Category Archives: Nakumatt

NSE Moment: Buyouts, Vultures, Divestments

A look at recent deals at the Nairobi Securities Exchange (NSE) and other privatization and equity bids since the last update. 

Divestments

  • Essar released a bombshell from India that they would be abandoning their investment in the old Kenya Pipeline Refineries and sell their stake back to the Kenya Government for $5 million. At the same time a Receiver Manager put up (the closed) Pan African Paper Mills up for sale, but that is likely to be complicated by links the company had with vulture funds who purchased Panpaper’s debts in the international secondary debt market. These faceless entities — basically different mutations of one group (going by the names like Noon Day Asset Management Asia and Farallon Capital Institutional Partners) — and 11 such firms own 37% of the company’s debt.The Essar fallout prompted Parliament to also look into the mystery of Orange Kenya which keeps asking for more government support even as the government loses equity in the company.Since then, the government announced that a new office will advise the government on state investments: Attorney-General Githu Muigai said the Government Transaction Advisory Services Office will guide state deals with the aim of sealing opportunities where the latter has been losing its shareholding in parastatals without monetary gain.  
  • EDIT: Another divestment is Kenya Wine Agencies Limited (KWAL) finally exiting Uchumi after disposing of all its shares. It had 18% in 2004 and 4% in 2012. – via @NSEKenya 

Done Deals

Recent M&A deals approved by the Kenya Competition Authority include:

  • Agri-Business: The acquisition of Juhudi Kilimo (turnover of Kshs 30 million) by Soros Economic Development Fund.
  • Aviation: The acquisition of Lady Lori Kenya by Ian Mbuthia Mimano, Adi Vinner and Peter Nthiga Njagi.
  • Education: The  purchase of 60% of Safer World Investments by School Operators Limited (owners of Peponi School) (The two will have a combined turnover of Kshs 672 million or ~$8 million)
  • Finance & Banking: The acquisition of Francis Thuo & Partners by Equity Investment Bank.
  • Food: The acquisition of 66% of Coca-Cola Juices Kenya by the Coca-Cola Export Corporation.
  • The acquisition of Lonrho PLC by FS Africa  (as part of a $280 million deal in South Africa).
  • The acquisition of Ma Cuisine by Harper Holdings.
  • Health: The acquisition of Jampharm Chemist by Viva Afya (the two have a combined turnover of Kshs. 19.5 million).
  • The acquisition of Ascribe Group (which has a turnover of Kshs 70 million) by Emis Group.

Deals Bubbling

  • Brookside Dairies have taken over Buzeki, the makers of Molo Milk, in a Kshs 1.1 billion ($13 million) deal that increases Brookside’s share of the dairy market to 44%.  – EDIT GAZETTE NOTICE No.  15068 – THE TRANSFER OF BUSINESSES ACT: NOTICE is given that the furniture, fittings, fixtures and the assets and the stock being the business of manufacturing and selling of milk and milk products owned by Buzeki Dairy Limited (the “Transferor”) on the premises situated at Ganjoni, Mombasa have been sold and transferred by the Transferor to Brookside Dairy Limited who will carry on the said business of manufacturing and selling of manufacture of milk and milk products at the premises of Brookside Dairy Limited under the name and style of Brookside Dairy Limited (the “Transferee”) with effect from 1st November, 2013 (the “Completion Date”).The address of the Transferor is Post Office Box Number P. O. Box 85532-80100, Mombasa, Kenya. The address of the Transferee is Post Office Box Number P.O. Box 236–00232 Ruiru, Kenya. The Transferee is not assuming nor does it intend to assume any creditors or debtors of the Transferor incurred in connection with the purchase and business of the assets of the Transferor up to and including the Completion Date and the same shall be paid and discharged by the Transferor and likewise all debts and liabilities owing and due to the Transferor up to and including the Completion Date shall be received by the Transferor. Dated the 5th November, 2013. KIPKENDA & COMPANY ADVOCATES, Advocates for the Transferor. COULSON HARNEY ADVOCATES
  • Centum shareholders approved new investments in Liberty Beverages, Mvuke Power, Two Rivers Lifestyle Centre, Centum Share Services, Centum Asset Managers (who are buying Genesis Kenya)  and the acquisition of 79% of Kilele Holdings.
  • Africa Media Venture (AMVF) a Dutch-based venture capital firm has raised its stake in a Kenyan restaurant guide website, EatOut, from 25% to 32% for Kshs 17 million ($200,000) in a transaction that values the online portal at Kshs. 220 million.  
  • Lonrho is selling its entire stake (11%) in African airline Fastjet. 
  • Crystal Ventures (owned by the Rwanda Patriotic Front) plan to sell their 20% stake in MTN Rwanda, in an IPO which will make MTN Rwanda the third company listed on the Rwanda Stock Exchange – after Bralirwa and Bank of Kigali.
  • Sameer Investments is buying out 41 million shares that Bridgestone owns in Sameer Africa – after which Sameer will own 159 million shares equivalent to 72% of the company.
  • Across the border, Tanzania’s Precision Air is looking for a government investment, just a year after an IPO which raised $7 million and reduced the shareholding of Kenya Airways from 49% to 35%
  •  Unga Group will acquire Ennsvalley Bakery for Kshs 125M ($1.5 million) and also dispose of its shares in Bullpak.
  • EDIT: Kestrel Capital has arranged a $1.2 million private placement of convertible debentures in Stockport Exploration to local Kenyan qualified investors. Stockport is listed on the Toronto Stock Exchange and has mining interests in Nyanza Kenya where they are exploring along a prolific gold-hosting greenstone belt. Zeph Mbugua, the Chairman of TransCentury, became a director of Stockport in February this year. 
  • EDIT:  Swedfund, the Swedish state’s venture capital company, and The Africa Health fund through The Abraaj Group, a leading investor operating in global growth markets, made a $6.5 million investment in The Nairobi Women’s Hospital, a leading private healthcare provider for women and their families (men and children) in East Africa.

Shareholder Restructurings

  • Businessman Christopher Kirubi is acquiring an additional 32 million shares in Centum Investments (for ~$8.6 million) which will raise the stake he controls to about 30% and he has received an exemption from complying with the NSE requirement to make a takeover offer.
  • After listing at the NSE, I&M shareholders have done a swop to bring the company’s investor numbers past the 1,000 shareholder mark.
  • The WPP Group (through Cavendish) is increasing its shareholding in Scangroup from 33% to 50%.  WPP, the largest advertising group in the world, is strengthening its control of Kenya and the East African market ahead of the merger of the two other advertising firms – Omnicom the No 2. in the world  (owners of TBWA) and No. 3 – Publicis (of France)  – which, when combined, will be larger than WPP.

De-Listing’s – Companies leaving the NSE 

  • Access Kenya Group after their buyout by Dimension Data was approved by the Government
  • CMC is at the conclusion of a buyout offer from Dubai’s Al-Futtaim Group who are offering existing shareholders Kshs 13 a share, or about $90m. 
  • The Dubai-based conglomerate, which holds lucrative distribution rights for Toyota and Honda in its home market, will help the struggling Nairobi-based automotive group expand its brands beyond its existing stable, which includes Volkswagen, Ford, Mazda and Suzuki.
  • R.E.A. Trading, which owns 56% of Rea Vipingo Plantations has offered to buy out all other shareholders at a price of Kshs 40 per share, representing a 43% premium. The shares that have since been suspended from trading and will be delisted from the NSE if the deal succeeds.

Stalled Deals

  • There was a Financial Times (FT)  article on queues forming to buy up East African retailers but deal opportunities at Nakumatt and Naivas have been hampered by shareholder/family disputes that darken their buyout reputations and possibilities.

Mostly Equity

Friday the 13th, and almost a year after Equity Bank listed on the NSE should have capped off a great week for Equity Bank – except for some MP’s in Parliament and anonymous letter circulating on the web. More on possible impact on share price and a great defense of the Equity’s significance to the country’s business and investment scene – but BDAfrica should probably mention that their CEO is an Equity director, in the same way CNN anchors mention their connection to Time Warner each time they report on the company.

more
– Equity is usually the first bank to announce quarterly results and we can expect more great numbers in the weeks ahead for June 2007.
– Alongside shareholder Britak, Equity will take up a 24.9% stake in Housing Finance. But the banking Act discourages banks owning shares in other banks (merging is ok, shareholding is not)
– Going international, Equity is poised to expand again, opening branches in Rwanda and Uganda
– Equity bank customers will also be able to access their funds at Nakumatt stores starting next week

More bank happenings

ABC joins the flat fee account race with a Kisima account (priced at 495 shillings)

Barclays has partnered with Nakumatt stores to launch a credit card. Barclays also has a branch on River Road I hear – a sight to see!

What can the Central Bank do about the strengthening shilling? With appreciating currencies, see what India did to help their exporters and Uganda did to curb currency speculators.

Consolidated bank has introduced solid loop product for businesses pursuing contracts/tenders/LPO’s

EADB has a line of credit from EXIM India to finance importation of eligible goods from India into Kenya, Uganda or Tanzania

Family finance aka Equity Blue opens a branch in Kapsabet

CDC opts out of the Housing Finance rights issueleaving the door open for Equity Bank and Britak

KCB now opens branches every Saturday from 9 to 12. The days of banks only opening on the first & last Saturday of the month is now history, with most now open every Saturday with longer hours, even on Sundays.

As the Telkom privatization kicks off, will several banks opt to get paid or sit back and convert their debt into Safaricom shares?

other economic developments
– Tata chemical (majority own of Magadi soda) plans to build another soda ash factory at Lake Natron, Tanzania- a move being opposed by conservation groups
– A new School of the Nations in Kitisuru
– Lake Naivasha resort and spa
– The government plans to set up a radioactive waste processing facility on Karen!
– The National social security fund plans to complete an 11 storey parking complex on Ngong road. It’s about time someone did something to ease the parking shortage esp. for upper hill workers

opportunities

Jobs – most from the daily papers this week

Chief financial officer at the Africa trade insurance agency . D/L is 22/7

Kenya capital markets authority: mangers [finance, corporate communication], assistant managers [financial analysis, enforcement,] officers [compliance (2), legal, surveillance, research] accountant, MIS systems analyst. Details at online and D/L is 25/7

Action research officer at decentralized financial services recruitment@kenyagatsby.org by

Join the East African development bank Young processionals program. Apply to
recruitment@eadb.org by 23/7

Business relationship manager at Equity bank. Apply to jobs@equitybank.co.ke by 20/7

First community bank: Financial controller, Managers (trade finance, internal audit, human resources, brand development, e-banking & cards, legal) Branch managers (Nairobi, Mombasa) Relationship managers (corporate banking), corporate credit analysts, retail credit analysts. Apply to fcb-vacancies@ahmedabdi.com by 25/7

HLB Ashvir: partners or senior managers. Apply to akassam@ashvir.com

Assistance credit manager at housing finance. Apply to human.recources@housing.co.ke by 20/7

Kencall: trainee managers, head of HR, transcribers (50) and other positions. Apply online.

Apply online for project planner at Kenya airways

Kenya ICT board: Marketing manager, financial management specialist, procurement specialists. Apply through Deloitte at esd@deloitte.co.ke by 27/7

Apply online for Financial analysts Kenya shares

Programme Manager for the Global Water Operators Partnership Alliance of UN-HABITAT . D/L is 4/8

General Manager at UUNET. Apply to jobs@biz-ideas.bix by 20/7

Independent financial adviser at Winton investments. Apply to jobs@winton-investment.com

CEO of the Youth enterprise development fund. Apply through Manpower associates by 25/7

aviation
– CMC aviation requires captains and first officers for dash 5 and dash 8
– Jetlink looking for captains and first officer for dc-9 aircraft

Nakumatt fights back

In a paid advertisement appearing in today’s papers, Nakumatt sets out to correct some inaccuracies mainly in the financial numbers that have been mention in the media comparing the recent performance and taxation between Nakumatt and Uchumi

Turnover Nakumatt’s was not 20X times Uchumi’s and they have always had fewer stores than Uchumi. They have gone from 7 stores in 1997 to 17 today while Uchumi has gone from 14 in 1997 to 30 in 2004 and down to the 17 which they closed on June 1. Nakumatt had lower turnover up till 2005 – their 1997 sales of 2.7 billion shillings (2.7b) rose to 7.1b in 2004, 11b in 2005 and estimated 11b in 2006 while Uchumi’s rose from 5.2b to a high of 8.9b in 2003 before dropping back to 5b in 2005 with the closure of 13 stores.

Profitability Nakumatt made profits of 60 million shillings (60m) in ‘97 and ‘98 each, lost about 200m each year (401m in 2000) from ’99 to 2002 and returned to profitability in 2003 (111m), 140m in ‘04, 287m in 05 and an estimated 459m in 2006 while Uchumi had increasing losses from -246m in ’03, -654m in ’04, -1.2 billion in ’05 and an estimated 600m in ’06.

Inspection Nakumatt say all their suppliers are compliant with the Kenya Bureau of Standards, which is not entirely true as many of their goods are imported and have not been verified for the last few years.

Taxes Claims they paid 21m in ‘04, 222m in ‘05 and 383m in ’06, and are ETR compliant. Electronic tax registers (ETR) were introduced by KRA to ensure VAT amounts collected were remitted to the government.

Outlook
The statement is a commendable start by Nakumatt which needs to do a lot more on the PR front. It is assuring that they have stated that they employ 3,000 Kenyans, have 600 local suppliers and that their books are audited by Deloitte & Touche.

The company needs to be more open in its dealings with the public since their image which has taken a public battering from parliamentarians and money laundering allegations. They should make more mileage from their philanthropic efforts, hire a spokesman or firm, and put forward a board of directors, preferably with a reputable Kenyan as Chairman to be the corporate face of the company.

Uchumi
I don’t put much faith in the recovery of Uchumi which has lost so much ground to other supermarkets. If it ever reappears on the stock exchange I’d sell my 500 shares immediately. The Nakumatt statement claims that they currently have an estimated stock of 3.1b compared to Uchumi’s 330m – which paints a bleak picture for Uchumi since both firms had 1.2b worth of stocks in 2004.


I don’t see a KMC (Kenya Meat Commission) style comeback for Uchumi – speaking of which I can’t wait for see KMC to start selling their very tasty corned beef again.

Mid-week Business

Fuel racket
The post budget 3 -4 shilling hike which has taken the price of a lire of fuel from about 73 to above 82 shillings per litre is the second such increase in just over a month.

Kengen
Refund cheques and physical share certificate are now ready for all Kengen shareholders and can be collected from stockbrokers. I already got and spent my refund last month.

Uchumi lifeline
Trade & Industry Mukhisa Kituyi says Uchumi could resume operations in just under a month under a governemnt approved plan. No word yet on the fate of (us) shareholders.

Naku Crash
– Uchumi’s main rival Nakumatt are having a sale this week at their ‘Mega’ branch (Nyayo Stadium) which is driving housewives, techies, and electronics shopkeepers, crazy. For the last week there’s been a mad rush each morning for flat screen TV’s, fridges, cookers, microwaves, radio’s and other electronic items which are have all been discounted by 50%.

– Meanwhile the company’s directors have failed to heed a lesson that the corporate world has learnt – which is that you don’t mess around with Government ministers. From Michuki (Standard & KTN), Tuju (CCK, KWS, KICC), Ngilu (Narc-K), Munyao (KMC), Kirwa (Kenya Seed) Maitha (city councils) and now Kituyi who has turned his fury at Nakumatt for interfering with his revival plan for Uchumi and retaliated on two fronts against the company – one is the non-inspection of their goods and the other is on the low taxes they pay (1/10th of Uchumi’s VAT).

New Bank
Family Finance Building Society will be licensed as a commercial bank at the end of this month and add on 5 new branches by the end of the year.

New University
Following the launch of Gretsa (U) in Thika last month, Kenya Methodist University in Meru will receive accreditation papers later this month.

Housing
New houses are on sale at the under-construction Balozi Estate off Muthaiga road. The 4 bedroom houses are going for 6.5 million.

Buy a minibus
Easy coach is disposing of 14 buses (10 38-seat Mitsubishi’s and 4 25-seat Isuzu’s). More details from easycoash@wananchi.com

Sleeping giants want you back
Telkom is waiving charges in a bid to get customers to reconnect their disconnected/out of service telephone lines. Reconnection and other charges from when the line was disconnected have been waived and the company will arrange repayment plans to settle the old bills.
Posta reminds Kenyans that it has over 80,000 mail boxes available at post offices around the country at an annual cost of 1,300 shillings for individuals and 4,000 for corporations.

Monster Week

Monster truck finale: Three ministries are fighting for the monster trucks and other assets of the about–to-be-disbanded CKRC.

Flora Kenya: A look at some of the major flower farms in Kenya. From Timbuktu Chronicles

Banking Secret #1: Cheques over 10 million shillings are cleared on the next day, unlike smaller cheques which normally take about a week to clear.

Nigerian Shares:During the Arsenal-Chelsea game shown on Super Sport, there were numerous advertisements about an on-going rights issue of Union Bank of Nigeria. I am not sure what the cost of advertising is on DSTV, but it’s unlikely that Kenyan banks or institutions will place adverts on DSTV especially for a rights issues. Note that the 2004 KCB rights issue had a total budget of 104 million shillings of which only 13 million was set aside for advertising.

Mobile phone questions: 

  • Safaricom House is a new office building next to Njuguna’s on Waiyaki Way. What will happen to the old Safaricom House in Westlands?
  • Now that I have bought a Celtel line for 49/= and received a second free Safaricom line for buying 100/= worth of credit on Luthuli Ave (both of which are dormant) what is my average value (ARPU) as a subscriber to both companies?

Tourism: Workers in the tourism sector are being encouraged to learn Mandarin to cope with the 10,000 (and growing) tourists from China who visit Kenya each year.

Housing: Construction of Eagle Plains Housing Estate, a 350 housing development off Mombasa Rd, is expected to resume after a Nairobi Court dismissed an objection to the construction of the estate filed by Nakumatt supermarkets against the developer and the National Environmental Management Authority (NEMA). Nakumatt had complained that the location of the proposed estate, which is next to its headquarters, went against the spirit/business theme of the area, which already has 13 major industries.

Retrenchment Pipeline: The Minister of Finance has approved a tax waiver of benefits to be paid to retrenched employees of the National Bank of Kenya (NBK), Kenya National Trading Company KNTC and the Civil Service. As part of the package, civil servants will not be allowed to re-join the service for a period of three years.

Jobs:  At the Kenya Times newspaper; managing director, chief accountant, adverting manager. Apply to the secretary to the board, kenyatimes@timesnews.co.ke by January 6.

Educational opportunity:  The Cornell Assistantship for Horticulture in Africa (CAHA) provides a doctoral assistantship in horticulture to a student from Sub-Saharan Africa. More details here and the deadline for applications is March 1, 2006 Thanks, Kevin.

Correction: The Nation corrects a story they had published earlier to the effect that Uchumi had fired PWC as their auditors.