Category Archives: NSE investor awareness

EFG Hermes launches online trading in Kenya

Kenya’s leading stockbroker, EFG Hermes has launched One, a new online platform that enables retail investors to trade shares on the Nairobi Securities Exchange (NSE).

EFG Hermes One, the equities trading platform will be available to clients of the stockbroker. The One app has been very successful in other markets, notably in Vietnam and the firm hopes to capitalize on the high mobile phone density in Kenya, reported at 108%. 

Speaking at the launch, the CEO of the NSE Geoffrey Odundo said that Kenya has an active retail investor base as seen with M-Akiba, a government bond issued and traded on mobile phones that drew 500,000 investors. He added that the new NSE platform has the ability for “day-trading” and “short-selling” and those would be products that appeal to retail investors.

Muathi Kilonzo, Head of Equities at EFG Hermes Kenya said that retail investors across the globe showed great activity in powering different equities and investments markets while the world was slowed by Covid-19.

Ali Khalpey, the CEO of Frontier Markets, said EFG Hermes started in Egypt 35 years ago and had grown to have 5,500  employees and offices in Egypt, Dubai, Nigeria, Kuwait, USA, Oman, UK, Kenya, Jordan, Saudi Arabia, and Pakistan offering stockbroking, investment banking, asset management, securities brokerage, research, and private equity services.

In 2017, EFG Hermes launched a greenfield operation in Kenya that has grown to be the top stockbroker by value traded on the Nairobi Securities Exchange in 2021. Last year it was acclaimed as the top frontier research institution and the best broker in Kenya and Nigeria. It produces highly prized research reports on frontier markets with recent ones on Kenyan banks, the silicon savannah potential and digitizing COVID-19 stimulus initiatives.

Download the One app from the Apple app store and Google play store, register to be an EFG Hermes client, and get on board after a regulator-mandated, know-your-customer (KYC) process.

Family Bank to raise Notes

A few weeks after retiring a bond issue e early, Family Bank has launched a new medium-term notes (MTN) program.

Family Bank has got approval from the Capital Markets Authority (CMA) to borrow up to Kshs 8 billion over the next five years to go towards growing its capital base, launch new products, and support lending mainly to MSME’s (micro, small, medium enterprises) . The first tranche will be Kshs 4 billion. 

This announcement is a welcome sign for the Nairobi corporate bond scene that has been shrinking for the last few years. Last week East African Breweries (EABL) announced it was retiring its bond program, and earlier, in April 2021, Family Bank had paid back Kshs 2 billion to its noteholders – concluding a Kshs 10 billion borrowing multi-currency program of fixed and floating rate bonds that it had launched in 2015.   

CEO Rebecca Mbithi said she was confident of the bank’s upward trajectory as Family is the fourth largest bank in the country by branch network, with 92 branches. The bank has recorded net compounded growth of profit-after-tax of 21% in the last five years, with assets growing annually by 7% and deposits by 14%. In the first quarter of 2021, it had a 71% increase compared to its earnings last year. 

Transaction advisors for the MTN program are NCBA Investment Bank and Genghis Capital. Other partners are PricewaterhouseCoopers (reporting accountants), MTC (note trustees), Mboya Wangong’u & Waiyaki (legal)  and Tim-Sky Media (PR). 

EDIT June 8: Family Bank Bond details are out.

  • The first tranche aims to raise Kshs 3 billion (about $27.8 million) in Kenya shillings or other currencies, with a 1 billion green-shoe option.
  • Maturity is 5.5 years.
  • The rate is fixed at 13% p.a. or floating (at the T-bill ±2.5%).
  • Funds may be used to expand branches, for on-lending, ICT investments, capital strengthening or regional markets entry.
  • Bond opens on 8 June, closes on 22 June,
  • The minimum investment amount is Kshs 100,000 (about $927)
  • Interest payments will be twice a year.
  • Bonds will be listed at the NSE from June 2021 to December 2026.

EDIT: June 24: The first tranche of the notes was fully subscribed and attracted bids for Kshs 4.41 billion. Family Bank was then granted approval by the CMA to exercise a green shoe option for Kshs 1 billion above Kshs 3 billion tranche size.

The entire first note tranche will pay investors at a fixed rate of 13%, paid semi-annually and will be listed on the Nairobi Securities Exchange on June 30, 2021.

EDIT June 30: Trading of the first tranche of Family Bank bonds at the Nairobi Securities Exchange (NSE) started this morning.

Bank Chairman, Wilfred Kiboro reiterated that Family plans to list its shares on the NSE and that activities like the successful bond listing, which raised Kshs 4.42 billion from investors, will increase the attractiveness of the bank.

Stanbic Uganda 2021 AGM

Stanbic, the largest bank in Uganda held its shareholders’ annual general meeting this morning. Beamed online, the 15th AGM of the bank was held virtually and shareholders were invited to register, watch the stream online and vote on the resolutions.

Excerpts

  • The bank is listed on the Uganda securities exchange and has 22, 000 shareholders
  • Much was made about Flyhub, their new financial services and innovation subsidiary created to compete with fintechs.
  • Shareholders could get their meeting packs on their phones, with the notice and annual report. Also, they could ask questions, and over 90 were received ahead of or during the AGM.
  • There is some board restructuring in Uganda as they separate banks from holding companies. As such, no directors retired at the AGM this year
  • Shareholders voted to adopt the meeting notice, new directors, audited report, and non-executive director fees
  • They voted to approve a dividend (Ushs 2.15 per share) for 2019 that was paid in April 2021. They also voted on a dividend for 2020 (Ushs 1.86 per share) that is in abeyance. The board has applied to the Bank of Uganda to pay the 2020 dividend but that has been refused as the regulator wants banks to withhold discretionary payouts and preserve capital during Covid-19. As such the board did not recommend this item.
  • Shareholders could vote the whole morning, and, just before the end of the meeting, the results were displayed instantly.

Another good thing is Stanbic recently solved a pain point for cross border investors, and allowed them to register and receive dividends by mobile money – such as Safaricom M-Pesa, instead of cheques.

It was the closest thing to attending the AGM of a foreign bank held in Nairobi.

KPMG on Kenya Taxes in 2021

KPMG East Africa has a summary of some tax proposals in the Finance Bill that will be used to plug the country’s ambitious Kshs 3.6 trillion 2021/22 budget.

Here are some excerpts

For investors

  • Depositories are to enhance the identity of investors i.e buyers and sellers of securities.
  • Creation of post-retirement medical funds in retirement benefits schemes.
  • Clarifies the definition of an infrastructure bond.
  • A capital markets tribunal shall deal with matters before it within 90 days.
  • Moving from 16% to exempt after July 1, 2021, are the transfer of assets into real estate investment trust (REIT’s) and asset-backed securities.

Competition

  • Opens up reinsurance to players other than Kenya Re to certify reinsurance contracts.
  • Opens the door to private electricity companies; no longer required to offer their supply to the national grid and they are eligible for investment deductions. Also, if government licenses them, they can compete with KPLC.

Prosecutions

  • Tax cases will not stop where there is an ongoing criminal or civil case.
  • Abolishes the amnesty on rental income tax before 2013 (which had since expired).
  • Rewards for informing on tax dodgers; The Kenya Revenue Authority (KRA) can reward up to Kshs 500,000 (up from 100,000) for information and up to 5% or Kshs 5 million of taxes recovered.
  • Taxpayers are to keep records for 7 years and KRA can assess claims of up to 7 years from the date of a taxpayer’s last return.

Digital Taxes and market

  • PIN’s required for digital marketplace transactions.
  • Digital service tax is removed from residents (only applies to non-residents).
  • Non-resident businesses can maintain records in convertible currencies (not necessarily Kenya shillings).

Large investors

  • To stop base erosion and profit shifting, multinationals / ultimate parent companies are required to file a report on their activities (revenue, profit, taxes paid, employees, assets, cash) in Kenya within 12 months of their financial year-end.
  • Ends group VAT registration for groups of companies; each entity will report its own VAT on transactions.
  • To encourage large investments, there is an exemption for import declaration fee (IDF) and railway development levy (RDL) for investments over Kshs 5 billion or with the approval of the Treasury Cabinet Secretary.

Value Added Tax

  • Introduces VAT on bread.
  • Several items move from 16% to exempt, which means the Treasury CS can exempt them on request. These include infants foods, medical ventilators, lab reagents, gas masks, x-ray equipment, anti-malaria kits and doses, and artificial body parts.
  • Also moving from 16% to exempt, are vehicles for oil & mining companies, and equipment for solar & wind generation.

Other

  • A 20% betting tax returns after being briefly for a year.
  • Bank loan fees no longer incur excise duty.
  • Remove a requirement for VAT regulations to be approved ahead by Parliament; instead they will be shared with legislators under the statutory instruments Act.
  • Withholding tax in oil and mining sectors will be 10%
  • Removes the 10 year limit on carrying tax losses
  • Excise tax goes up on motorcycles and is introduced on jewellery and nicotine substitutes.
  • Reintroduces excise duty on locally-manufactured sugar confectionery and white chocolate that was removed in 2019.

M&A Moment: May 2021

Various merger/acquisition (M&A) deals in the last few months in East Africa since the last update.

(1 US dollar equals 110 Kenya shillings)

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

Kenyan Banks

  • The Competition Authority approved the acquisition of 24.9% of the Montessori Learning Centre by Victoria Commercial Bank.
  • Stanbic Africa gets an extension to the end of 2021 to increase its Stanbic Kenya stake to 75%, by acquiring 14.8M shares from other shareholders through the NSE
  • Mwalimu National Sacco has acquired 100% ownership of the trouble-ridden Spire Bank from business tycoon, Naushad Merali – via @moneyacademyKE

Regional Banks

  • Equity Bank to merge BCDC_RDC & Equity Bank Congo which are its subsidiaries in DRC.
  • I&M Holdings PLC has completed the acquisition of 90% of Orient Bank Limited from 8 miles LLP and Morka Holdings Limited. OBL is the 12th largest bank and a licensed and established commercial bank in Uganda. with 70,000 customers and a network of 14 branches. 
  • KCB Group to acquire 62% of BPR, Rwanda’s second-largest bank, and 100% of Bank ABC in Tanzania – two banks that Atlas Mara had offered to Equity Group.
  • Atlas Mara to sell its Botswana bank, BancABC, and its subsidiary’s BancABC Mozambique to Access Bank.
  • Atlas Mara denies receiving offers from a Nigerian or any other bank to acquire its stake in UBN – the Union Bank of Nigeria.
  • Atlas Mara has completed the sale of BancABC, its Mozambique bank to Access Bank.

Investment Markets and Deal Makers

  • The Johannesburg Stock Exchange to acquire a majority stake in South Africa’s second-largest share registry.

Insurance

  • Allianz will acquire a controlling stake in Jubilee Insurance’s property & casualty business in Kenya, Tanzania & Uganda and the short-term insurance in Burundi and Mauritius for USD 100 million. In the deal, Jubilee will acquire the business of Allianz in Kenya to draw on its global expertise in retail, digital insurance, and micro-insurance.
  • The Competition Authority approved the acquisition of 56% of Agriculture and Climate Risk Enterprise (ACRE Africa) by Zep Re (PTA Insurance Company)
  • The Competition Authority approved the proposed acquisition of 100% of Resolution Leapfrog Holding by Linkham Services.
  • Liberty Holdings to buy out the Coronation (Hilton, Vanderbilt) and Kimberlite fund shares in @LibertyLifeKe in a private deal. Liberty shareholding increases from 57% to 73%, but no plans for a buy out offer and shares will remain listed on the NSE.
  • Monarch Insurance to sell a majority stake (51%) of the company to the Holmarcom Group of Morocco through its holding company “Holmarcom Insurance Activities.” The Kamu Group and Maisha Bank will remain as minority shareholders.
  • Minet Group and Africa Lighthouse Capital have acquired Aon’s shareholding in Aon Botswana, and will now operate as Minet Botswana.
  • Old Mutual Life Assurance has been acquired by UAP Life Assurance for Kshs 2.59 billion.

Remittances

  • The proposed merger involving ECP Africa Fund IV LLC and ECP Africa Fund IV A LLC and Remitix Holdings (Mauritius). Remitix is a Mauritius-based holding company, which holds the business known as the “Mukuru,” a cash remittance technology platform that allows users to send or receive money across various countries in Sub- Saharan Africa and provides foreign exchange services.
  • WorldRemit to acquire Sendwave .. in the last 12 months, the two companies have sent $7.5 billion in transfers (mainly to West and East Africa), generating $280 million in revenue
  • Stripe acquires Nigeria’s Paystack for $200M+ to expand into the African continent.
  • Ghana’s remittance firm Zeepay acquires Mangwee Mobile Money in Zambia – via @SamWakoba

Other

  • The Competition Authority approved the acquisition of 85% of Century Microfinance Bank by Branch International on condition that they each maintain terms agreed with existing borrowers until they expire.
  • South African law firm Cliffe Dekker Hofmeyr (CDH) and Nairobi-based corporate law boutique Kieti Law have agreed to a merger, established under CDH’s name.
  • Kenyan agency banking startup Tanda is expanding its operations regionally after closing a funding round and has secured key strategic partnerships with Mastercard & Interswitch. Tanda’s platform and network supports 58 banks and saccos, 4 telecoms, 12,000 merchants and agents and has served over 300,000 customers.
  • The business of Altima Africa has been transferred to Stratostaff EA Ltd.

Agri-Business, Food & Beverage M&A

  • The Competition Authority approved the proposed acquisition of 50% of Bidco Land 0′ Lakes limited by Aaryan Investments.
  • The Competition Authority approved the proposed acquisition of control of the bakery business of Kenblest Ltd by Kenblest Foods, the proposed acquisition of the maize milling business of Kenblest Ltd by Max Grains and the proposed acquisition of control of the wheat milling business of Mcneel Millers by Kenblest Processors. Kenblest once owned 12.5% of Imperial Bank before it shut down.
  • The Competition Authority approved the proposed acquisition of Glacier Products by ExEo Capital through their Agri-Vie Fund II
  • Eat’N’Go acquires the Domino’s Pizza and Cold Stone Creamery franchises in Kenya – and aims to grow from running 147 stores in Nigeria and Kenya to 180 across Africa by year-end.
  • Certain assets of the manufacturing, production, processing and dealing in agricultural and farm products business carried on by DNC Foods will be transferred to Bigcold Kenya.
  • The assets of the meat processing and food distribution business carried on by Alpha Fine Foods Limited will be transferred to Bigcold Kenya.
  • Coca-Cola European Partners has acquired a 25% stake in Innovative Tap Solutions (PourMyBeer) whose technology allows consumers to pour and pay for drinks themselves, cutting queues, reducing unnecessary contact & wait times, and freeing up staff.
  • The Kenya Ministry of Defense is doing public participation to facilitate the transfer of the Kenya Meat Commission from the Ministry of Livestock to the Department of Defense.
  • The Competition Authority has approved the acquisition of 50% of Propack Kenya by Jaiminia Patel. Propack had a turnover of Kshs 711 million in 2019.
  • EDIT: Tana Africa Capital has acquired a minority stake in Kensington Distillers & Vintners (KDV) that owns majority stakes in Monument Distillers Kenya, Monument Distillers Nigeria and Truman & Orange South Africa. KDV offers high-quality wine and spirit brands and plans to grow its footprint into other high-growth African markets. Tana, a JV between the Oppenheimer Family and Temasek Holdings, has raised $600 million and invested in a diverse portfolio across 20 African countries.

Logistics, Engineering, Manufacturing & Agri-Biz M&A

  • The business and assets of Mindtrac Ltd carrying out the business of e-commerce software development will be transferred to Dukaree Innovations Ltd which will carry on the business of e-commerce software development.
  • Amethis acquired a minority stake in Nouvelle Minoterie Africaine (NMA), a leading FMCG company in Sénégal, which produces and distributes poultry and livestock feed, pasta and wheat flour.
  • Carbacid shareholders vote on the Kshs 1.24 billion buyout of BOC Gases at the end of January and may de-list the acquired company in future. Carbacid set out to acquire 100% of BOC Kenya and BOC accepted the offer and agreed to retire directors, transfer trademarks, and rebrand as all employees will be retained. Carbacid and Aksaya are confident that minority BOC shareholders will accept an offer to buy 100% of the firm at Shs 63.50/share by 6 April. BOC’s board, having sold its 65%, says the deal is willing buyer, willing seller and will not make a recommendation to fellow shareholders.
  • Logistics platform Amitruck and ecommerce platform Sky.Garden announced a partnership to form an end-to-end digital chain for goods pick-up and deliveries to the last mile.
  • The Competition Authority has approved the acquisition of certain assets of Orbit Enterprises by R. K. Sanghani. Orbit had a turnover of Kshs 97 million in 2019.
  • The Competition Authority has approved the proposed joint venture between Elopak AS and Nampak Southern Africa Holdings.

Airline/ Oil/Energy/Mining M&A

  • Heirs Holdings and its affiliate, Transnational Corporation of Nigeria Plc have acquired 45% participating interest in Nigerian oil licence OML 17 (that can produce 27,000 barrels of oil per day) and related assets from Shell Nigeria, Total Nigeria and ENI and have sole operatorship of the asset. The deal involves financing of US$1.1 billion from a consortium of global and regional banks and investors (Afreximbank, ABSA, Africa Finance Corporation, Union Bank of Nigeria, Hybrid Capital, and Amundi).
  • The Competition Authority approved the acquisition of control of Quantum Power East Africa GT Menengai limited by Globeleq, CDC’s energy firm. QPEA is among three firms that were awarded contracts by the Geothermal Development Company (GDC) to develop power plants in Menengai.
  • The Nairobi Securities Exchange suspended trading in Kenya Airways shares following a request from the airline in anticipation of a government buy-out.
  • Express Kenya CEO Hector Diniz gets approval to buy another 5% and increase his combined shareholding to nearly 77%, but with no intention to make a take-over offer or delist the company from the NSE.
  • Transcorp acquired Afam Power Plc and Afam Three Fast Power in a $300 million deal in November 2020.  
  • Amitruck has secured an ‘undisclosed’ investment from Dynamo Ventures and other angel investors after completing the Google for Startups Accelerator Africa.
  • The Competition Authority has approved the acquisition of 60% of Raysut Cement by Zou Fengqi. Raysut had a turnover of Kshs 877 million in 2019.
  • The Competition Authority has approved the acquisition of 100% of Kilimapesa Gold by Mayflower Capital Investments. Kilimapesa had assets of Kshs 742 million in 2019.
  • The Competition Authority has approved the acquisition of (i) Solutions East Africa and (ii) Seagas Kenya by Proto Energy East Africa on condition that 80% of staff at the target companies are retained after the merger.

Education, Tourism, Real Estate & Supermarkets M&A

  • The Competition Authority approved the proposed acquisition of an additional 50% in Nakuru Meadows Development by Pan African Housing Fund LLC
  • Aleph Hospitality, an independent Dubai-based hotel management company has taken over the management of three hotels – Boma Nairobi, Boma Inn Nairobi and Boma Inn Eldoret, which are owned by Red Court Hotel, a subsidiary of Kenya Red Cross Society. In Kenya, Aleph also operates the Best Western Plus Westlands in Nairobi and has been awarded the management contract for a Protea by Marriott hotel in Kisumu, as well as a business hotel to be located in Mombasa.
  • Umubano Hotel in Kigali had been acquired by Madhvani Group for $13M after years under liquidation. The main issue with previous investors has always been a failure to make the requisite investment to expand the hotel which has been managed under Laico, Novotel, Meridian and Accord.
  • Thousands of Airbnb hosts got invitations to buy shares ahead of the IPO, but some did not respond.
  • Treasury plans to merge KICC with the Bomas of Kenya.
  • The Competition Authority has approved the acquisition of control of Mpala Wildlife Foundation Inc. and Mpala Ranch Ltd by  the trustees of Princeton University

Telecommunications, Education, Media & Publishing M&A

  • The East African Safari Classic Rally announced new owners, new management and a new direction for the world’s greatest classic rally, following Minti Motorsport UK’s takeover of the EASCR and Lynn Tundo was appointed as Managing Director of the Classic. 
  • MSP Sports Capital will invest £185m into McLaren Racing (McLaren F1 & IndyCar), acquiring a15% stake that will increase to 33% in 2022, in a deal that values the team at £560m.
  • American investment firm Dorilton Capital acquires the legendary family-owned Williams #F1 team.
  • TransAtlantic Capital Inc has acquired SUREBET, a Kenya licensed sports betting and lottery company. (via Nasdaq
  • Multichoice invested $112 million for a 20% investment in BetKing, a high-growth sports betting group with operations in Nigeria, Kenya and Ethiopia.
  • A trip down memory lane .. serendipitous that eLimu Kenya, a digital educational content firm, that was launched in the iHub, is now being acquired by iHub (CcHUB) 8 years later. – via @AmkaKenya
  • The CcHUB Syndicate that allows angels and early-stage investors to invest alongside CcHUB in high growth technology startups in Africa has funded three startups – Taeillo, Oneport and Stears Business after a due diligence process.
  • Ajua (formerly MSurvey), has acquired WayaWaya, the Kenya-based Artificial Intelligence and Machine Learning known for its innovative Janja platform, that enables borderless banking and payments across apps and social media platforms.
  • Millicom International which trades as Tigo, has signed agreements for the sale of its operations in Tanzania and its stake in the AirtelTigo joint venture in Ghana, marking its complete exit from the African continent.

Health and Medical, Pharmaceutical M&A

  • Mastercard has invested in Kasha Global Incorporated, a purpose-driven e-commerce platform providing essential access to health and personal care products along with the information required to support everyday hygiene needs.
  • The Competition Authority had approved the proposed acquisition of control of Africa Bio Systems by Maisha Holdings.
  • The Competition Authority approved the proposed acquisition of 100% of Dudutech Integrated Pest Management by Bioline Group SAS.

Other Notes

  • The Competition Authority seeks whistleblowers who can confidentially share information on cartel-like behaviour, price-fixing, unsafe products, unauthorized mergers etc. – and they can get a reward of Shs 1 million.
  • Safaricom restructured its strategy and innovation division in FY20 and introduced a mergers & acquisitions department to support strategic acquisitions.
  • Kenya’s Parliament has complained about why the Privatization Commission has not had a substantive board for two years, after the terms of six directors lapsed in June 2019 – and that at a time when the government is engaging with the IMF on the reform of state-owned entities, the Commission only has five directors who are mostly government officials.