Category Archives: Sameer Africa

Nairobi investment tips from Genghis for 2020

Genghis Capital has launched its 2020 investment playbook with the theme “harnessing value” after a year in which the Nairobi Securities Exchange (NSE) all share-index had gained 18% compared to a loss of 18% in 2018. 

Top gaining shares in 2019 were led by Sameer Africa which rose 86%, then Equity Group 53%, Longhorn Publishers 46%, KCB 44% and Safaricom 42%. Shares on the bottom side were Kenya Airways which lost 77%, then Uchumi Supermarkets -63% and Mumias Sugar -43%. 

The playbook has a summary of 2019 whose gains were largely due to Safaricom and bank shares, and some of the year’s top deals which included the bank mergers of CBA & NIC and KCB & NBK. Other highlights of the year were the launch of derivative futures and the NSE Ibuka program which has uncovered some promising companies. It also notes the suspension of Mumias which joined Deacons and Athi River Mining as other shares in limbo. 

Outlook for 2020: The report includes a macroeconomic outlook for the country this year during which they expect aggressive domestic borrowing by the government, and the Kenya shilling to range between 100 – 104 against the US dollar. They have also factored in the possibility of another Kenya political referendum happening during 2020. 

Going forward, they expect that bank shares will do well, but that other equities will struggle this year. They look forward to the opportunity that derivatives have brought of diversification with lower trading costs but note that there is a need to have a market-maker to resolve some liquidity difficulties of trading derivatives.

They also note that the main shareholders at Unga and Express may try again to delist their company shares and take advantage of a new rule that reduces the takeover threshold requirement from being approval by 90% of shareholders to just 50%. Genghis also expect that the nationalization of Kenya Airways will be completed in 2020.  

Genghis picks and recommendations:

  • Momentum shares are Equity, EABL, KCB, Safaricom.
  • Income Shares are KCB, Barclays, Co-op Bank, Stanchart, KenGen.
  • Value shares are EABL KenGen, Kenya Re.
  • Buy (expect gains of more than 15%) EABL, Kengen, Kenya Re, KCB, NCBA, and Diamond Trust.
  • Hold (expect changes of between -15% to +14% over the next 12 months) Safaricom, Standard Chartered, Barclays, Equity, Cooperative, Stanbic, and I&M.  
  • Sell Recommendation: N/A

See last year’s picks by Genghis.

EDIT : On June 4, 2020, Genghis Capital announced a partnership with EGM Securities, to offer investors a wider range of alternative asset classes including online currencies, commodities, precious metals, oil, and biotech company stocks.

East Africa M&A Moment: June 2015

Recent stuff in the newspapers (mainly the Business Daily), Kenya Gazette  (some of the just-approved deals were first announced two years ago) and press releases. $1 is about 95 Kenya shillings (and about 90 when deals were formulated)

Overall

Earlier this month, the Financial Times (FT) reported that mergers and acquisition (M&A) activity in Africa has fallen to its lowest level in more than a decade, as a result of collapsing commodity prices, political volatility and an anticipated rise in US interest rates. The value of African deals so far this year stands at $9.2 billion — 23% lower than the same period 12 months ago and the lowest level recorded since 2004, according to data from Dealogic.

Burbidge Capital also found that Kenya’s merger & acquisition deals slowed down in 2015 – with 11 M&A deals so far compared to 17 in the first four months of 2014. This year, the largest concluded deals have seen Helios sell a stake in Equity Bank to Norwegian funds and Old Mutual’s purchase of a 60.7% in UAP Holdings.

Banking/Finance

More mergers are expected in the Kenyan banking sector as the Treasury Secretary announced that an increase in the minimum capital to strengthen banks’ capital base and increase competition…progressively from the current Kshs 1 billion to Kshs 5 billion (~52 million) by 2018. 20 banks are below the Kshs 2 billion mark.

  • Helios cashing out;  Norfund & Norwegian private investors are acquiring 50% of Helios partners investment in Kenya’ Equity Bank Group and will now own 12%. And today, Uganda’s National Social Security Fund has bought a 2.44% stake in Equity Bank Group from Helios Investors at Kshs 50 per share – and the new deal is worth ~$50 million.
  • National Bank management said it has not been briefed on any merger plans with its State-owned rival Consolidated Bank. Treasury Secretary Henry Rotich said National Bank would be merged with another bank before it’s planned rights issue. The government is the biggest shareholder of National Bank controlling about 79% of shares consisting of Treasury and NSSF stakes. As part of a rights issue, it is expected that NBK will retire its preference shares (held by the Treasury and NSSF) by converting them into ordinary shares.
  • High-level talks regarding a merger between NIC Bank and Commercial Bank of Africa are reportedly taking place but Mshwari may be spun out of any resulting entity. Both are mid-tier banks with quite a focus on corporate and high-end clients.
  • While Mwalimu SACCO is acquiring 51% of Equatorial Commercial Bank (ECB), the Society is not converting into a bank nor merging with ECB.
  • Kenya’s Nairobi Securities Exchange is acquiring 77% of their associate company CDSC, which they own with stockbrokers, in a deal worth~Kshs 260 million.
  • Barclays Africa advised on the largest sale of an African Bank in 2014 – a deal, in which Nigeria state-owned Asset Management Corporation of Nigeria (AMCON) sold Mainstreet Bank to Skye Bank.
  • Equity Group Holdings agreed to acquire 79% of ProCredit Bank Congo, the 7th largest bank (by assets) in DRC. ProCredit has total assets of $200 million, a customer base of over 170,000, and has KfW (12%) and IFC (9%) amongst its shareholders.
  • Liaison Financial Services who have just been approved as an investment advisor in Kenya recently acquired the African business of Knutson Global who were involved in asset-backed securities, municipal development bonds and consumer lending.

Insurance

Oxford Business Group expects strong Kenya insurance M&A as companies merge to increase market share & meet higher capital requirements.

  • The Mauritian Minister for Financial Services, Roshi Bhadain, said the State Insurance Company of Mauritius (SICOM), would take over the 23.9% stake (valued at more than Kshs 13 billion) held by Businessman, Mr. Dawood Rawat, in financial services firm British-American Investments Company (Kenya)  – a.k.a. Britam. This comes after the government of Mauritius placed Rawat’s firms in receivership over alleged financial impropriety charges.
  • UAP and Old Mutual agreed on a merger ahead of listing. This comes after Old Mutual raised its shareholding to 60% from 23% after buying 37% from private equity (PE) firms Aureos, Africinvest and Swedfund for around Kshs 14 billion. Old Mutual will not buy out the other 1,000 minority shareholders (who are staff & agents). Old Mutual first bought into UAP in January by acquiring a 23.3% stake from Centum Investments and businessman Chris Kirubi. Centum sold its stake to get the funding it needed for its massive real estate, financial services and power projects.
  • Also, the Competition Authority approved the acquisition of 60% of UAP Holdings by Old Mutual Holdings and Old Mutual Life Assurance.
  • Barclays Africa will acquire 63% of First Assurance, Kenya’s No. 10 insurer, for Kshs 2.8 billion (~$30 million).
  • KCB Group is said to be considering a takeover of Madison Insurance.
  • Pan Africa Insurance shareholders approved the acquisition of at least 51% of Gateway Insurance. Through this acquisition, the company will enter into the general insurance business.
  • Kenya’s competition authority approved the acquisition of 61.2% of Resolution Health East Africa by Leapfrog II Holdings.

Hotels/Tourism

  • The Heron Portico, which is managed by Indian hospitality group Sarovar Hotels & Resorts, says the acquisition of rival Zehneria Hotel in Nairobi’s Westlands in a Kshs 1 billion buyout to expand its market share in conference tourism and hospitality industry in Kenya. The Heron Portico financed 80% of the purchase price using debt while the rest is self-financed.
  • Minor Hotel Group of Thailand, and Elewana Afrika, are acquiring 6 camps spread across national parks in Meru, Samburu and Narok counties. Stefano and Liz Cheli (Cheli and Peacock Group), the founders of the camps, will continue to run the resorts and focus on business development.
  • Kenya’s Competition Authority approved the acquisition by Fortune Hotels of Paradise Safari Park and 85% of Paradise Investments and Development Kenya held by Paradise Company.
  • TPSEA (Serena) acquires 25.1% of TPS (D) that was set up to run the Movenpick Hotel in Dar, now known as the Dar es Salaam Serena Hotel in Tanzania.

Logistics/Transport

  • Frontier Services Group (FSG), a Nairobi-based logistics firm, has completed its purchase of Cheetah Logistics SARL – Congolese transport company as part of central and western Africa expansion plan. Kenya’s competition authority also approved the acquisition of Phoenix Aviation by Frontier Services Group as well as the acquisition of 55% of Tradewinds Aviation Services by NAS Africa Aviation.
  • UK logistics and engineering firm Atlas Development says it is in advanced stages of discussions with potential takeover targets in Kenya, Tanzania and Ethiopia.
  • Part of Best Wing Cargo operations at JKIA have been transferred to Suppercare Freight Services.
  • Part of  Fastlane Freight Forwarders operations at JKIA have been transferred to Airwagon Cargo Movers.

Energy

  • Norfund to acquire a stake in Globeleq Africa from Actis for $225M and partner with CDC to pursue power generation opportunities.
  • UAE’s Gulf Petrochem Group acquires Essar Petroleum East Africa and renames it as Aspam Energy (Kenya) in a deal to enhance the group’s integrated services and products for the downstream supply chain in the oil and gas sector in East Africa.

Media/PR

  • Scangroup dropped a bid to acquire 80% of Experiential Marketing, as approvals were not granted in time. Scangroup shareholders later renamed the company WPP Scangroup signifying that WPP Scangroup and WPP plc. are now fully together, with a shared vision for developing marketing communications across Sub Saharan Africa.
  • Hill+Knowlton Strategies (H+K), and Buchanan, one of the world’s leading financial communications consultancies, joined forces to launch H+K Financial, a specialist financial communications division dedicated to the Middle East and Africa.

Telecommunications/ICT

  • Millicom is to acquire 85% of Zanzibar’s Zantel for $1 and take over $74 million of its debts. Zantel is the leading Telco in Zanzibar (but just 5% to Tanzania’s total) with $82m in revenue and 1.7m customers.
  • Kenyan innovation, Wezatele, was acquired for $1.7 million by AFB Kenya.
  • Techno Brain acquired the trips™ suite of integrated customs &revenue software from Crown Agents to provide tax and customs solutions that target the broader financial management needs of the government.
  • Akvo Kenya transfers the business of building open source internet and mobile software to support international development partnerships to Akvo Kenya Foundation.

Industry

  • A Paris-based PE fund bought 30% of Ramco Plexus, a subsidiary of Ramco Group that has an annual turnover of Kshs 5.5 billion. The Ramco Group was started in 1948 as a hardware store and has grown into a 34-subsidiary strong business, which employs 3,000 people.
  • The Competition Authority approved the acquisition of 51% of Bullpark by Nampak Holdings.

 Pharmaceuticals

  • Business transfer:  Antipest Kenya Limited, has transferred to Modern Ways.
  • Business transfer: Unicorn Pharma Kenya has been sold and transferred to Medisel (Kenya)
  • The Competition Authority approved the acquisition of the assets of European Perfumes and Cosmetics by Charm Industries. The deal excludes the debts of Varanasi Deepak, and Chirag Savia.

 Agri Business/Food Business

  • Syngenta rejected Monsanto’s $45 billion merger offer. An eventual agreement will have an impact on Kenya’s agricultural sector.
  • Shareholders of REA Vipingo Plantations approved the sale of the firm’s land at Vipingo to Centum Investments as agreed upon in a settlement with R.E.A Trading.
  • Giant milk processor Brookside Dairy has bought out Sameer Agriculture & Livestock business in Uganda for Sh3.5 billion (~$38 million). The government of Uganda, which owns 49% (of Sameer) confirmed this on March 25.
  • Business transfer: Pure Imported (formerly European Foods E.A. Limited) (which was in the business of importing & selling deep frozen foods and supplying fresh juices) to European Foods Africa.
  • The Competition Authority exempted the production, bottling supply and distribution business between Distell and Kenya Wine Agencies Business transfer: for 5 years.
  • Business transfer: The ice cream production & trading business of Alpha Dairy Products is being transferred to Razco.
  • Tanzania’s Competition Commission may reverse its decision approving for EABL to merge with Serengeti Breweries, as Serengeti’s performance failed to meet expectations.
  • The Competition Authority approved the acquisition of an additional 30% in Largo Investments by NAS Holdings.
  • The Competition Authority approved the acquisition of the brands and assets of Chirag (Kenya) by Chirag Africa. Elsewhere these were acquired by newly-listed Flame Tree.
  • The Competition Authority approved the acquisition of 52% of Ennsvalley Bakery by Unga Holdings.
  • Norwegian private equity fund, Norfund, has bought shares in agriculture firm Vertical Agro in a Kshs 476 million (38.7 million Norwegian krone) deal. Vertical Agro is the parent company of Sunripe and Serengeti Fresh which makes it the largest exporter of organic vegetables in the country. The company produces 6,500 tonnes of fruits and vegetables annually from its farms in Kenya, Tanzania and Ethiopia.

Property

  • Kenya’s Competition Authority has approved (i) The acquisition of 50% of Equatorial Commercial Bank Centre by Fidelity Shield Insurance  (ii)  The acquisition of Parkway Investments by Mt. Kenya University Trustees (iii) The acquisition of Endebees Estate (Kilifi Holdings) by Balloobhoni Chhotabhai Patel.

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.

Naushad Merali on Entrepreneurship

Kenyan businessman Naushad Merali, known for his Sameer Group investments in banking, telecommunications, manufacturing, agriculture and other sectors, gave a talk at a new Entrepreneurs Club event on Thursday. He briefly spoke about his business life and then took part in a Q&A session.

Excerpts: 

Merali spoke about how he grew up in Mombasa, and would take a bus twice a month to sell Indian sweets in Moshi to pay for school fees. And then worked for a few years at Ryce Motors as an accountant, he was able to buy it out from the owner who was retiring and also convince Daihatsu that he could sell their short wheel-base vehicles in Kenya, landing their franchise.

(Think) Big: when he signed the deal to buy the First American Bank in London, Merali did not have the money, but by the time he flew back to Nairobi people had heard and were amazed and want to partner with him – so by the time it came to conclude the deal, he had a cheque to pay. Same with Kencell – when MTN bought out Vivendi they were sure that they’d get their way and he would not be able to match their offer, but he chose to exercise his preemptive rights and spent 15 days flying around during which time he got funding from Celtel.

Exits: Don’t get emotional about owning a business, and know when to cash out. Selling out, and getting liquidity and value for all your hard work is the only way to grow. e.g. He took money from communications and put it into the fibre cable business.

Give Back: Do this and you’ll get back more. He’s done this by listing his shareholdings, the creation of the Jaffrey Sports Club on prime land that is free for all the public to use, and other philanthropic activities that his wife manages.

Growth: Diversify, but don’t take money from one business to put it in another one. Grow each one with its own capital, and if one fails, it goes alone.

(Take advantage of) Opportunities: On a flight, he sat next to a man who he conversed with and found that was trying to sell his company called Sasini. He had no idea about tea and coffee, but shook hands and had a deal.  Same with his IT investments did not know muchAlso, when President Museveni told him that farmers were pouring milk because there was a shortage of milk processing, he set one up and expanded the capacity of the country to process milk many times over.

Partnerships: Choose the right partners – business partnerships are harder to break than marriages and you need partners who align with your vision for the next few years. He found that his new South African partners had a different style than him so he cut back his internet interests.  

People: Kenya’s greatest resource is its people – hardworking resourceful staff. He mentioned how he motivated his salesmen at Ryce Motors, by giving their wives cheques to hold, that would only be signed if their husbands sold enough car volumes. Also, he is very protective about creating and retaining jobs for workers (the Sameer group now has 24,000 staff). He said when Firestone chose to stop manufacturing their brand in Kenya (and shut production), he bought them out and created a new brand – Yana. 

Succession: On business succession – life is finite, and many businesses here won’t last more than one generation because of secretive management styles, unlike those in developed countries that last hundreds of years. He advises that you bring your kids into the business open your books share your secrets, but don’t hire relatives as they are very hard to fire, and can cause domestic stress and lawsuits. 

TEA: His motto for business and finding new partnerships is (TEA) T – trustworthy, E efficient A – attitude (i.e. work with people with positive attitudes).

Technology industry: The problem with tech is that companies require continuous investment year after year – so tech entrepreneurs should know when to take on new partners and funding, perhaps giving up a little equity to like-minded partners, if they are to grow.

Final advice from Merali: Invest in agro-processing & food value addition as that’s the future.

Real Estate Moment

The 13th edition of the Kenya Homes expo is going on at KICC Nairobi this weekend. Here’s recap of that and other real estate on-goings. It seems larger than last year with more properties on display, along with energy, interior finishing, communication, insurance and media companies as well as several mortgage banks. Also some properties advertised last year were still on sale.

Expo: Some notable property developments included;
– Trident Park in Langata (behind Splash/Carnivore) 4 bedroom (4br) , all en-suite homes that cost Kshs 15.5 million [Kshs 15.5M or $193,000] (Trident Estates)
– Diamond Park in South C which are 4br maisonettes that cost Kshs 12M (Diamond Park)
– Tamarind Meadows are 3br maisonettes located in Mlolongo/Athi River with prices ranging from Kshs .6.5m – 9M (Tamarind Properties)
– The 3rd phase of Greenspan Housing estate of 3br maisonettes in Donholm/Umoja that cost Kshs 8.5M (brochure says that some houses sod in phase 1 have achieve rental of Kshs 45,000 [$560] per month) (Greenspan Housing)
– Residential plots sold by Ndatani Enterprises in Kitengela can range from Kshs 500,000 – 900,000 ($11,000)
– Le Mac is a planned 24 story tower complex with apartments, malls, shops, offices, bank, restaurant, gym on Waiyaki Way, Westlands that was launched by the vice president a few weeks ago. Offices and showroom will cost 15,500 per square foot , while apartments that will include studios, 1, 2, 3 and 4 bedrooms will cost 16,500 per square foot – translating to Kshs 12.6M for 1br to Kshs 56M ($700,000) for a 4br duplex. (Mark Properties)

Financiers: at the Expo were the usual banks present including Housing Finance, Barclays, KCB, and Standard Chartered.
– Barclays loans start at 12% up to 20 years and 90% of home cost, or 70% of construction costs and they buy mortgages finance by other banks. A Kshs 10M loan taken over 10 years has repayment of Kshs 143,413, and over 20 years has monthly repayments of 110,039
EDITCBA: Mortgages are payable over 25 years, and (they say) you can accelerate and pay off an entire home loan without being penalized.
– KCB has mortgages up to 25 years and rates are 13.75% and finance 90% of mortgages for salaries people homes in urban areas, 70% for plots, and 85% for estate development. A Kshs 10M loan taken over 10 years has monthly repayments of 152,274, and over 20 years attracts a monthly payment of 120, 737
– Housing Finance had their Makao Homes which are pre-designed homes they can build for anyone with a piece of land and range from a 2br bungalow that costs 1 million ($12,500)(ideal for 1/16 acre) to 4br maisonettes ideal for ¼ or ½ acre that cost 13.3 million ($166,000). A Kshs 10M loan attracts repayments of 155,266 over 20 year and 124,352 over 20 years.

– Other finance from Houising Finance, includes plot purchase (70%), for investment groups (70%), for commercial office space/shops development (65%), as well as finance for incomplete or stalled projects.

They were joined by newcomers including;

– National Bank of Kenya
– CFC Stanbic who last week launched a 100% mortgage facility.
– I&M Bank – pay lesser amounts in initial years and higher amount in later years as your income grows (you think?), all loans have free credit card and free fire insurance. Loans are at 12, 14 and 16% and range from Kshs 2M -30M to finance up to 80% of property price with a maximum of 15 years. The brochure also indicates all the typical home closing costs – e.g. a Kshs 10M mortgage will attract valuation fee if 10,000, 1% on disbursement (100,000), processing of 0.5% (50,000), legal fee of 1% (100,000) for a total of about 3% (home buyers are advised to budget 5%)

Other: – The Sameer Business Park has started leasing this week; it initially looked like white elephant its now available through property agents Knight Frank .

Via @azthedance – This article by Brendan Barron titled Arrest this Development? points to some disparities in the sector such as;

– The country’s average wage is somewhere around $4,500 a year, but the average mortgage was more than 12 times that, at $56,000.
– Nairobi currently has no urban plan
– There’s also no real Building Code to which technicians can refer to ensure new homes meet standards. There are, simply, no enforced standards.

Edit: Here’s a nice series of articles in the Business Daily by analyst and columnist Carol Musyoka, first on Kenyans obsession with owning property and a follow up on the
investment risk of owning property, which has this paragraph.

Given where today’s interest rates are at say 15 per cent, an average middle income house costing Sh10 million, will require a monthly mortgage payment of approximately Kshs126,000 after the buyer puts down a deposit of Sh1 million or 10 per cent on the 15 year mortgage. This is not an amount that is easily payable by the average Kenyan worker and requires a great amount of sacrifice on the part of the buyer, especially where the rent for a similar house would be about Sh40,000 or a third of the mortgage payment.

The fact is that buying your own home is really not supposed to be an investment, rather it is a method of providing future security for yourself by having home ownership at the end of the mortgage period.