Category Archives: CFCStanbic

Pepsi to Kenya?

. Nairumour that after an absence of many years, Pepsi will re-enter the Kenyan market in the near future to resume battle with Coca Cola, possibly through their South African partners. If so, it will cap a great year for investment to the country, and that despite 2008 being a relatively tough year for investors and companies, with the post-election violence, business disruption, high fuel and energy prices, depressed consumer spending, P & P madness (pirates and politicians) collapsing stockbrokers, there was a steady flow of new investments and new products that happened this year.

Re-cap of some notable ones

Banking
– Takeovers concluded – Ecobank take over of EABS, and Stanbic merger with CFC (now CFCStanbic)
– UBA licensed (2009)
– Gulf African and First Community (Shariah banking kicks off)

Beverages
– Summit Lager a new beer from Keroche Industries
– East African Breweries launched Alvaro (malted soft drink)
– Coca Cola launched Novidia (another malted soft drink) and also started selling Minute maid
– KETEPA launched Safari Iced Tea

Communications
– WPP buys into Scangroup
– 2008 saw the launch of two new mobile operators – Orange (France Telkom) and Yu (Essar/Econet) to battle Safaricom and a re-energized Zain
– Altech buys into KDN
– A long-running fight over one(EASSY)submarine cable, gave birth to three different ones being laid to Mombasa
– Wananchi launched Zuku (TV, Broadband, Phone)

Transport, Energy & Manufacturing
– Tiger brands buying into Haco
– An investment in the Kenya Oil Refinery at Mombasa was still under battle between Libyan and Indian Investors
– Jinchuan (China) to bail out Tiomin?
– Mirambo and PD Toll to salvage the Rift Valley Railways
– Delta Airlines (USA – but postponed to 2009)
– Air Arabia started flights to Kenya

Tourism
– Libyans took over the Grand (Laico) Regency
– The Tribe opens.

Exits
– Chevron (Caltex) sold out – bought by Total
– Unilever (de-listing from the NSE)
– Roy Puffet from rift Valley Railways

Bank Tales II

Maina T kind of started this thread with a review of the P/E correction of Nairobi Stock Exchange (NSE) shares.

NSE: ½ full or ½ empty? – to take it further, how are NSE shares today compared to last October? If you considered them fairly priced then, you are frowning today, but if you considered them over-valued, are you smiling today?
estimates
– Shares that have appreciated since October 2007: 4% – BAT Scangroup, 3% – Access 3%, 1% – Unga
– Shares that have depreciated since October 2007: (83%) – Mumias (74%) NIC (59%) Nation Media Group, CFC (55%) – Housing Finance, (53%) – Sasini (51%) – Kenya Airways (47%) – Sameer (45%) – Kengen, Centum (44%) – Eveready (43%) – Williamson (42%) – Express, Jubilee (41%) – KPLC, Kenol
– Banking sector: Best (4%) – NBK, worst (-74%) – NIC, sector average is -32%

Interesting that despite the world financial meltdown of late 2008, the Kenyan financial sector is faring no worse than other sectors (agricultural, industrial) which are all down approximately 1/3,and remains the sector most likely to produce super-profits again this year. Best performing sector is commercial services (excluding Safaricom only listed in June 2008) which is down 20% from a year ago

Cheap M&A The depressed NSE prices bring out good and bad banking opportunities.
– Good for anyone speculating on buying into a Kenyan bank. The Helios stake in Equity is priced as almost what it was when the deal was signed, while the CFC/Stanbic merger is worth ½ as much as it was a year ago.
– Bad for the Government who are hoping to raise funds from further sale of NBK and Development Bank of Kenya share. It also raises a question of how Co-op Bank IPO shares will be received i.e. if you enter a train going down hill and you want to go up hill, where will you end up?

Family Bank a recent stockskenya discussion could indicate that a listing of shares could happen soon.

EADB: sad tales on the East African Development Bank.

Kenya Bank Top 10s

half year to June 30 2008

Pre-Tax Profit: Barclays 4,295 million shillings [$64 million], KCB 3,394, Equity 2,997, Standard Chartered 2,321, Citibank 1,694, Cooperative 1,664, National Bank of Kenya 902, Commercial Bank of Africa 847, Investment & Mortgages 767, CFCStanbic 698 [$10.4 million]
12 month profit change : Ecobank 633% (to Kshs. 66m), Family 290%, Equity 189%,
Bank Africa 105%, Prime 98%, Giro 86%, Dubai 85%, KCB 77%, Guardian 76%, Citibank 75% then Consolidated, Cooperative, NBK, Credit, I&M

Deposits: Barclays 128,765 million shillings [$1.92 billion], KCB 93,372, Standard Chartered 73,512, Cooperative 59,072, CFCStanbic 57,040, Equity 42,116, Commercial Bank of Africa 35,135, National Bank of Kenya, 34,020, NIC 30, 165, Citibank Kenya 27,836 [$415 million]
12 month deposit growth: Equity 78%, Chase 58%, Prime 57%, Development Bank 41%, Diamond trust 38%, Fidelity 36%, CFCStanbic 33%, Oriental 32%, NIC 31%, Equatorial 29%, Transnational 23%, Barclays and Imperial 22% then KCB, Bank Africa, ABC.

Loans: Barclays 106,691 [$1.59 billion], KCB 60,165, Standard Chartered 45,351, Cooperative 43,411, CFCStanbic 38,746, Equity 34,273, NIC 25,727, Diamond Trust 22,320, Commercial Bank of Africa 21,803, Investment & Mortgages 20,703 [$309 million]
12 month loan growth: Equity 139%, Chase 88%, Prime 66%, Baroda 57%, Development Bank 54%, Commercial Bank of Africa 52%, Family Bank 51%, Co-op Bank 44%, Credit 44%, Fidelity 41%, then NIC, Bank of Africa, Diamond trust, I&M, CFCStanbic, Fina, Barclays.

Where to work: high employers – 6 month staff expenses; Barclays 3,287 million [$49 million], KCB 2,767, Cooperative 1,387, Standard Chartered 1,306, Equity 1,245, National Bank of Kenya 864, Commercial Bank of Africa 423, Citibank Kenya 416, CFCStanbic 389, Diamond Trust 330
directors; Standard Chartered 61 [$910,000], KCB 57, Cooperative 26, Commercial Bank of Africa 25, NIC 22, CFCStanbic 21, National Bank of Kenya 17, K-Rep 17, Southern Credit 14, Diamond Trust 12

Assets: 12 month asset growth: Equity 135%, Chase 76%, KCB 66%, Citibank 65%, Prime 59%, CFCStanbic 42%, Diamond trust 40%, Family bank 39%, I&M 33%, Bank of Africa 23%, Barclays 22%
Return on assets: Equity 4.28%, Citibank 2.85%, India 2.84%, Barclays 2.58%, Stanchart 2.45%, Coop Bank 2.31%
Non-performing assets: Cooperative Kshs. 8,841 million ($132m) , KCB 6,982, Barclays 5,986, Ecobank/EABS 3,492, CFCStanbic 3,435, National Bank of Kenya 2,559, Housing Finance 2,302, Standard Chartered 2,045, Equity 1,845, Commercial Bank of Africa 1,540
Sgare capital : Barclays Kshs. 19,233 ($287 million), Equity 19,005, Standard Chartered 9,615, KCB 9,591, Citibank Kenya 7,791, CFCStanbic 6,865, Cooperative 6,710, National Bank of Kenya 4,912, NIC 4,649, Diamond Trust 4,259

Kenya Bank Rankings

Kenya’s banks assets and profits at June 30 2008, for the first half of the year
1. Barclays; assets Kshs. 166,702 million [$2.48 billion], (pre-tax profit of Kshs. 4,295 million [$64 million])
2. KCB; 160,230 (profit: 3,394)
3. Standard Chartered; 94,570 (2,321)
4. CFCStanbic; 78,948 (698)
5. Cooperative; 72,018 (1,664)
6. Equity; 70,102 (2,997)
7. Citibank Kenya; 59,495 (1,694)
8. Commercial Bank of Africa 44,035 (847)
9. National Bank of Kenya 43,360 (902)
10. NIC; 37,590 (650)
11. Diamond Trust; 34,262 (618)
12. Investment & Mortgages (I&M); 32,775 (767)
13. Prime; 17,088 (283)
14. Baroda; 16,070 (302)
15. Housing Finance; 12,942 (51)
16. Imperial 12,851 (350)
17. Bank of India; 10,960 (311)
18. Ecobank (formerly EABS); 9,474 (66)
19. Family Bank (formerly Family Finance); 9,278 (273)
20. Bank of Africa; 9,036 (76)
21. Fina; 8,729 (65)
22. Chase 8,497 (109)
23. K-Rep; 7,197 (4)
24. ABC 6,126 (82)
25. Habib Zurich; 5,931 (111)
26. Guardian; 5,530 (60)
27. Giro; 5,379 (67)
28. Southern Credit; 5,338 (11)
29. Development Bank (DBK); 5,165 (90)
30. Equatorial; 4,820 (46)
31. Consolidated; 4,228 (8)
32. Victoria; 3,988 (78)
33. Credit; 3,637 (53)
34. Habib Bank; 3,611 (70)
35. Fidelity; 3,590 (29)
36. Transnational; 3,224 (53)
37. Middle East; 3,106 (35)
38. Paramount Universal; 2,584 (22)
39. Gulf African; 2,529 (-138) * #
40. Oriental; 1,809 (26)
41. Dubai; 1,518 (26)
42. City Finance; assets of 522 million [$7.8 million], (profit of 11 [$164,000])
43. First Community — (–) * #
* New bank
# Shariah bank

Same time last year had Barclays, KCB, StanChart as the top three, Co-op ahead of CFC, NBK wer 6th, CBA ahead of Citi, and Equity were 9th

CFC-Stanbic Bank EGM: merger approved

An extraordinary general meeting to approve the CFC – Stanbic merger was held on November 12 at the Intercontinental Hotel

Deal: Stanbic is the largest bank in Africa with a presence in 18 Africa countries and 21 others around the world (including Bank of America in Argentina which they just bought). It has assets of $140 billion and 43,000 employees – and by combining their (relatively) small Kenyan operation with CFC, they will become the 4th largest bank in Kenya.

Approval got: CMA, CBK, monopolies commission.
Approval to be got: shareholders, SA reserve bank, NSE.
The Deal should be complete in about a month.

The meeting was led by CFC Chairman Charles Njonjo. Fellow director J. Kierini introduced the board and, other dignitaries present who including D. Ndonye (Deloitte), Jimnah Mbaru, Kaplan & Stratton advisers, and Craig Bond and a team from Stanbic include his son who works at Stanbic Kenya.

CFC MD Soundararajan explained the rationale for the merger – synergies, very similar and complementary customers, regional opportunities, and enhanced capital adequacy. Customers will get a one-stop shop for all their business, staff get to work in a bigger bank with more careers opportunities (and all employees are assured of retaining their jobs).

Shareholder questions

  • Dilution of minority shareholding? : Management said they are getting into a bigger entity
  • Are major shareholders bailing? : Gambit will get paid in new shares but also about 5.8 billion shillings. MD answered that shareholders are staying and the company is not going anywhere
  • Mgmt. afraid to say that CFC being; Management says it’s a merger, and not a sale; the new entity will have 40% – CFC and 60% – Stanbic shareholders.
  • If CFC is growing well, why sell? Need for capital is important. MD said that he needs about $100 million, while the new entity will have around $60 – 70 million. The merger will enhance the company’s growth plans
  • Due diligence on Stanbic? ; Done and they shared strategies which each other to see if they were on the same path. Also, board member (and lawyer) Fred Ojiambo denied that a 25 billion shilling lawsuit had eroded the value of Stanbic (K) saying that claim had no firm base
  • Why no bonus shares instead of selling out?: MD said CFC had in the past given the largest bonus divided in the history of NSE 21 for 1 and the board will consider that at the right time

This is it: The historic moment passed in a flash as the Chairman proposed that all six resolutions be passed in a single vote since they were all interdependent.

The resolutions passed in a single vote:

  • Created 117 million new shares to accommodate Stanbic
  • Empowered the directors to allot shares to Stanbic
  • Changed the name of the company to CFC Stanbic Holdings
  • Transferred the bank business (assets, liabilities, employees, creditors etc.) to Stanbic
  • Amended the new articles of association
  • Changed the business of the company from a bank to a holding company
  • Now CFC Stanbic Holding co to remain listed on the NSE while CFC Stanbic Bank will be a 100% owned subsidiary

Other speakers

Craig Bond: The Head of Stanbic Africa, said they got lucky in Kenya as the first bank they identified turned out to be the right partner offering great synergies; in Nigeria, they have looked at 6 banks which have not panned out. He said that Stanbic which intends to be the ‘best emerging-markets bank’ in the world had identified 3 countries that they intended to dominate in Africa – SA, Nigeria and Kenya where they intend to break into the top 2 (not remain #4), by rapidly expanding branches in 2008.

Commenting on the largest bank in the world ICBC buying 20% of Stanbic (it’s 70% owned by the Government of China) – he said China is coming to Africa in a big way for her resources, and it offered Stanbic cheap money with the promise to match them $ for $ in any investment in Africa

NSE Chairman Jimnah Mbaru said he was proud that the deal happened under his watch and confirmed that he expected NSE to approve the deal by end of the week. He looked forward to having a big institution with the capital to enable the economy to meet growth goals in terms of resources. And finally called out to family-owned companies to see what could happen if they transform themselves into institutions as the late Mr. Jani had done with his firm which was now merging with Stanbic.

There were further tributes to the late Mr. Jani who created the company in 1951 with a vision for into to partner with an international powerhouse, MD Soundararajan and directors Njonjo and Kiereini for making the deal happen

Humorous moment: Chairman Charles Njonjo was sad that there were only ‘5’ shareholders present when the meeting started but got happy as the numbers had reached about 100 by the time it ended. However, it didn’t really matter as he had 45% proxies from Africa Liaison and Gambit while fellow director Kiereini had 30%.

Goodies: souvenir pen, umbrella, big lunch box with little food from intercontinental – (Fanta, cake, apple, and a bit of goat, chicken, and sausage)

other news

Barclays launched tranche one of its bond – 1 billion shillings, maturing in November 2014.

Rwanda and Burundi to join the East Africa Development Bank once they subscribed via share capital

Equity Bank extends banking hours to almost match office hours; 8 a.m. – 4:30 p.m. on weekdays and 8 a.m. – Noon on Saturday

The National Housing Corporation is offering investors loans to build rural and peri-urban homes. The maximum loan amount is only 1.5 million shillings – and it’s advanced at 13% over up to 10 years

Sasanet investors want to notify partners, bankers, and other companies (including Safaricom) that the company had not refunded investors their funds.

Urban transport gets more expensive as all the major transporters Citi Hoppa, KBS and matatu owners start a blanket 10 shilling per ride fare hike to counter rising fuel prices

Opportunities

  • Celtel territory sales executives (17). D/l is 16/11
  • IT manager at EA Cables. apply thru deloitte esd@deloitte.co.ke
  • Jamii Telecommunications: account managers (3). d/l is 16/11
  • KBR various jobs in Iraq, Afghanistan, Kuwait. But …
  • Madison: finance manager, senior investments manager
  • Microsoft: public sector lead account manager – public sector & education solution sales professional (business productivity), infrastructure consultant, MBA graduate
  • Head of ICT services – Standard Group. d/l is 13/11
  • Chief Operating Officer at Renaissance capital. apply to coo@rencap.com by 19/11