Category Archives: IMBank

Private Equity Moment

Access Kenya directors have approved the sale of the company to Dimension Data and will now recommend that all other shareholders vote in favour of the deal at a shareholders EGM on August 20, 2013. The company will forward this circular to all the company’s 28,000 shareholders and need to get a 75% vote approving the deal which will pay Kshs. 14 (~$0.16) per share and also de-list the company from the Nairobi Securities Exchange just six years after an IPO and listing.

Elsewhere, the government has agreed to waive the requirement that local Kenyans have to own 20% of the company after the Dimension Data takeover.
Other Deals

Big Milk: According to the Standard, dairy giant Brookside has acquired a majority stake in rival Molo Milk – continuing a pattern of the company buying out its rival’s and consolidation in the milk processing sector.
Unfriendly Oil: Kenol Kobil is fighting off the takeover of a prime petrol station at Yaya area, Nairobi by a rival company – Hashi Energy. KenolKobil (management) claim an armed gang of 20 people raided the petrol station, kicked out its staff, and rebranded the outlet with the Hashi Energy logo.
Recent M&A deals approved by the Kenya Competition Authority include:
Automobiles
– The acquisition of DT Dobie Kenya (distributors of Jeep, Mercedes-Benz, Nissan, Renault, Chrysler) by Toyota Tsusho Corporation – with a provision that implies that there will be some separation of brands above and below 1,800 cc.
– The acquisition of Cica Motors Kenya (distributors  of Hyundai Trucks and Greatwall brands) by Toyota Tsusho Corporation
Banking, Insurance & Finance
The acquisition of Iroko Securities by Ecobank Development Corporation.
 
Health & Beauty
The acquisition of Laborex Kenya and Epdis Kenya by Toyota Tsusho Corporation.
Technology
– The acquisition of Comztek Holdings by Datatec in a South African deal valued at 88 million rand (Kshs 767 million)
– The purchase of all assets of Interest Africa by BSS Africa (Belgium Satellite Services)

KQ-KLM: The Competition Authority also exempted the joint venture agreement between Kenya Airways and KLM Royal Dutch Airline from the provisions of section 21 of the Competition Act which prohibits the abuse of a dominant position in the Kenyan market.

I&M Bank lists at the NSE

I&M (Bank) Holdings formally listed at the Nairobi Stock Exchange in the banking segment on June 25, 2013. I&M Holdings is the 6th largest bank group in the country with  assets of Kshs. 144.7 billion ($1.74 billion), profits of Kshs 5.73 billion ($69 million) as at December 2012.
 
This was the culmination of a three year transaction process that had several steps including a cash-less acquisition of 100% of I&M Bank by City Trust Limited (then-listed on the alternative shares segment of the NSE, and City Trust  owned 7.3% of I&M), a 1:5  share split to create make 27 million shares (up from 6 million), the issue 364 million additional shares to I&M shareholders in a swap – all resulting in 392 million shares to star  trading at Kshs 50 shillings ($0.60) each on the NSE. 

Within that period, I&M Bank also had a private placement to raise about 2.4 billion ($30 million), launched an e-commerce platform, launched a multi-currency debit card, bought stakes in banks in Mauritius, Rwanda (55% of Banque Commerciale du Rwanda) and Tanzania and also got investment funding from Proparco & DEG banks.
At the launch Dyer & Blair Investment Bank Chairman Jimnah Mbrau advised other family-owned firms to emulate I&M in such moves in order for them to live on long after their founders.
I&M shares started trading at Kshs 93 per share this morning. 

Private Equity Moment

Following the January  post on M&A deals, here are some recent events.
The Private Equity Confidence Survey was published by Africa Assets and Deloitte and it showed that, in 2012, private equity firms invested $1.13 billion towards 58 deals in Sub-Saharan Africa. This was a a slight decline from 2011, and that Kenya, Nigeria and South Africa accounted for 45% of the deals in 2012.  Also in the survey;
– Despite the enormous hype surrounding Kenya’s growing IT sector, dubbed the “Silicon Savannah”, no IT or venture capital deals were reported in eastern Africa in 2012. This clearly reflects that both the IT sector and VC industry in eastern Africa, and indeed Africa more broadly, remain quite young and underdeveloped. Interestingly, IT-Tech deals were done in 2012 in South Africa, Ghana, Nigeria and the DRC.
–  One conference speaker on VC deal structuring said the problem is ‘Kenyan entrepreneurs believe they each have a fantastic proprietary idea, and they want lots of money up front to develop it, regardless of the lack of business model planning done by many of them. 
– The dominant exit route across Africa is a sale to a strategic investor..and most investors expect the average investment lifecycle to be between two to five years.
Recent M&A deals approved by the Kenya Competition Authority include:
Agri-Business & Food
– The acquisition by Almasi Beverages of Kisii Bottlers, Rift Valley Bottlers and Mount Kenya Bottlers
– The acquisition of Lord Erroll Limited by Koita International Kenya. EDIT – The Business Daily in August 2014 wrote on the Lord Erroll buyout
– The acquisition of Ocean Agriculture (EA) by JH Verwiel.
– The acquisition of Siret Tea Company by Siret Outgrowers Empowerment & Produce Company.
– The acquisition by the Rai Family of shares of Sukari Industries.
Banking, Insurance & Finance
– The acquisition of I&M Bank by City Trust Limited.
– The acquisition of PSJ & Associates by PKF Kenya.
– The acquisition of 66.66% of Mercantile Insurance by Colina Holdings
Building, Energy & Real Estate
– The acquisition of shares in Cemtech (who were to put up a cement factory in Pokot) by Rock Field Corporation.
– The acquisition of Economic Housing by Mali Rasili Group.
– The acquisition of all assets of Mutonga Mutuandaju Small Hydro Power  (a hydro-power project in South Imenti, Meru) by Intrepid Energy.
Health & Beauty
– The purchase of shares in Alexander Forbes Healthcare by Zanele Investments Holding Company
– The acquisition of the health and beauty business (cosmetic & hair brands) of Interconsumer Products by L’Oreal East Africa
– The acquisition of certain assets & liabilities of RTT Health Services by Imperial Group
– The acquisition of Lyntons Pharmacy by Luwada Management
– The acquisition of Star Biotech Lab & Diagnostics (a pathology lab) by Metropolis Health Healthcare
– The acquisition of an indirect interest in the assets of Strategic Industries Limited.
Media & Communications
– The acquisition of Alldean Networks Limited by ISAT Africa Limited FZC and Richard W. Bell.
– The acquisition by EMC Acquisition, LLC and Emerging Markets Communication, LLC of EMC, LLC.
– The acquisition of shares in Dodhia Packaging Limited by Corpak Africa and Corpark Kenya
– The acquisition of  the investment in Rodwell Press held in Interlabels Africa by Interlabels Industries Private Limited.
Oil & Mining 
– The acquisition of Aviva Mining Kenya by Africa Barrick Gold (from Aviva Corporation)
– The acquisition of 87.25% of Pacific Seaboard Investments Limited by Tardigrade International Inc.
Tourism
– The acquisition of East Africa Safari Ventures by Natural Habitat Safaris.
– The acquisition of 80% of Nairobi Tented Camp  by Porini Limited.
– The acquisition of Leleshwa Safari Company  by Natural Habitat Safaris
– The acquisition of Vittoria Limited and subscription of shares in Olarro Conservancy Limited by Arabian Ranchers Property Investments
Transport, Engineering & Logistics 
– The acquisition Swift Global Logistics by DSV Air & Sea Holdings
– The purchase of 55% of Tradewinds Aviation by NAS Africa Aviation
– The acquisition of 60% of Treadsetters Tyres by Bharat Doshi, Aashit Shah and Carlet Overseas Corporation.
– The acquisition of 40% of Tredcore Kenya by Magister Limited
– The acquisition of Vtechnologies (Kenya) Limited by UHT SAS.
EDIT
More deals approves in May 2013
– The acquisition of the remaining shares in Cable Television Network by Wananchi Group
– The acquisition of 99% of Microensure Advisory Services by Microensure Holdings
– The acquisition of Brightermonday.com by Cheki Africa Media.

– The acquisition of 1,680 steers and 792 cows from Delamere Estates by Ngombe Ltd 
– The acquisition of 80% of Altech Kenya Data Networks and 100% of Altech Swift Global Limited by Liquid Telecommunications Holdings
–  The acquisition of the business of Daru Shifa Centre by Viva Afya
– The acquisition of Endebess Estates (Kilifi Holdings)  by Ballobhai Chhotabhai Patel.
 
Other recent deals in the News
– Jacana Partners and InReturn Capital announced a merger, and plans for a $75 million SME Fund
– 88mph and the eVentures Africa (eVA) Fund announced a partnership to improve investment opportunities
– Does Tuskys Supermarket want to buy Ukwala  a rival supermarket chain?
– 90% of I&M Bank shareholders have accepted the takeover by City Trust Ltd and the deal makers have been granted a 2 week extension to reach out to the remaining shareholders. Next steps include a share split.  mandatory acquision of the balance of shares, and a possible NSE-listing on June 12.
–  Airtel signed an agreement to fully acquire Warid Uganda – the combined entity will remain the number two carrier in Uganda with 7.4 million customers  and a market share of 39%.
Fastjet and the CEO of Fly540 agreed to cease their court battles and work towards an acquisition of Fly540  – freeing FastJet to commence Kenyan operations.
– A summary of China investments around the world in the year 2011.
–  In the US, M&A of VC-backed startups are at a four year low.
–  Venture capital merger and acquisition activity in the US dropped in the first quarter of this year, ending with the fewest exits since the first quarter of 2009, according to the just-released venture report from Dow Jones VentureSource.
Some 86 M&A transactions were done for a total amount of $4.3 billion, down 44% in deal activity and a decline of 24% in capital. In the final three months of last year, 113 deals brought in $7.6 billion to the VC-backed startups.
– Companies raised $6.36 billion in the first quarter of 2013, the lowest amount raised since the third quarter of 2010, when $6.1 billion was raised. In the first three months of the year, 752 companies were funded, which is similar to the 732 companies that got funded just over two years ago. Healthcare deals accounted for almost a third of the invested capital.

EDIT Jambo Biscuits food processing business is being transferred Kilimanjaro Foods.

Mobile & Card Payments across East Africa

A new unsecured card solution was launched by afb last week that will allow customers to instantly spread the cost of their purchase at participating shops into affordable 6-month repayments. afb have signed up 52 merchants like Baus Optical, Cambridge Opticians, Fabguru Shoes, Kitengela Glass, and local supermarkets (Tumaini, Home Depot, Homemade) and are also signing up other merchant shops where consumers will be able to apply for cards and get them approved & issued in the stores ahead of making a purchase.  afb settles the transaction amounts directly into the retailer’s bank account, and the customer makes repayments via M-Pesa. afb next hope to venture into loans and insurance in Kenya.

How large is the card market? A Central Bank of Kenya reports showed that there were 9 million debit cards and 140, 000 credit cards in use in Kenya in 2012.

In terms of mobile money, CBK data showed that 21 million Kenyans moved Kshs. 141 billion ($1.65 billion) via 53 million mobile money transactions during February 2013.

CBK has also come up with new mobile money rules that target money laundering. They require that operators link different accounts opened by a user with a single ID card, flag accounts that move more than Kshs. 100,000 (~$1,175) per day or 300,000 (~$3,530) per week, have audit trails, institute systems to handle customer complaints and retain transaction data for 7 years. 

KCB and Western Union who have an account-based money transfer service (ABMT) in Kenya will extend it across East Africa this week, enabling KCB customers to receive money from Western Union directly into their accounts.

Kenya Airways has a 1.5% fee on all credit card transactions (owing to high processing bank charges).

Following a spate of fraud incidents last December, the Kenya Bankers Association (KBA) has launched an ATM safety campaign dubbed “Be Alert” or “Kaa Chonjo” which include tips such as cover the PIN’s with their hands (at ATM’s), and not sharing PIN numbers with anyone (including spouses). 

KBA also announced the shift by Kenyan banks to the new Europay, MasterCard and Visa (EMV) technology to ensure better security of cards.

90% of KenyaPower pre-paid electricity tokens are now purchased using #Mpesa – according to a Safaricom Business ad.

Diners can now pay restaurant bills via M-Pesa under a new partnership between Kopo Kopo, Eat Out and Safaricom. Restaurants accept payments at 1.5% per transaction.

MasterCard and Equity Bank introduced PayPass enabled debit cards in 5 African markets which will enable merchants to receive payments via low-cost add-ons linked to applications on their mobile devices (such as a smartphone or tablet) 

Mastercard and I&M Bank launched a multicurrency (Dollars, Pounds, Euros) prepaid card which enables users to load up to $10,000 and make foreign currency purchases without incurring exchange rate or other charges.

MasterCard also released a study called the MasterCard African Cities Growth Index that showed that Accra, Lusaka and Luanda offer the highest growth potential in Sub-Saharan Africa. Other ranked cities included Dar es Salaam (4), Addis Ababa (5), Nairobi (6), Kampala (7), Johannesburg  (8), Cape Town (11), Mombasa (12), Lagos (13),  and Khartoum (19).

Credit reference bureaus like CRB Africa and Metropol are expanding across East Africa.

The inaugural Mobile Money Africa Awards will be held in Johannesburg next month, to award the best mobile money app, mobile banking service, and mobile money platform for Africa, among others.  

Nation Hela launched last year has 8,000 active cards in use.

With PesaPal, Kenyans in the Diaspora can send school fees payments directly to 12,000 schools in Kenya using their credit cards (no need for money transfer service). 

Shell Kenya have a visa card promotion to encourage motorists to swipe their cards and pay for fuel The platform is powered by Equity Bank POS at all Shell stations, and station owners are not charged commissions for card sales (Shell pays all commissions).

Tangaza321 is said to be the second largest mover of mobile money behind M-Pesa. The Tangaza system uses biometric data (fingerprints) as many customers don’t possess national ID cards and allows them to send money across all networks, even to people who don’t have mobile phones.
A team with the University of Nairobi’s University Students Community Organization (Uniscoo)  has developed a prepaid card for university students. Uniscoo which has 25,000 students seeks to encourage good money management among students through the use of the prepaid card powered by MasterCard.

Kenyan M&A

The Kenya Competition Authority recently approved for several corporate deals to be completed. Some of them were mere rubber stamping formalities, as the deals originated far away or had little in the way of local competition that would compel the authority to intervene. 

They covered a variety of sectors including: 

Agro-Processing
  • (The acquisition of) The flower growing business of Finlay’s Horticulture Kenya by Lamorna
  • (The acquisition of the) Residual business  of Agrifresh Kenya by Finlays
  • (The acquisition of)  Sarkish Flora Ltd by Africa Blooms Limited.
Oil & Mining
– Acquisition of 100% of Cove Energy Plc by Shell Exploration & Production (Thailand) 
– Acquisition of  100% of Dominion Petroleum by Ophir Energy Plc.
– Pacific Wildcat Resources Corporation acquiring 100% of Stirling Capital  (UK) and Cortec Pty (UK)
– Elsewhere, there are new (and controversial) that have been proposed that mandate for local shareholders to own 25% of petroleum companies and 35% of mining companies (read more) 
Money & Finance
  • Acquisition of 100% of Aureos Capital by Abraaj Capital
  • Acquisition of Grant Thornton Kenya by PKF & Associates (which continues to be in an expansion mode even after taking over DCDM)
  • (The acquisition of) Additional shares in Pan Africa Insurance Holdings by Hubris Holdings
  • Acquisition of Credit Reference Bureau (Holdings) Limited by Transunion Netherlands (part of the credit giant Transunion
  • 62.52% of Micro Africa by Letshego Holdings (of Botswana)
Tourism
  • (100%) of  Ol-Seki Ltd by Hemingways Holdings
Manufacturing & Engineering
  • The acquisition of selected assets of Raffia Bags Kenya by Polycem Bags
  •  The acquisition of 62% of Civicon Ltd by Transcentury Engineering & Contracting
Service
  • The acquisition of 75% of Nairobi Java House by Emerging Capital Partners Africa Fund III. The deal won the AI  deal of the year  award and last weekend was featured on the Citizen TV piece called Who owns Kenya  (video)

Others

  • Shoden Data Systems (Proprietary) by Hitachi Data Systems Europe (a sub-Saharan territory deal)
  • Kingfisher Properties by Mahesh Sanghrajka & Aasheet Sanghrajka.
  • Centro Suburb Ltd by  Westlands Triangle Properties

On-Going

Following on three earlier deals: 

  • Barclays & Absa are back in the news, six years later
  • The shareholders of three bottling companies in Kenya have agreed with a Coca Cola  plan to merge them under a single company Almasi, with one board of directors and CEO and cut other costly production redundancies
  • No word on Kenol. 

 

In the News

Other ongoing deals, yet to be concluded include: 

Money & Finance

  • Deloitte East Africa merging with Haile Solomon & Tekeste (Ethiopia)
  • The I&M Bank and City Trust deal
  • I&M Bank Limited buying 55% of Banque Commerciale du Rwanda
  • EcoBank Kenya pursuing an undisclosed local investment bank
  • UAP Holdings pursuing an undisclosed Tanzanian insurance company

Other

  • Australian firm Aviva Corporation (Australia) selling stakes of Kenyan subsidiary to Africa Barrick Gold (ABG)
  • Copy Cat buying 51% stake of Seal Africa
  • Low cost airline, FastJet which took over the routes of Fly540 in Kenya and Tanzania, also plans to take over the collapsed operations of South Africa’s 1-time airline for $0.12
  • The Woolworth – Deacons deal