Category Archives: Serena

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.

Nairobi Serena is the Leading Hotel in Kenya

Nairobi Serena Hotel has just been named the Leading Hotel in Kenya at the 2015 World Travel Awards.

Established in 1976; the hotel has been modernized over the years with timely, yet discrete, renovations and now has 183 modern rooms with all the modern necessities. In many Kenyan’s minds Serena, is a concept, not a place; this comes from the 2008 post-election mediation talks that were held at the hotel, and for a few weeks, Kenyans got daily updates from the hotel which was the effective centre of efforts to stabilize the country as mediators led by Kofi Annan tried to get the two (then) warring sides of politicians to come to an agreement.

As a business traveler, it’s easy to see why the hotel gets so many visitors and hosts so many corporate events. The hotel is located about 200 meters from the edge of the centre of town and borders Central Park and easy walking distance past the park which many Nairobian’s wrongly refer to as Uhuru Park. From the outside, it’s clear that greenery and landscaping are part of the hotels’ brand as it blends well with the surrounding park.

Once inside, after a brisk but efficient security is a brown lobby that sets out an African theme that  extends throughout the hotel; from the staff uniforms to wall murals, carvings, to duvet covers, and the corridors on every floor, – you are constantly reminded that this is an African set in a green park. The art pieces which originate from different African countries are properly identified.

There are several event rooms of varying sizes, that are used for various corporate events. Whether it’s an early morning breakfast for a company to announce financial results to investors before the stock exchange opens, or a cocktail to launch a mobile phone in the evening, the hotel staff and service seems to always be fresh and impeccable. The hotel is unique among the top Nairobi hotels in that it has ample and secure parking for its guests and visitors.

Whether you arrive late at night from Europe or Asia or have an early morning flight to another African capital, guests are sure to get the service they need. Room service is 24 hour, and one can arrange for early morning breakfast before an airport dash or a fast period.

Serena standard deluxe double room

If a guest arrives late and has to work overnight, the hotel has a fully equipped 24-hour business center where they can print, bind, and scan documents ahead of a busy day.

The hotel has two full-time restaurant open form about 6:30 a.m. to 11 p.m. but one is closed on Sundays.

The standard rooms have double beds or twin single beds depending on the guest request. The bathroom is simple to operate with a standard bathtub/shower plumbing layout and there is a fresh dressing gown and slippers for each room guest. There are also several levels of suites for guests who require such facilities and spacing.

There is an interactive TV that welcomes the guest to the room, that’s activated from the reception and this also helps orient the guest with the hotel facilities and layout.  There is complimentary Wi-Fi for guests in the rooms and throughout the hotel. The rooms also have mini-bar (that guests will incur charges for using) and a complimentary in-room self-service beverage layout that’s refilled every day.

There are extension cables to enable guests to charge various electronic devices (phone/tablet) simultaneously if one has forgotten a cable or not got the right plug for this country. The in-room safes are extremely large and one can safely put in several files of confidential documents in addition to a few laptops, phones, cash, passports etc.

Some business-friendly features include, same day laundry and even faster ‘express service’ from their in-house Laundromat, and there is also a unisex beauty salon.

The outdoor heated pool is somewhat secluded from the dining and guest area. This is good as no one wants to swim while day visitors attending a workshop or eating lunch at a workshop gawks at them, Some shrubs and artefacts provide discrete partitions.

The second floor is designated as a smoking floor for guests who prefer that. Unlike other hotels, the evening entertainment is light music at a piano bar, not too loud and there is no casino at the hotel.

The guest relations can arrange for limousines and taxis,  mobile phone rentals, golf outings, visits the Nairobi National Park or other activities further. They also offer babysitting, family rooms, children’s dining/menus and there is a house doctor on call.

The hospitality offered by the well-trained hotel staff keeps bringing guests back, enabling them to have a relaxed work or family setting hidden behind the shrubs and trees that also filter out the noise of Nairobi’s (now notorious) traffic.

While the local hotel industry still fails to rank and rate Kenyan hotels. Serena Nairobi is clearly five-star and is a member of the ‘Leading Hotels of the World’ group.

From October 2015, Nairobi Serena will undergo another phased refurbishment and extension. Additions over the next two years will include a new ballroom, new upper car park, new restaurant, shop, salon, new executive lounge,  and rooms on the 7th floor will see their number increase from 183-199. The directors of Serena plan that these improvements will ensure that Nairobi Serena remains the preferred and leading hotel for visitors to the city for the next 30 years.

Hilton, Intercontinental, KWAL Privatizations

Privatizations to be concluded by the Kenya Government by June 2013 include: 

  • The Industrial & Development Corporation (ICDC) will sell 26% of Kenya Wine Agencies Limited (KWAL) to Distell of South Africa and 4% to employees.
  • The Kenya Tourist Development Corporation (KTDC) will sell 40% of the 287-room Hilton Hotel, 34% of 389-room Intercontinental Hotel (both in Nairobi) and 39% of Mountain Lodge which is located in Nyeri and managed by TPS Serena, to fellow shareholders.
No IPO’s will result, but the remaining shares in KWAL may be sold to the public within two to four years if their performance improves.  

Idea Exchange: Michael Joseph, Serena, Lotteries

Michael Joseph: Outgoing Safaricom CEO Michael Joseph will have an informal fireside chat session at the Nairobi iHub this month ( details here on how to attend). It will be staged like one of the Warren Buffet town hall meetings, and he will take questions from the audience and talks about his legacy at Safaricom.

Serena: last Monday had the bell ringing ceremony to launch newly issued shares of TPSEA (Serena Hotels Group) at the Nairobi Stock Exchange (NSE) after the company raised 1.1 billion shillings ($14.5 million) from shareholders. The funds will be used for: development of 3 hotel properties in Nanyuki, Nakuru and Elementaita (through Jaja Limited), buy 51% of Upekee Lodges who own two properties in South Tanzania, acquire Mbuzi Mawe Tented Camp and Mountain Village (Arusha) and increase the group’s investment in TPS Rwanda from 8% to 17% (through refurbishments of Kigali Serena)

Also at the launch:
– Amish Gupta of standard investment bank called for day trading at the exchange (with settlement at the close of business), which he said, would raise turnover by 150% at the NSE
– Eddy Njoroge, chair of the stock exchange called for more companies to consider using the Nairobi stock exchange for capital raising, noting that Serena were able to raise Kshs 1.1 billion in two months – faster than any bank loan of that magnitude. F. Okello, the Serena Chairman – who’s also a Barclays Bank director, diplomatically did not challenge that point.

Centum Diversifies: Results and resolutions passed at the 2010 Centum (formerly ICDCI) AGM were published in the newspaper on Monday. The extra-ordinary business approved by shareholders at the meeting included:
– Business of Reli holdings (a 100% subsidiary now called centum investments) which sold its shares in Rift Valley Railways for Kshs 265 million and paid dividend to centum shareholders
– Uhuru heights limited (a 100% subsidiary), which is developing a plot on Uhuru highway worth 35.9 million
– Runda Closeburn (a subsidiary) which is in the process of buying 100 acres of land adjacent to Runda for 1.16 billion
–> Used to be a shareholder of Centum, but lost interest when they became too vested in other listed companies that all investors had access to. Yes it is healthy for an investment company to have a liquid portion of the portfolio, but Centum, Olympia and other investment companies should invest in unlisted companies (railways, real estate, coca cola bottling plants) that not available to the public – that is their attraction.

Lotteries Galore Zain and Safaricom both have lottery claim to give away a million shillings each week. Zane actually had a press launch the day before Safaricom launched theirs, but did not go public till over a week after Safaricom Masonko 150 did. So did Safaricom pre-empt Zain? Or did Zain pre-empt Safaricom without getting all the necessary approvals or having all the operations in place? Anyway, Zain’s promo is to enhance their subscriber loyalty program, while Safaricom is to mark tenth anniversary of the company.

This week urban IT consulting launched Supapesa which promises Kshs 50 million of prizes’ and last month saw the conclusion of massive 90 million in 90 days. Mbugua Njihia wrote about the lottery, also known as Shinda Smart and which a Nairumor has it grossed Kshs 1.2 billion from over 20 million SMS messages received.

But the winners are genuine of the lotteries and appear in the newspaper clutching bundles of cash or weeping as they receive new car keys – I don’t know any of them personally, but I know many faithful participants who remit spend a few shillings each day, sending in the daily lottery SMS and all hoping (& praying) they will be the next winner.

But from what I know about gambling & lotteries is the house (organizer) is always the real winner, so it seems companies have landed on a new money making scheme based on unrealistic public expectations and naivety about the odds of winning prizes.

Kenya Easter Tourism Expo 2010

Past Easter expos: 2007, 2008

This year’s edition of the Kenya Tourism Board Easter 2010 Holiday Expo was held at the Sarit Center last weekend. Some of the notable offers were

Nairobi: KWS has self catering guest houses in most of the national parks and mountains areas. They also offer shuttle services to the Nairobi National Park from downtown Nairobi on Saturday, Sunday and Holidays (9.a.m and 2 p.m.) at a cost of 500/= (~$6.5) for adults and 200 for children

Country-wide: Heritage have full board and family adventure packages at their three Mara properties, (Siana, Intrepid and Explorer), three coast properties (Voyager Ziwani, Voyager beach resort, Kipungani -Lamu), as well as Samburu intrepid, and Great Rift lodge (Naivasha)

Ashnil Hotel has Aruba Lodge (located next to a man made dam inside Tsavo Park) at a cost of 6,000 ($80). They also have a new controversial camp inside the Masai Mara, but recently lost their 200 million shilling ($2.5 million) tented camp in Samburu in a matter of hours after heavy rain and flooding last month. Another property in the Samburu managed by Atua Enkop Africa got insurance compensation after flooding. Also not nature related but a looming disaster, the Bogoris Spa Resort and other hotels around Lake Bogoria must be wondering what will come after the recent Endorois court award that may affect their land holdings.

Also in the Central Rift there is also Lake Nakuru Lodge single in April to June is 8,000 while its 11,000 in high season from July to march, sunbird lodge at lake Elementaita at 5,200 full board from April to June, Kigio with Kigio Wildlife Camp and Malewa Wildlife Lodge

In Western Kenya, there’s a new entrant from Kakamega – Mago Guesthouse.com – an income generating venture of the Mago youth polytechnic in Kakamega with prices of 2,500 half board for residents missionaries and volunteers.

Kenya Coast: New North Coast Beach Hotelwon a prize for best stand the expo. They are trying to establish themselves with low introductory rates e.g. single half board is 5,800 ($75) and 6,500 full board up to December 2010 (except Christmas fortnight)
– Mombasa continental has a flying package from Nairobi 22,750 ($295) per person for 2 nights half board up to July 2010, while singles normally pay 6,500 in the low season (April to June)
– Leisure Lodge Leisure Lodge, site of the Kenya ICT Board
connected government workshop has single rooms at 6,900 8,855 and 10,960 for Easter week.

East African Tanzania had Kempinski (Dar $130, Zanzibar $170, Serengeti $200 and Blue Bay), Plan Hotel (mapenzi beach camp special $333 and Neptune pwani beach $234) Hotels & lodges Tanzania (private island Zanzibar $264), Lamela Camp (Ngorongoro and Serengeti) and Gibbs Farm (Ngorongoro and Manyara)

Uganda had Lake Victoria Serena – opened in September 2009 with 2 nights flying on Air Uganda at $590 per person, Peal of Africa (tours of Bujagali falls) and ATV Safaris (ATV/quad bike safaris at lake Mburo)

other – Sports: surprisingly did not see any world cup related travel opportunities to South Africa in June/July 2010 – a missed opportunity?
– Kuoni have a package for golfers for $1,185 comprising 6 days of Golf at Windsor, Karen, Muthaiga and the Great Rift Courses, with the option of an extra trip to Masai Mara for ballooning
– Wildflower have the Wildman Triathlon 24 -25 April 2010 at Turtle Bay Resort (Watamu)

Wedding: Serena Hotels had a beach wedding package for $1,380 per couple with 2 nights half board VIP stay, marriage license & certificate, wedding cake, champagne breakfast, wedding gift, bride manicure/pedicure, and guest of the couple enjoy 10% off.