Category Archives: NSE IPO

Mdundo lists on Nasdaq

September 4 saw the listing of shares of Mdundo on Nasdaq’s First North Growth Market in Copenhagen, Denmark. 

This comes after the Danish firm, Mdundo offered 4 million new shares at 40 million Danish Kroner in August. They were marketed in Denmark but got interest from Sweden and other countries, resulting in 2,900 investors taking up 8.4 million shares, and giving Mdundo a value of 102 million Kroner (~$16 million).

Excerpts from Mdundo’s investor prospectus.

  • Ticker name: “MDUNDO
  • Mdundo enables musicians to upload songs and make money from their content as people to stream and download music from their app and website. It has a commercial focus in Kenya and Tanzania. 
  • Mdundo means rhythm in Swahili and it has 5 million monthly active users, half of who are in East Africa, who stream music free, to listen, and pay to download songs. 
  • Mdundo has paid out 1.9 million Kroner (~$300,000) to artistes who have uploaded 230,000 songs from 32 African countries.
  • Tanzania’s Diamond Platnumz is one of Mdundo’s top artists with over 7.2 million downloads, while Kenya’s Willy Paul, Naiboi and Khaligraph Jones have all received the Mdundo Platinum Award which is given to musicians with 1 million downloads. 
  • Use of Funds: With the new investments, Mdundo aims to double in size to 9 million subscribers in 2021 and 18 million in 2022, targeting sub-Saharan Africa, the world’s fastest-growing mobile market which will be 623 million large by 2025. The app can also be used out of Africa and the company plans to grow its international users with a subscription model that goes for about $2 per month. 
  • In the deal, they are acquiring 100% of Mdundo Kenya for 1.2 million Kroner (~Kshs 21 million). As at June 2019, it had revenue of Kshs 6.8 million and a loss of Kshs 21 million for the year. This was after costs of sales of Kshs 4 million (they pay musicians over half their revenue), salaries of 12 million, and 4 million each for administration and distribution expenses. Mdundo Kenya had accumulated losses of Kshs 75 million.
  • Upside: They estimate their valuation at $2 per active user while their peers are trading at $10 to $115 per user. 
  • Mdundo had 40 angel investors, and the new shares were sold through Danske Bank, Nordnet, Jyske, Nordea Nykredit and Arbejdernes Landsbank, with Danske Bank as the settlement agent. 
  • Other “African exports” to foreign exchanges include Jumia at the NYSE, Naspers at Amsterdam and Airtel Africa and Vivo Energy in London. Hope Mdundo performs better than Jumia.

NSE Ibuka

The Nairobi Securities Exchange (NSE) “Ibuka” is an incubation program that aims to identify Kenyan companies and fast track their development and governance structures that will gain them exposure from investors. Several companies have joined the program which was launched and entails a ten-month course that will hopefully lead to an eventual listing at the NSE.

The companies that have signed up so far are:

  • (1) January 31 2019 – The NSE admitted APT Commodities, a leading tea exporter with a wide portfolio of brands such as Jambo Chai Tangawizi, Hassan Tea and Equity Green Tea, to join the Ibuka Program.
  • (2) March 15 –  Globetrotter Agency is a leading travel and tours company with enhanced domestic and international travel solutions, offers a wide variety of services including medical tourism.
  • (3) March 21 – Moad Capital provides independent commercial real estate advice and consultancy services.
  • (4) March 27 – Bluenile Rolling Mills is a leading hot rolled steel and wire products manufacturer with an annual turnover of Kshs. 4.5 billion. Established in 2007, it provides high-quality products across the region under its signature brands – Kifaru and Kifaru. It produces over 6,000 tons per month and has 800 employees.
  • (5) April 3 – Myspace Properties (Kenya), established in 2008,  is a private properties company serving the housing and property needs of real estate clientele.
  • (6) April 12 – Vehicle and Equipment Leasing Limited (VAELL) provides bespoke leasing services across in Kenya, Rwanda, Tanzania, Uganda, and Zambia and has correspondent relationships with other leasing firms in South Africa and India.
  • (7) May 3 – Polygon Logistics, a company that was co-founded by a husband and his wife in 2010, does clearing and forwarding, imports and exports shipments as well as air charter flight services and airline representation.
  • (8) May 9 – Nile Capital Insurance Brokers provides general and life insurance products. Established in 2013, it is one of Kenya’s fastest growing insurance brokers and a preferred broker for domestic and international underwriters.
  • (9) May 13 – Nyali Capital, the company led by the best woman in business in Mombasa in 2018, is a non-deposit taking microfinance providing credit facilities, financial advisory services and training programs with special focus on empowering women and youth-owned businesses.

https://twitter.com/NSE_PLC/status/1128192130206371841

  • (10) May 14 – HomeBoyz Entertainment became the first entertainment company to join the program. Established in 1992, it offers bespoke services in event production and is listed as one of the top 10 event production companies in Africa.
  • (11) 30 May – TSG Realty, founded in January 2010, it focuses on serviced and furnished apartments, town homes and commercial real estate in the high-end, luxury market.
  • (12) June 25 – Naveah Capital Insurance Agency was established in January 2018 and aims to become the leading champion of wealth preservation in Africa through the provision of risk management and financial planning services.
  • (13) July 10 – Capital Power was formed in 2013 to undertake various renewable energy projects in Kenya.
  • (14) July 23 – Masumali Meghji Insurance Brokers is one of the largest independent insurance brokers in Mombasa, and has served the region for more than 36 years, offering commercial and industrial covers to its clients.
  • (15) Aug 1 – Tusker Mattresses (Tuskys), which currently serves over 10 million customers monthly across 63 branches in Kenya and Uganda and on its premium e-commerce platform, aims to enhance its growth as the leading retail chain in the region. Founded in 1990, it has 6,000 staff and 3,000 suppliers.
  • (16) Aug 13 – Ceven aims to enhance service delivery among electricity customers in Kenya. It currently serves two contractual assignments with Kenya Power for distribution of pre-paid electricity tokens and processing post-paid payments.
  • (17) Sept 5 – RentCo East Africa seeks to leverage on the NSE Ibuka Program to enhance its growth as the leading asset leasing company in the region. The company leases out construction equipment, vehicles and aircraft to both public and the private sector. (via Business Daily)

Kenya’s Capital Markets Authority (CMA) envisions having four new listings on the NSE every year.  Other companies expected to list, not necessarily through Ibuka, include Cytonn,  Jamii Bora, Vitaform, Bank of Kigali (Rwanda) and National Oil (NOCK).

Hopefully, the Ibuka program will eliminate the taint of the GEMS listings when new companies introduced to the NSE like Atlas Africa (already exited), Home Africa and Kurwitu have under-performed and disappointed investors who now view them as not being ready for a public listing.

https://twitter.com/NSE_PLC/status/1189816010905395200

  • EDIT: (18) October 31- The Safaricom Investments Cooperative Society, that was established in 2009 to pursue real estate development ventures for its members, became the first cooperative to be added to the Ibuka incubation program.
  • EDIT (19) November 15 – The  NSE has admitted Buzz Afrique, to Ibuka. The company offers experiential marketing, events management, public relations and corporate branding services, has offices in Nairobi & Mombasa and has also acquired a printing plant. (Via Business Today).  
  • EDIT (20) November 19: Saracen Media Group, an agency that provides media planning, buying, control and inventory management, joined Ibuka as its 20th member. (via Kenyan Wall Street)
  • EDIT (21) December 3: This morning BimaNet was admitted to the Ibuka Program. (via @NSE_PLC twitter).

https://twitter.com/NSE_PLC/status/1203997050410536960

  • EDIT (22) December 9, 2019: Mookh Africa becomes the 22nd company to join the Ibuka platform (via AnyikoPR).
  • EDIT (23) Prafulchandra and Brothers Ltd .. a leading Kenyan company with a five decade heritage in the distribution of lighting, kitchen as well as flooring solutions.
  • EDIT (24) February 28, 2020: The NSE admitted kitchen equipment maker Merican Steel to the Ibuka program.
  • EDIT (25) October 27, 2020: Kawsar Auto Spares joins the NSE Ibuka program. The company, founded in 1992, is a leading distributor of motor vehicle spares, sourcing OEM products from Japan. It is the sixth company from Mombasa to join Ibuka. 

Case Digest – Kenyan Capital Markets Court Cases

Kenya’s Capital Markets Authority (CMA), has published a digest of legal cases that Authority has been involved in, and some of which were later appealed.

The 27 cases cover ten years, and most the largest share involve dealings at  Uchumi and others revolve around executives and directors of CMC, commercial banks, and a handful on rogue stockbrokers who preyed on retail investors during the heyday of the Nairobi Stock Exchange during the IPO listings of Kengen and Safaricom.

Some notable cases include, Solomon Alubala who was fined Ksh 104.8 million and barred from holding a position at a listed firm for ten years, Bernard Mwangi who attended Uchumi board meetings and sold shares while the company was performing poorly, CMA cases versus Jeremiah Kiereini and  Martin Foster, Chairman and CEO of CMC Motors, the CMA versus the Institute of Certified Public Accountants of Kenya (ICPAK) over audits done by its members at CMC, cases involving Chadwick Okumu, CFO of Uchumi, and CMA versus Jonathan Ciano, a CEO who was for a time celebrated for turning round the Uchumi. They also have a case of Alnashir Popat and Imperial Bank directors, and Munir Ahmed MD of National Bank who the CMA fined Kshs 5 million and barred from holding a position at a listed company for three years.

The cases are published in partnership with the National Council for Law Reporting who have an online database of over 124,000 court cases.

Cytonn Investors Briefing

On Thursday, November 8, the board and management of Cytonn Investment had a session with investors at the end of a weeklong series of meetings. Present at the cocktail were managers and directors of different Cytonn companies, a few hundred of the 3,500 Cytonn investors and a team from principal partner Taaleri Africa. 

Prof. Daniel Mugendi, the Cytonn Chairman, spoke of East Africa’s attractiveness to investments as he thanked the management for the growing the relationship with Talleri, which had just resulted in them investing a further Kshs 2 billion in real estate projects with Cytonn as well an interest to buy 20% of Cytonn in an IPO, which the board supported.

Cytonn has several arms including real estate, education, hospitality, asset management (Seriani and Cytonn Asset Managers are being merged next week), high yield solutions, and a diaspora office run from Washington DC. Edwin Dance, the CEO of Cytonn said that funds raised from investors (minimum Kshs 1 million) are primarily (~70%) put into the different real estate projects such as the Alma, Taraji, The Ridge, Newtown (1,000 acres) and RiverRun which are run as independent special purpose vehicles (SPV)] with their own boards and reporting structures.

Dande said Talleri was the first institutional investor to commit to Cytonn as he also saluted some of the early investors and supporters of Cytonn, including the Chairman, who came on board even as its founders were embroiled in a bitter tangle with their former employers.

Kati Salo, a risk specialist with the Taaleri Africa team said they had exited the Amara project successfully and were now back to do more investments with Cytonn and had signed with The Ridge, taking their investment to Kshs 5 billion. She added that they were impressed with the team who had also given them access to management, clients and advisors and had decided to take a stake in Cytonn in the planned listing of the company. Earlier this year, shareholders of Cytonn had approved a listing of the company, and going by the amended resolution, this may not necessarily be on the Nairobi Securities Exchange,GEMS segment.

BK Group – Bank Kigali Rights Issue and Nairobi Listing

BK Group, the holding company for Bank of Kigali, which is the leading financial institution in Rwanda, has launched a rights issue that will end with it cross-listing its shares on the Nairobi Securities Exchange (NSE).

BK Group is floating 222.22 million new shares at Rwf 270 with a target to raise Rwf 60 billion (~$70 million or Kshs 7 billion) through a rights issue in which current shareholders are eligible to buy one new share for every three they own. All the funds will go to shore up the capital of the BK Group bank and its subsidiaries. Also, 7.2 million new shares will be allocated to an employee share ownership plan (ESOP) for eligible director and employees.

Incorporated in 1966, the bank ended 2017 with assets of Rwf 727 billion (~$830 million or Kshs 84 billion) and pretax profit of Rwf 34 billion. Its subsidiaries include an internet company (TecHouse), registrar, nominee, securities, and general insurance company. It has 79 branches and 2 million customers. It has an estimated 32% share of the Rwanda bank market, ahead of BPR 13%, Cogebanque 10%, Equity 8%, KCB 7%, Ecobank 6%, and a 4% share of assets each for both GT Bank and Access. 

In 2011, the Government had offloaded 25% of its shareholding to the public as the bank listed on the Rwanda Stock Exchange. It is still the major shareholder through two organizations, the Rwanda Social Security Board (RSSB) and Agaciro Development Fund with 32.4% and 29.4% respectively. Others are the Rock Creek Group Dunross and Co Aktiebolag, Kamau Robert Wachira, RWC Frontier Markets Equity Master Fund, Frontaura Global Frontier Fund, and The Vanderbilt University – T133. After the rights issue, the top two shareholders will have 30% and 22.1% respectively with the ESOP having 0.8%. The government is not taking part but RSSB will partially participate to ensure their shareholding remains at 30% while other shareholders who don’t participate will be diluted by 25%.

The rights issue is from October 28 to November 9. It will be followed by a rump issue that will be from November 12 to 16 November in which shares not taken up in the rights issue will be offered to through a private placement to qualified institutional investors at Nairobi’s NSE.  Results will be announced a week after and the new shares admitted on the Rwanda Stock Exchange, with a cross-listing on the Nairobi Securities Exchange, on November 30. 

The target is 70% success with the 155.56 million being taken up worth Rwf 42 billion. In the event of an over-subscription, the rights issue has no green-shoe option and refunds will be done. In a statement released today, Kenya’s Capital markets Authority confirmed approval of the listing at Nairobi with an estimate that 40% of the funds will be raised through the rump issue. 

BK Group advisors are Renaissance Capital (Rwanda) as the lead transaction advisor, BK Capital – sponsoring broker and registrars, Trust Law Chambers as legal advisors, PricewaterhouseCoopers as reporting accountants, Bank of Kigali is the receiving bank and Hope Holdings are the PR & Marketing Advisors. The rights issue will cost Rwf 1.72 billion comprising Rwf 526 million transaction advisor fees and Rwf 900 million as placement commission (1.5% payment to authorized agents who are BK Capital, CDH Capital, SBG Securities, Faida Securities,  Baraka Capital, Core Securities, African Alliance Rwanda and MBEA Brokerage). Other fees are Rwf 90 million to the RSE, 39 million legal advisory and Rwf 22 million each for reporting accountants, receiving bank, sponsoring stockbroker and also for media and advertising.

$1 = Rwf  873, 1 Kshs = Rwf  8.58

EDIT Nov 23 results : Rights issue announced uptake was 43% with 104 million of the offered 222 million shares subscribed for, raising ~$31 million. And following the rump offer, by institutional investors, who oversubscribed for the shares and took up took up 136 million shares for ~$41 million, the total issue performance has been recorded at 107% and the new shares will list on Nairobi and Kigali exchanges on November 30.