Category Archives: GEMS

Homeboyz Entertainment at the NSE

A peek at the prospectus of Homeboyz Entertainment that was released after their listing at the NSE

Monday, December 21 saw a brave move by Homeboyz Entertainment to list on the Nairobi Securities Exchange (NSE) by introduction. The Homeboyz board approved the listing on the growth enterprise markets segment (GEMS) of the NSE back in February 2020, just before Covid hit the entertainment industry and the company now projects a 68% decline in their business this year due to Covid.

With the listing of 63.2 million shares at Kshs 4.66 per share, the twenty-five-year-old company becomes the first pure entertainment company on the NSE. Homeboyz was one of the companies in the NSE’s Ibuka program which it joined in May 2019 and has now graduated from. The event comes a few days after the NSE and CMA approved the listing.

  • Ownership and management: Homeboyz share capital is Kshs 31.6 million divided into 63.2 million shares. Owners are Myke Rabar, the co-founder and CEO with 35.6 million shares (56.4%), Rose Maina, the finance and administration director, with 27.5 million shares (43.6%), and John Rabar 20,000 (0.03%). A debt owed to the directors of Kshs 11.6 million was converted to equity in a share split ahead of the listing in November 2020. The three are directors along with Humphrey Wattanga (Chairman), Joe Otin and Stephen Gugu and the firm has 55 employees.
  • Turnover in 2019 was Kshs 311 million and in 2018 it was Kshs 346 million.  Interestingly, a majority of their revenue comes from their soundtracks business (earn Kshs 120 – 130 million every year from Soundtraxx), while events management and equipment leasing have fluctuated as they are more competitive. The company had a pre-tax profit of Kshs 38.9 million in 2019 and in 2018 was a loss of 9.7 million.
  • Have recent contracts with the Kenya Revenue Authority, State House, Kenya Open Golf  Kenya Rugby League, Football Kenya Federation, Sports Loto, and E-Sport Kenya Federation. In the past, they have partnered with UK’s Tiger Aspect Production on Tinga Tinga Tales TV series and now have another deal with Warner Bros for a video game called Pamoja Mtaani. 
  • Their brands include Swype (a payment gateway), Homeboyz Aktivate (experiential marketing), Music Technology Academy (a school for DJs), Y-HUB (online learning) and Fixxit. They also partnered with Publicis Africa Group in 2016, one of the world’s largest communications agencies.
  • Directors have a similar shareholding in Homeboyz Holdings Ltd while at Homeboyz Radio 2017 Ltd, Radio Africa owns 51% of the radio business.
  • They bought a bottled water company for Kshs 100 million in 2009 and divested from it in 2011.
  • Bank at Habib Zurich, NCBA and Bank of Africa. Their main financing is now with Bank of Africa who Homeboyz have asset finance and overdraft facilities that are enjoying a Covid moratorium up to March 2021.
  • Listing fees are Kshs 9.1 million and include payments to the nominated advisor of Kshs 2.1 million (AIB-AXYS), transaction advisor 2.1M (Horizon Africa Capital), and legal advisor 2.8M (MMC Asafo). The auditor is Matengo & Associates.

Reading the Tea Leaves at Kurwitu Ventures

Kurwitu Ventures published their 2017 accounts last month. The company listed on the Growth Enterprises Market Segment (GEMS) of the Nairobi Securities Exchange (NSE) back in November 2014 at a premium price of Kshs 1,250 per share. The GEMS segment was created was created to give small and medium enterprises an easier route to the capital markets through lower requirements such as being in operation and audited accounts for just a year and took take steps to improve their governance

Their 2017 report notes that Kurwitu offers Shariah-compliant investments and asset management services – including Sukuk securities (Islamic bonds) – and their key focus remains on agriculture investments. The company may also invest with others persons in pass-through ventures such as REIT’s and investment notes – and such products may not appear on the group balance sheet.

In their original listing document (PDF), the company had forecast to generate revenue through three sources; from early-stage equity investments (generated by investing Kshs 100M in in projects in 2015, up to Kshs 200M in 2017), doing three (3) pass through investments a year of about Kshs 400 M in value – out of which they would earn a 1.5% fee and finally, corporate financial advisory deals for which they would earn a minimum of Kshs 4 M per deal. But in 2017, the company lost Kshs 10 million (10 M) compared to a loss of Kshs 14 M the year before. They had revenue of Kshs 317 shillings (all interest income, and still an amazingly low amount of interest income in relation to their bank balances) while they had revenue of Kshs 20,885 in 2016.

Directors at the time of listing were Abdikadir Hussein Mohamed, Mohamed Abdirahman Hassan, Sumayya Hassan Athmani, Jamal Isaak Ibrahim, Abdikadir Mohammed Haji, and Abdirahman Abdillahi and shareholders were Abdirahman Abdillahi (51%), Mohammed A. Hassan (27%), Ali Daud Mohamed (4%), Noordin M Haji (4%) and Anas Ibrahim Hussein (4%).  Abdirahman Abdillahi and Mohammed Hassan have since reduced their stakes in Kurwitu. To date, shareholders have lent Kshs 70 million to Kurwitu (including 20M in 2017) and these loans, which have no repayment date or interest charged, can be converted to shares at a value of Kshs 1,400 per share – and the current outstanding loans are equivalent to 50,000 shares against the current 102,000 issues shares. The company is authorized to have 125,000 shares.

The company created an asset management subsidiary in March 2015 that is 99.9% owned by Kurwitu Ventures and 0.01% by Abdirahman Abdillahi (the managing director). It has 3 plots of land in Lamu – Magongoni that it bought for 102 million and which it has owned since its listing, while in 2015 they bought another parcel in Lamu – Lake Kenyatta for Kshs 4 million.

In 2017, the company had Kshs 6 million (6M) in the bank, paid 5 M in salaries and another 3M in professional fees. Their accounts were audited by Abdulhamid & company. This accumulated losses at the end of  2017 were Kshs  44 million, compared to Kshs 33 M the previous year.

Other companies on the GEMS segment of the NSE include Home Afrika, Flame Tree, and Nairobi Business Ventures. Cytonn Investments, which was granted a fund manager license last month, also plans to list under GEMS later this year, while Atlas has already exited.