spinning off Multichoice, Naspers plans to list its international internet assets on the Euronext Amsterdam Exchange with a secondary listing in Johannesburg. The assets include companies like PayU, Souq, Flipkart (which was sold to Walmart in 2018), Tencent, and Mail.ru. It only makes 4% of its revenue in South Africa and accounts for 23% of the Johannesburg All-Share SWIX exchange. By listing 75% of the company in Amsterdam, this will reduce its weight in the South African exchange. Safaricom is in a similar situation in Kenya, accounting for about 40% of the value of the Nairobi Securities Exchange, but as its revenue is currently all from Kenya, a listing move away is unlikely.
  • Within Africa, the island nation of Mauritius is an attractive listing country and is considered a gateway to India and Africa for many venture funds. Listing there confers benefits including no capital gains or dividend taxes, and Mauritius can also grant residency to people who invest over $500,000.

Other foreign listings planned include:

  • Airtel’s listing of its’ business in 14 African countries is expected to be another large London blockbuster.
  • Kenya’s National Oil is a long-shot to be listed in London and Nairobi.
  • Dangote Cement which accounts for about a third of the Nigerian Stock Exchanges market capitalization plans a secondary listing in London later in 2019.
  • MTN is expected to list a share of its Nigeria subsidiary once a tax dispute matter is resolved.

Nigerian Banks – Diamond and Access to merge

After weeks of speculation, Diamond and Access Banks announced a merger to create the largest bank in Nigeria.

It was reported that the Diamond Bank spurned offers to inject critical capital from US private equity firm, Carlyle that was a key shareholder in the bank and sought other deals, and the statement points to a competitive process out of which Diamond selected Access Bank.

According to an FT report, the deal values Diamond at just over $200 million and would create Nigeria’s biggest bank by both deposits and assets and that the merged entities would have 650 branches and 6,800 that would see some savings through redundancies.

Access will acquire Diamond through a combination of cash and shares with Diamond shareholders receiving Naira 3.13 per share, comprising N1.00 per share in cash and the allotment of 2 new Access Bank ordinary shares for every 7 Diamond Bank ordinary shares held.

The merger will result in the end of Diamond Bank with listings of its shares cancelled at the Nigeria Stock Exchange and the London Stock Exchange when the merger is completed in the first half of 2019. Access is listed in Nigeria, while Diamond was also caught up in the Nigeria vs. MTN forex case.

The Banker Magazine ranked five Nigerian banks among 1,000 top global banks with Zenith, Guaranty Trust, FirstBank, Access Bank and United Bank for Africa featuring. Another ranking of the top banks in Nigeria in 2017 listed Nigeria Zenith, Guaranty Trust, First Bank of Nigeria, Ecobank Nigeria, Access Bank, United Bank for Africa, Diamond Bank, Union Bank of Nigeria, and Fidelity Bank. The banks with a presence in Kenya are Guaranty Trust Bank (GTBank), Ecobank and United Bank for Africa (UBA).

edit March 2019 Approvals: The merger decision was approved by 98% of Access Bank shareholders, while at Diamond Bank it got 100% (99.98%) approval. Also, the Central Bank of Nigeria and the Securities and Exchange Commission have approved for the combined businesses to start business on April 1, 2019, as a Pan-African bank operating in 12 countries, 3 continents. The combined banks (Access had 11.8% market share and Diamond 4%) will have 15.9% making it largest Nigerian bank ahead of Zenith (14.6%), FBN (13.9%) and UBA (11.7%)

Digital banking: The new bank has been hailed by the deal backers as creating Africa biggest retail bank by customer base (29 million) with 677 branches, and 3,100 ATM’s. On the digital side, Access had 3 million customers compared to Diamond’s 10 million online banking customers and Access will incorporate elements of Diamond’s banking services such as XclusivePlus, DiamondXtra and Pay Day loans. 

No new capital: Post-deal ownership of the bank will comprise 81% Access shareholders and 19% Diamond shareholders. Access was expecting to proceed to raise Naira 75 billion ($207 million) of capital and had got approval for a rights issue to happen in the first half of 2019, but they will no longer pursue this avenue as they have identified 150 billion Naira in revenue and cost synergies to be tapped over the next three years.

Nigeria fines MTN’s Banks over Forex breach

A few weeks after the Central Bank of Nigeria (CBN) directed local commercial banks to refund foreign currency (forex) it says telecommunications giant MTN had banked through them, the CBN has gone ahead to debit the accounts of two banks it cited for facilitating what it termed as illegal capital repatriation from Nigeria.

The banks mentioned were Standard Chartered, Stanbic IBTC,  Citibank, and  Diamond Bank which were all directed to refund a total sum of $8.13 billion for breaching Nigeria’s forex rules on behalf of MTN.

It was later reported that the CBN had debited N2.4 billion ($7.9 million) in fines from Standard Chartered and N1.2 billion from Citigroup. The CBN spokesman said they had investigated the remittance of forex by the banks related to irregular certificates of capital importation (CCI’s) issued to offshore investors of MTN and concluded that $3.45 billion was repatriated by Standard Chartered Bank, $2.6 billion by Stanbic IBTC, $1.7 billion by Citibank Nigeria and $348 million by Diamond Bank between 2007 and 2015.

MTN had been in talks to raise funds, possible do an IPO in Nigeria which is their largest market, like a recent one in Ghana. In various statements to shareholders on the matter, MTN said they are a law-abiding corporate citizen and that the issue of historic dividends allegedly repatriated by MTN Nigeria between 2007 and 2015 had been investigated and concluded at the Nigerian senate which found that there was no collusion to contravene forex laws.

MTN’s has since sued the CBN and Attorney General of Nigeria to restrain them from taking further action against assets of the company.

EDIT: December 24, 2018:

After discussions between the Central Bank and MTN, a settlement deal was arrived at which will see MTN pay just US$53.2 million,  a tiny fraction of the $8.1 billion the Bank had sought from the group’s subsidiary in the West African country.

Paper Planes: Big Day for African Airlines on Paper

July 18 was a big day for various African airlines with news affecting travel in different parts of the continent, ahead of the Farnborough Airshow in the UK.

Nigeria announced plans to revive a national airline – Nigeria Air, a new private sector led-airline in which the government would own no more than 5% and would not manage. It is planned to start flights in December with a target of serving 81 destinations. The launch was officiated by the Nigerian Minister of State for Aviation at Farnborough and he said that they were in talks with Boeing and Airbus and also financiers such as Standard Chartered Bank. The new airline was shown in the livery of new Boeing 737 Max and Airbus A330 models. 

Just a few days after leaders of Ethiopia and Eritrea announced a cease-fire and made historic visits to each other’s countries, Ethiopian Airlines made it’s first flight since 1998  to Eritrea. On the flight were many families reuniting, and former Prime Minister former Hailemariam Desalegn. The flights will be seven days a week, between Addis and Asmara and Ethiopian,  which is expected to be part of some privatization program, was also reported to be planning to invest in a 20% stake in Eritrean Airlines.

Also there are reports that Ethiopian Cargo, Africa’s largest cargo operator, is to sign a joint venture with parcels and logistics giant DHL that would see DHL take up a 49% stake in the company.

A few days ago, Air Tanzania received its first Boeing 787 Dreamliner, which is expected to carve some routes in East Africa that are controlled by Kenya Airways and Rwanda Airlines.

Also at Farnborough, Uganda Airlines signed an MOU for two A330-800 Neo planes which they would fit in a three class-layout.

Earlier the same day, Uganda (National) Airlines announced an order with another manufacturer Bombardier for four CRJ900 planes.

Kenya Airways continues to market new routes Mauritius, Cape Town and the new direct non-stop flights to New York that will start in October 2018.

At Farnborough, Embraer and Kenya Airways announced a spare parts deal.

South Africa Airways celebrated Nelson Mandela’s 100th birthday with some new livery on some planes.

The revival comes all comes at a time when African Airlines now account for just 20% of the air traffic from the continent, down from 60% in a decade as Gulf carriers have made great strides in the continent. African airlines have also struggled with financial performance and management, with only Ethiopian posting consistent profits in the last decade. And, notably,  the deals announced at Farnborough lack detail on the financing aircraft, with Boeing 787’s and Airbus A330’s each having official prices of over $200 million.

Earlier, Skytrax published its list of the top 100 airlines in the world and it featured some African airlines including Ethiopian Airlines (at number 40), South African Airways (45), Air Mauritius (69), Air Seychelles (82), Kenya Airways (85) and was topped by Singapore, Qatar, All Nippon, Emirates and Eva Air. Other awards for African airlines were in categories of best airline staff service (South African Airways), best regional airline (Royal Air Maroc), best low-cost airline ( Mango) and best African airline (Ethiopian).

EDIT: More from Farnborough – via Leeham News & Comment.

  • Air Botswana signed a firm order for two ATR72-600s.
  • Mauritania Airlines placed a firm order for two E175s that will deliver next year.