Category Archives: Bralirwa IPO

Dividend Payments across East Africa

Having bought shares in recent East African IPO’s (Uganda: Stanbic Bank and Rwanda: BralirwaBrewers), there appears to be some progress in addressing one of long-standing problems of buying such shares – and this is the bank charges associated with receiving and having to process dividend cheques that are paid in currencies that are fractionally weaker than the Kenya shilling.

With Stanbic, the Kenyan arm of the African bank has shown little interest in facilitating this even though a significant number of Stanbic Uganda’s 25,000 shareholders are Kenyan. In fact, the staff pension funds of Kenya Airways and the Central Bank are listed among the top 10 shareholders of the bank.

At Bralirwa, the dividends are issued by KCB Rwanda and via a late message, KCB Kenya state they are paying/cashing the cheques up to RWF50K (~Kshs 8,000) across the counter. ( If higher, the cheques will be sent for to Rwanda).

While the next step should be for East Africans to receive cross-border dividend payments by mobile money such as mpesa dividends this is only available to Kenyan shareholders. For now, the facilitation of affordable across-the-counter dividends, and other cross border trade & investment payment options is something that banks, not just KCB, with a regional footprint like Equity, Stanbic, Diamond Trust, and NIC should also take up.

EDIT: New communications from the banks shows new options for Kenyans who have invested shares across East Africa as follows:

Bralirwa: Any cheques of less than RWF 50,000 (~Kshs 7,750) can be cashed at the counter of any KCB Kenya branch at a fee of RWF 200 (Kshs 31) on the  production of an ID or a passport.

Stanbic Uganda: No certificates will be issued for the 1:1 bonus, and no physical annual reports will be mailed. But shareholders can now elect to receive dividends by electronic funds transfer, or mobile money (airtel money or m-pesa) after confirming their details at Comprite (Uganda) Registrars whose Nairobi office is at Marakwet House, Elgeyo Marakwet Road.

Shares Portfolio February 2011

A tale of Two Brewers – comparing shares to November 2010 and a year ago

The Stable

Bralirwa (Rwanda) ↑
Diamond Trust Bank ↑
East African Breweries (EABL)
Kenya Airways ↓
Kenya Commercial Bank (KCB) ↑
Kenya Oil Company (Kenol) ↓
Safaricom ↓
Scangroup ↓
Stanbic (Uganda) ↑
Uchumi ↔

– Best performer: Bralirwa up 31% since their 2010 IPO
– Worst performer: Scangroup (down 14%), then EABL
– In: Bralirwa
– Out: None
– Increase None
– Decrease: None
– Unexpected gains/losses: – Uchumi shares have not been re-listed despite the company’s exit from receivership a year ago

Events & Outlook: – Performance: The Portfolio is down 3% in the last three months while the NSE Index is down 6%
-Bralirwa Rwanda was a good buy as the Rwanda (virtual monopoly) beer company listed shares that were open to all East African nationals and many retail shareholders got full allocation (still waiting for a similar offer from Tanzania); However in Kenya EABL faces challenges from the so-called Mututho Law which appears to have curtailed sales of alcohol through reduced hours.
– Safaricom seem to be weathering the storm from Airtel Kenya and their battle has extended to political and regulatory circles. Airtel added only 2 million more customers in all Africa compared to a year ago (Dec ’09)
– Kenol has gone quiet since the Kenya Government instituted price controls around the country and despite popular expectations, prices have steadily risen in the two months since the program started.

Looking forward to: – February brought news that Transcentury and Britak – British American insurance plan to list at the stock exchange this year. Britak, Kenya’s 4th largest insurance company looks more likely – it had a 2009 pre-tax profit of Kshs 500 million and assets of 15 billion ($185 million). Transcentury shares trade at an OTC market run by Dyer & Blair – and (this week) are at Kshs 35 per share compared to Kshs 48 in 2010 according to the East African.

CIC Insurance, CFC Life and Family Bank are silent, while government linked companies like New KCC, Consolidated Bank, and National bank, are also likely to go through more political hoops before they reach the market.

– Also on offer this month is a 30 year savings bond from the Central Bank of Kenya to promote savings in the country. It pays 12% per year and targets to raise Kshs 18 billion ($221 million) with a minimum investment of Kshs 50,000 ($615), and closes on. Exactly two years ago, there was a similar push for an infrastructure bond offered by the Kenya Government to raise 18.5 billion ($231 million) by offering investors 12.5% returns over 12 years.

Investor Choice: December 2010

December is traditionally a slow investment month in Kenya, but not so this year with so many investment offers from a variety of sectors


Bralirwa IPO is ongoing for Rwanda’s largest beer company. Nairobi stockbrokers who are facilitating the cross-border deal include Dyer & Blair, Faida, African Alliance and CFC Stanbic

Deacons set out to raise Kshs 800 million ($10 million) in November. They extended the deadline to early December, and came up slightly short at Kshs 700 million which is still commendable for a low marketed company in a competitive industry with no immediate listing plans

I&M Bank had a private placement to raise about 2.4 billion ($30 million) and is said to be past the mark

– The Kenya Power & Lighting Company – KPLC Rights issue set out to raise almost Kshs 10 billion ($125 million) in a combination share split, tights issue, government shareholding restructuring. It runs till December 22, but for new shareholders deadline is December 15 and is 50% underwritten with Centum and Equity bank.

– A second tranche of the Kshs 12 billion Safaricom bond program which aimed to raise Kshs 4.5 billion ($56 million) closed yesterday, and announcement is to be done today – (PDF)

Airline Investors – away from retail investors we have the rarefied world of institutional investors and buccaneers in the aviation space in Africa

– (Via Flight Africa Blog) Jetlink expanding flights to (Asmara) Eritrea while Fly540 is to soon launch operations in Angola and Ghana
Kenya Airways resumes flights to (Rome) Italy on December 16 which is its fourth European destination
– Recently, Rwanda Air launched flights from Rwanda to Dubai via Mombasa.
Yemenia resuming flights to Kenya.
East African, (who may or may not be in business) are promoting flights from Nairobi to (Hargeisa) Somaliland for $620
– And helicopter leasing is getting popular in Kenya, even at rates of $2,000 per hour.

Reading the Bralirwa Tea Leaves

Brasseries et Limonaderies du Rwanda Limited – (Bralirwa) is Rwanda leading beer brewer and which is now offering shares to the public in an IPO. In the spirit of the East African Community, the shares are offered to residents of all member countries (Read that Tanzania).

In the past, cross-border opportunities have been in the case of Safaricom (Kenya) and Stanbic (Uganda) IPO’s as well as with cross-listing of a half-dozen Kenyan companies across the exchanges of Kenya, Uganda, Tanzania and soon Rwanda.

from reading the information memorandum (IM)

On Offer: – 25% of company is for sale; being 128.57 million shares at 136 RwF per share (~Kshs 18) and minimum shares are 100, with units of 100 thereafter
– IPO allocation will be 35% retail (Rwanda and EAC nationals), , 5% employees & distributors, 30% international investors, and 15% to Qualified Institutions (insurance, pensions firms) in Rwanda and in EAC – if oversubscribed Rwanda nationals will get 60% in retail pool
– Runs from 23 November to 17 December and trading begins in February 2011

About Bralirwa: – Current shareholders are the Heineken group with 75% and state of Rwanda with 25%; the shares were split by 5000:1 ratio in November 2010 to facilitate this IPO
– The IPO represents a complete divestment by Rwanda government
-Heineken, the no. 2 brewer in Africa controls the group.
– The company is largest taxpayer in Rwanda – accounting for 12% of domestic tax revenue
– Sales in 2009 were $60 million and with a net profit of $11 million
– Subsidiaries include Coglegas (62% of company exploiting methane in Lake Kivu) and Bramin (50% of a maize processing company)
– Bank borrowing is a fixed interest rate of 12.25% and Bralirwa has unsecured borrowing facilities from Bank of Kigali, Commercial Bank of Rwanda, Fina Bank, Kenya Commercial Bank and Access Bank which have a combined facility limit of Rwf 3.5 billion ($5.8 million)
– Staff benefits for 528 (45) staff listed in IPO include performance-based bonus scheme insurance scheme, subsidized mortgages vehicle leases, medical treatment (free of charge), uniforms for school going kids of employees, school fees for orphans of staff killed in 194 and drinks for employees at special occasions
– The company’s supply chain is via the port of Mombasa for clearing and transportation of inputs, and a 1000 KM along the northern corridor through Uganda which takes 3-4 weeks and they use SDV Transami
– Regional competitors – EABL Kenya (Central Glass) and KIOO Tanzania – provide the company with bottles
– Competitive strengths include the fact that importing beer from Kenya or Uganda is uncompetitive owing to freight, fuel and insurance costs however high energy costs of US cents 22/kkwh are a challenge.

Incentives: – While effective income tax in the country is 32% in 2011, it can drop to 8% (over 5 years) for companies that sell over 20% of their shares to the public
– 2009 divided was 5.1 billion RwF ($8.5 million) or approximately RwF 50 per share (Kshs 6.5)
– No capital gains tax
– Withholding tax is 5% for Rwanda and EAC residents (but elsewhere IM says all dividend subject to 15% withholding)

Market: – Bralirwa market share in Rwanda in 2010 is 94%
– Rwanda has a Population of 10.5 million people, but per capita beer consumption of 9 litres trails Kenya (11 litres) and Burundi (18 litres!!)

Kenya Links: Bralirwa will be Rwanda’s first listed company, joining Kenya’s KCB, which is the only equity, trading on the Rwanda Stock Exchange. Kenyan influence is strong in the form of KCB (collecting agents), Dyer & Blair (transaction advisors), Faida Securities, Renaissance Capital, Muriu Mungai advocates (legal advisors), and the Central Depository & Settlement Corporation – CDSC (registrars). However Kenyan investors may be currently pre-occupied with their own KPLC rights issue and Deacons private placement

Governance & Registry: – Votes at annual general meeting shall by poll and articles explicitly state not by show of hands
– Company may buy its own shares
– All directors signed the IM document
– IM declares none of the directors are involved in bankruptcy proceedings or been convicted under criminal proceedings or been judged by a court to have been fraudulent or dishonest (Ethics Kenyan corporates can learn )
– Articles also state – if a shareholder dies, their survivor, executor and administrators only persons recognized to have an interest in the shares