Category Archives: ICEA

M&A Moment: September 2020

Since the last update of deals in the East Africa region, we are six months into the era of Coronavirus and its effects across the world.

Merger and acquisition (M&A) deal are still happening, with some older ones having been in the pipeline for months before. The impact of the pandemic has also created some new M&A deals and partnerships, while reducing the value of others, and even killing off some earlier-announced merger deals, in scenarios that had all been foreseen by deal-makers.

https://twitter.com/gina_din/status/1227504077203886081

Here are some notable deals (1 US dollar equals 108 Kenya shillings)

Airline/ Oil/Energy/Mining M&A

  • Jubilee Holdings is acquiring an additional 9.4% share in Uganda’s Bujagali Hydropower from SN Power for $40 million to now own 18.2% of the project as part of a diversified portfolio that includes quoted stocks, bonds, real estate and interests in Farmer’s Choice, PDM and Seacom. 
  • The proposal to nationalize Kenya Airways through a National Aviation Management Bill, which grew out of a proposal by the airline to manage Nairobi’s main airport, will be debated in Kenya’s Parliament over the next few months.
  • Shareholders of Tullow Oil approved the sale of its entire interest in Blocks 1, 1A, 2 and 3A in Uganda and the proposed East African crude oil pipeline System to Total. 
  • The proposed Transfer of 85% of Global Petroleum Products Kenya  to E3 Energy DMCC has been approved 
  • Barrick Gold and the Government of Tanzania have signed an agreement to launch a new joint venture to oversee the company’s future gold mining operations in the country. 
  • The Competition Authority approved the proposed acquisition of 100% of Acacia Exploration (Kenya) by Shanta Gold Mauritius.
  • Safaricom bought 18.96% of Circle Gas for Kshs 385 million. The gas company has interests in Tanzania also acquired KopaGas’s technology in a $25 million transaction, one of the largest private equity investment in the clean cooking sector. 
  • In what will be a controversial deal, Kenya plans to have the Industrial and Commercial Development Corporation become a super agency to oversee a new Kenya Transport and Logistics Network (KTLN) that will coordinate the Kenya Ports Authority, Kenya Railways and Kenya Pipeline Company.
  •  Deal Undone: The Competition Authority has noted that the acquisition of 80% of the Embraer by Boeing has failed to take place following the decision of the parties to withdraw from the transaction. 

Banking and Finance: Finance, Law, & Insurance M&A

Kenyan Banks  

  • Kenya’s Central Bank approved the acquisition of 51% of Mayfair Bank by Commercial International Bank, Egypt’s leading private sector bank, and it will be renamed as Mayfair CIB Bank.  
  • The Central Bank of Kenya approved the takeover of 90% of Jamii Bora Bank by the Cooperative Bank of Kenya.
  • Access Bank completed the acquisition of 100% of Transnational Bank. 
  • Centum’s Bakki Holdico has acquired all the shares of the late Ambassador Bethuel Kiplagat in Sidian Bank (via Business Daily) 
  • Equity Bank has completed its buyout of 66.53% BCDC in DRC. Covid saw the final price reduced by $10 million to $95 million.  
  • Deal undone: Atlas Mara and Equity Bank mutually agreed to discontinue transaction discussions given the effects of the COVID-19 pandemic.
  • Deal undone? Businessman Naushad Merali and Mwalimu National Sacco plan to sell their stakes in Spire Bank after it issued a notice to engage potential suitors to buy a 100% of the bank. 

Investment Markets and Deal Makers

  • The Nairobi Securities Exchange acquired 61% of AKS Nominees, which holds an 18% share in the Central Depository and Settlement Corporation (CDSC) for Kshs 77 million.
  • Genghis Capital has partnered with EGM Securities to offer investors a wider range of alternative asset classes including online currencies, commodities, precious metals, oil, and biotech stocks.
  • Helios & Fairfax to partner on Africa investments. 
  • Fanisi Capital and Ascent Capital are set to merge and raise funds for bigger deals in the region.
  • Two Nairobi stockbrokers AIB Capital and Apex Africa entered a joint venture that will lead to a merger. The entity will be part of Mauritius firm, the AXYS Group which acquired Apex in 2015.
  • African Alliance Kenya investment bank is divesting from stockbroking owing to a structural decline in the agency trading model in both the local and global financial markets (amplified by the Covid-19 pandemic)

Insurance

  • The Competition Authority approved the acquisition of 24.1% of ICEA Lion Insurance Holdings by Eastern Africa Holdings which is being used by private equity firm Leapfrog Investments for the buyout of  ICEA Lion Insurance Holdings for Kshs 10 billion.
  • The sale of Stanlib Kenya to ICEA Lion was approved by the Competition Authority though clients have pulled out Kshs 75 billion following the deal. 
  • Mauritian insurance company MUA completed the acquisition of Saham Assurance Company Kenya. 
  • Octagon Africa, who offer pension, actuarial and insurance services in Kenya, Uganda and Zambia acquired a 49% stake in the Zambia subsidiary of Alexander Forbes who doing a group strategic review. 
  • EDIT: Allianz will acquire controlling stakes in Jubilee Insurance’s general insurance business (property & casualty insurance) in Kenya, Tanzania and Uganda as well as the short-term insurance business in Burundi and  Mauritius for Kshs 10.8 billion ($ 100 million) while Jubilee will also acquire Allianz Insurance Kenya.  

Regional Banks

  • The Tanzania Postal Bank (TPB) has absorbed a third bank, TIB Corporate, in a new merger deal. 
  • The National Bank of Malawi plans to invest in Akiba Commercial Bank in Tanzania in a bid to expand its operations beyond Malawi.
  • The Bank of Tanzania approved the merger of Mwanga Community Bank and Hakika Microfinance Bank to form the Mwanga Hakika Microfinance Bank. 
  • EFG Hermes and the Sovereign Fund of Egypt aim to acquire 76% of the Arab Investment Bank. EFG Hermes will own 51% of the bank and plans to transition from an investment bank to a commercial bank. 
  • I&M Bank is buying Orient Bank in Uganda.  edit The deal in which I&M Holdings acquired 90% of Uganda’s 12th largest bank from 8 miles LLP and Morka Holdings was completed in April 2021. Through the acquisition, I&M Group has acquired additional net loan assets of approximately KES 7.7 Billion, deposits of KES 18.2 Billion, a customer base of close to 70,000, a staff component of 340 employees and a network of 14 branches and 22 ATMs across the country.

Remittances

  • WorldRemit has agreed to acquire Sendwave, an app-based remittance company in a cash and stock transaction. 
  • Beyonic has been acquired by MFS Africa.  

Agri-Business, Food & Beverage M&A

  • Kenya has floated an international expression of interest for the privatization of five sugar firms. 
  • The Kenya Tea Development Agency Limited (KTDA) and the Japan International Cooperation Agency (JICA) are each investing over Kshs 150 million to set up Africa’s first Japanese speciality green tea production factory at Kangaita Tea Farm in Kirinyaga County. 
  • President Kenyatta has ordered the Kenya Meat Commission to be transferred from the Ministry of Livestock to the Ministry of Defence
  • Dominion Farms on a parcel of land comprising 3,700 hectares at Yala Swamp in Siaya County is being transferred to Lake Agro Ltd.
  • edit Nathan Kalumbu has acquired control of Interstrat Ltd (Big Square Kenya) which has assets worth Ksh 689 million.
  • edit The Competition Authority has approved the acquisition of Dilpack Kenya by Elgon Kenya and the companies will from March 2020 will jointly service the East African market with packaging solutions for the horticultural and floricultural industries.
  • edit The Competition Authority has approved the acquisition of Marsyetu Ltd by Mija Ltd. 

Health and Medical, Pharmaceutical M&A

  • Indo-Oceania Ventures is acquiring Mayfair Healthcare Holdings
  • The CDC Group and Novastar Ventures have invested in mPharma which currently operates in Ghana, Nigeria, Kenya, Zambia and Zimbabwe, and serves approximately one million patients annually, through a network of over 400 pharmacies.
  • edit Goodlife Pharmacy, which had a turnover in 2018 of Kshs 936 million, is acquiring assets of Salama Pharmaceuticals which had a turnover of Kshs 13.3 million and Eurose Enterprises which had a turnover of Kshs 9.8 million in the same years.

Logistics, Engineering, & Manufacturing M&A

  • Mum’s Village Kenya has merged with BabyBliss Nigeria to create the Bliss Group Africa. 
  • Portuguese multinational Salvador Caetano Group has invested Kshs 350 million to launch an automotive hub in Kenya and be the dealer for Renaultand Hyundai cars with plans to venture into the local assembly of the two brands.
  • Bolt, the ride-hailing app, has received a EUR 50 million as venture debt facility from the European Investment Bank to support its research and development strategies.
  • Kenyan e-commerce startup AfricaSokoni has acquired Nigeria company Bolorims to expand into the West African country. The deal, which gives Bolorims a 10% cent stake in AfricaSokoni, creates a new entity in Nigeria, Bolosokoni.com, with AfricaSokoni continue to trade as before in Kenya. 
  • edit Evo Pack Ltd is acquiring Kshs 234 million worth of assets of Digital Packaging Innovation Holdings.
  • edit The Competition Authority has approved the acquisition of certain assets of Bamburi Special Products, a wholly-owned subsidiary of Bamburi Cement, by Yellow House Ltd. .. the deal was terminated by the parties in December 2020
  • edit The Competition Authority has approved the acquisition of 25% of Macquarie Airfinance Limited by Sunsuper Pty.
  • edit The Competition Authority has approved the acquisition of Ignazio Messina and C.S.P.A and Roro Italia S.R.L by Marinvest S.R.L on condition that Ignazio Messina East Africa business continues to operated and managed independently of Marinvest.
  • edit Shareholders of NSE-listed Nairobi Business Ventures approved the sale of 84% of the firm to Delta International FZE of Dubai, for Kshs 83 million, pending regularity approval.

Real Estate, Tourism, & Supermarkets M&A

  • LSE-listed Network International Holdings is to acquire Nairobi-headquartered DPO Group for $288 million worth of shares of Network. The firm whose payment services are used in 19 African countries, was affected by COVID disruptions of travel and the tourism sector. DPO’s founders will get $13m worth of shares and Apis Growth Fund receives $50m of shares in Network. 
  • PrideInn Group has acquired Azure Hotel and re-opened the Kshs 1.2 billion Westlands hotel that suspended operations in March during the pandemic.  
  • Cloud9xp, an online booking service for leisure experiences and an alumnus of Nairobi Garage, has been acquired by Kenyan-based travel-tech outfit HotelOnline in a share swap deal. 
  • Tusker Mattresses announced plans to recapitalize through the sale of a majority stake that is supported by seven shareholders in its Orakam parent company. But it’s not clear if this will be enough to save the struggling retailers that initially tried to secure short-term supplier support through ring-fencing of payments.  
  • Slumberland Kenya is being transferred to Simba Foam.
  • Deal undone: Tiffany & Co. has filed a lawsuit to compel LVMH Moët Hennessy-Louis Vuitton to complete a merger transaction on earlier-agreed terms, noting that COVID-19 has not prevented other parties from concluding similar deals 
  • edit The Competition Authority has approved the acquisition of control Of Kingdom 5-KR- 185 Ltd by Madison Hotels and Resorts. The Business Daily has this story of the sale of hotels between billionaires by Prince Al-Waleed bin Talal to Binod Chaudhary.

Telecommunications, Media & Publishing M&A

  • Edelman, the largest independent global communications firm, has expanded its African footprint with the acquisition of Gina Din Corporate Communications. 
  • Scangroup completed a long-standing deal after a special EGM in May 2020 saw 88% of its registered shareholders participate and vote 99.98% in its favour.
  • Safaricom and Vodacom have acquired control of M-Pesa in Africa from Vodafone for Kshs 2.15 billion, with each firm paying 50% of the amount (Kshs 1.07.billion) as their share of the joint venture. 
  • Tigo has combined with Zantel. The Tanzanian firms have a combined 12.8 million customers and 7.4 million mobile money users.
  • Mettā and Nairobi Garage are combining their services to create Kenya’s largest innovation community, offering access to all their networks, while members will have access to both organizations’ workspaces throughout Nairobi and the complimentary business support services
  • Nigeria’s CcHub acquired Kenya’s iHub to create a mega Africa incubator.
  • edit French media company Groupe Canal+ SA has acquired a 6.50% stake in Multichoice Africa. This comes after Canal+ acquired African film and television studio ROK in 2019.
  • Deal undone: Telkom Kenya and Airtel have mutually agreed to end their pursuit of a joint venture. This came after conditions were raised that delayed the deal.  
  • edit The Competition Authority has approved the acquisition of 20% of Icolo Limited By Prif Africa Holding.
  • edit Autochek.Africa is buying out Ringier One Africa Media’s Cheki and will operate in Nigeria, Ghana and Kenya where Cheki runs new and second-hand car sales, car importation services, car loans and financing.

Other M&A

  • Sport: The legendary Williams F1 racing was taken over by US investment firm Dorilton Capital. Covid and a sponsor departure were triggers for the deal. 
  • Foreign Aid: The United Kingdom, which is leaving the European Union, plans to merge the Department for International Development and the Foreign and Commonwealth Office – to become the Foreign, Commonwealth and Development Office.
  • Art: The art prize collection of the bankrupt Abraaj Group was acquired by a Saudi art organization Art Jameel and will be hosted at their space in Dubai. 

Cancer Insurance in Kenya

Kenyan insurance firm, ICEA Lion (the Insurance Company of East Africa), launched a cancer insurance policy in October. They have been advertising in newspapers, TV with the promise of cover for just Kshs 165 ($1.$ per month). Yet there is a billboard, and their own FAQ’s, that state that the policy is NOT a medical insurance cover. So what is it?

Cancer impacts: Cancer is becoming more prevalent, affecting thousands of Kenyan every year and has been cited in the illness and death of many Kenyans. Today’s Nation newspaper has a report than one in five Kenyans will develop cancer in their lifetimes and that one out of every eleven deaths in the country is due to cancer.

Cancer afflicts all groups, and the working and the wealthy seem as afflicted as poorer Kenyans, who may not have any medical insurance. Treatment comes with hefty bills for scans, operations, radiation, chemotherapy and other treatments, whether in Kenya or overseas, especially in India. There are dozens of fund-raisers every month within families or online, or in church groups etc.

Features: The ICEA cover pays out a percentage of the sum insured when one is diagnosed with invasive cancer (which is spreading to other organs or healthy body cells) or a brain tumour.

ICEA pays the insured person, not the hospital so that they meet their medical or other ordinary living expenses for which cancer treatment would pose a burden. The policy offsets financial obligations arising from medical expenses and is targeted at heads of households. Recent surveys on financial inclusion found that 42% of Kenyans use their own savings to manage shocks and risks, such as medical treatment, and 28% use social networks.

The ICEA policy pays 10% upon diagnosis, 5% of the sum insured for each course of chemotherapy (for up to five instances or five years), 5% of the sum insured for each course of radiotherapy (for up to five instances or five years), and 20% of the sum insured for one surgical procedure in the first five years.

Another 10% is paid in case there is a relapse between years five and ten, and another 10% is paid if there is a remission after year ten. If someone requires palliative care (basically pain management with no more chance of recovery), 100% of the remaining insured sum is released.

For brain tumors, 10% is paid on diagnosis, and 40% of the insured sum can be used to pay for surgery.

Payment is made within two weeks (14 days) of a claim. Payments can be made to the policy owner, or their beneficiaries and is done regardless of other medical insurance in place.

Joining: No medical tests are required for sums up to Kshs 5,000,000 (~$49,250). The maximum age to join is 60 years and the cover expires when one turns 65 years. The policy runs for a minimum of 5 years.

Policy Costs: ICEA has a premium calculator on their website e.g. for a 25-year old to have the cover of Kshs 5 million, it will cost Kshs 1,174 per month or 14,000 per year. And for Kshs 10 million (~$98,500) of cover, that will be Kshs 2,349 per month or Kshs 28,187 ($277) per year. The cost increases as one gets older and if one is 45 years old, and with the looming cap of 65 years, to get Kshs 10 million cover will cost 18,310 per month or Kshs 219,722 ($2,164) per year. Also, payment is waived if someone is diagnosed with stage 4 cancer.

Exclusions:

  • If one is diagnosed within three months of purchasing the cover.
  • If one has signs of cancer within the 12 months before they purchased the policy or had been diagnosed earlier.
  • No payments for surgery to diagnose cancer.
  • Benign or malignant tumours (i.e. cancer which is not spreading )
  • For some prostate tumors or some leukemia (blood cancer) types.
  • If a woman had a mastectomy or lumpectomy within five years before the policy started.
  • For any cancer caused by a pre-existing condition.

Medical Insurance in Kenya: Medical insurance is not a lucrative product. According to the Association of Kenya Insurers (AKI), eleven companies underwrote medical insurance of more than one billion shillings in the year, topped by Jubilee, followed by others such as AAR, Resolution, APA, CIC, and Madison. But the industry saw Kshs 56 billion of claims in 2018, that was led by medical insurance with claims of Kshs 20 billion ($197 million), followed by private motor and commercial motor with claims of about Kshs 14 billion each. Only seven out of twenty-three companies made an underwriting profit from medical insurance.

⁩Other firms with medical insurance that extends to some cover for cancer-related illnesses include UAP / Old Mutual, GA Insurance, and the National Hospital Insurance Fund under their “SUPA” cover.