Category Archives: Stanbic

Stanbic to Increase Kenya stake to 75%

Stanbic

August 17 EDIT: Stanbic Africa has been granted an extension by Kenya’s CMA to acquire another 27.3 million shares and take their Stanbic Holding shareholding to 75% up through December 2019.

July 23 EDIT : After the two rounds of tenders closed, Stanbic announced that they received acceptances which resulted in their Kenya shareholding increasing to 68%. The statement adds that they have applied to continue buying shares of the bank through the market to reach their 75% target i.e from other shareholders of the company through the Nairobi Securities Exchange.

June 21 EDIT: Results of the first closing were announced and Stanbic received offers of 26.32 million shares out of the 23 million target and they will buy 23.56 million shares valued at Kshs 2.24 billion shillings – which will increase their shareholding to 65.96%. The second phase already commenced on 12 June, and those who participated in the first phase will begin to receive payments from 25 June. Participants who take part will forego the Kshs 4 per share dividend.

May 16 EDIT: Stanbic published a new notice in which the offer changed to a tender on a “willing-buyer, willing seller” basis with no element of compulsory acquisition. It will be in two phases which run from May 21, with the first closing to June 11 and the second on July 2. This will allow those who take it up the offer to be paid earlier – and that will be after the first closing date. Preference is given to the shareholders with less than 10,000 shares, and Stanbic shares now trade at 89-92 shillings.

March 16 2018 Original: Stanbic Africa Holdings (Stanbic) – SAHL has tendered an offer to other shareholders of its Kenyan subsidiary who may be willing to sell their shares to the SAHL group at a premium as it seeks to increase its stake in Kenya’s 8th largest bank.

SAHL, which owns 237 million shares representing 60% of Stanbic Kenya, is seeking to buy another 59 million shares, which will take its stake to 75% (296 million shares) as part of a commitment to grow its business in Africa. Stanbic Kenya is listed on the Nairobi Securities Exchange and SAHL has declared that the shares will remain listed after the deal and have applied for an exemption from being required to make a formal takeover.

The bank shares were trading at Kshs 83 before the announcement, and SAHL is offering to buy no more than 59 million additional shares at Kshs 95 (~$0.94) a share. SAHL states that it will give preference to shareholders on the register date for up to a maximum of 10,000 shares in the offer, which runs to April 27.

In 2016, Stanbic Kenya had 4,424 shareholders, 3,837 of whom owned less than 10,000 shares, and 1,838 of these had less than 500 shares. While SAHL states that it is not acting in concert with any other parties, it is entirely possible that the three largest shareholders behind SAHL in the Kenyan bank – two foreign firms and one local company who may own a combined 59 million shares may be targets of the offer.  One of the shareholders has also recently divested from owning large stakes in other NSE-listed companies including Athi River Mining and Kenol-Kobil.

SAHL established its banking presence in Kenya in 2007 by initially merging with the CFC Bank Group. Shareholders who take up the new offer to sell their shares will also forego a dividend of Kshs 4.00 per share declared this month when Stanbic reported bank profits of Kshs 5.6 billion along with assets of Kshs 239 billion, loans of 130 billion and deposits of Kshs 153 billion.

2018 Kenya macro prospects are largely positive

Kenya’s economy is projected to grow by 5.6% from 4.7% last year, Stanbic Bank economists projected on Thursday. The Kenya macroeconomy was supported by improved performance in the agricultural and tourism sectors rippling down to the manufacturing and services sectors.

Pic from KenyanWallStreet

Jibran Qureishi, Stanbic’s Regional East African economist explained the Stanbic Bank Kenya Purchasing Managers Index (PMI) served as a leading indicator as it vindicated itself over the quarterly GDP growth rate. He underlined the importance of the government’s focus on credit growth to the private sector, improved agricultural policies, the balance of payments and exchange rate.

Recent ranking in the ease of doing business report, end of the political impasse, improved efficiencies in ports and expected increase in foreign direct investment (FDI) would hopefully promote the economy over the 6% year on year growth target which Kenya has only achieved five times since 1980.

However, Kenya’s debt service costs which are mainly external and fiscal consolidation needs to be thought about more carefully for a better and consistent economic performance and Mr. Qureishi warned that the biggest downside risk to the growth outlook would be slower private sector credit growth and fiscal consolidation. He stated that the introduction of IFRS 9 (replacing the IASB 39)  will make the credit growth drought recovery sluggish although the demand side for credit is improving and that the government also needs to develop a sound industrial policy which would have productivity gains rather than increasing expenditure on new infrastructure projects.

In summary:

  • Inflation is likely to fall in H1.18 and thereafter edge higher as 2017.
  • Short rains have been good.
  • An expected rebound in the agriculture sector.
  • KES to be steady in H1.18.
  • GDP growth is likely to recover in the near to medium term.

Here’s a recap of other recently-released economic forecast reports on Kenya.

Deloitte on African Art and Finance

The value of African art can grow tremendously over the next decade with investment and support from buyers both within Africa, and others who live beyond the continent, as well as from African art schools, governments, museums, galleries, art professionals and banks to stimulate and support more interest in African art.

These are some of the findings from the Art & Finance Report 2017 that was unveiled at Deloitte’s 10th Art and Finance conference at the Italian Stock Exchange in Milan this week and which estimated that the value of art owned by Africans collectors was $12.7 billion in 2016 and that it  could grow to $20 billion by 2026. This still accounts for less than 1% of the global art market currently estimated at $1.6 trillion with an annual turnover of $50 billion.

Some key findings of the report which looked at the global art markets include:

  • The art market should be self-regulated and there is great support for art to be part of wealth management offerings to customers at more private banks.
  • Banks need more specialists to properly value and manage art markets.
  • Art can be used as collateral, enabling art collectors and galleries to realize liquidity without having to make unfavorable sales to meet short-term cash-flow needs. See this on how to borrow against art.
  • Art as an investment class poses risks that are no different from others that banks manage and have to guard against, including vices like price manipulation, insider trading, money laundering and terror financing.
  • The top categories in the global art market are  “post-war & contemporary art”, followed by “modern & impressionist art”, “Chinese & Asian art” and ” jewels & watches”.

Some excerpts from the report on the African art market include:

  • International dealers and auction houses like Bonhams and Sotheby’s are seeing a gradual shift in the African contemporary art buyer base from mainly African art collectors to a more international and diverse group of art collectors.
  • London experienced a 12.5%  rise in African art auction sales between 2015 and 2016, with Bonhams controlling a 65% market share.
  • Sotheby’s London joined the African art auction trend in 2017 with its first auction focused purely on African contemporary art. It achieved total sales of over $3.6 million and 79 of the 116 lots were sold.
  • In 2017, record-breaking hammer prices recorded at auction for contemporary art were achieved by Nigerian artist Njideka Akunyili Crosby, whose work sold for less than $100,000 at auction in 2016. However, less than a year later, the artist’s piece “Drown” sold for a record-breaking US$1.1 million at a Sotheby’s auction and a few months after that, her 2012 painting “The Beautiful Ones” sold for US$3.1 million at a Christie’s London auction.

There is currently an inter-section of art, wealth, and technology with the possibility that bitcoin / block-chain can be used to assist banks and financiers with tools to help with transparency authentication, copyrights and ownership of art objects and there are already platforms such as Blockai, Ascribe.io, Chainmark, and smArtchain etc. in use.

The greatest demand for African art is currently from high net worth individuals in Nigeria and South Africa, which are the two largest economies in Africa. The report also notes that there is increasing demand from corporations such as the Nigeria Stock Exchange

Elsewhere In Kenya, Stanbic was working on investor management portfolio offerings that include wine and African art, while Nigeria has Access Bank in Nigeria. There are also other innovations coming up in African art and finance from leading banks and galleries in Kenya, South Africa and Europe.

Tegeta Escrow

Yesterday Harbinder Singh Sethi and James Buchard Rugemarila were charged with obtaining $22 million and 309 billion Tanzania shillings from the Bank of Tanzania in what’s been dubbed the Tegeta Escrow case.

Perhaps the best summary of the Tegeta Escrow case comes from Africa Confidential (Vol 55 – N° 19) dated 26 September 2014 –

  • Heads may be about to roll after revelations about the contested transfer of 200 billion Tanzania shillings (US$124 million) from an escrow account in the central bank, the Bank of Tanzania, to Harbinder Singh Sethi’s Pan Africa Power Solutions Tanzania Limited (PAP, AC Vol 55 No 13). The complex details of how Sethi acquired Independent Power Tanzania Ltd. (IPTL) and then raided the BoT account have now been pieced together by two opposition members of parliament, Zitto Kabwe and David Zacharia Kafulila, with the help of The Citizen and Mwananchi newspapers.
  • If Sethi’s critics are proved right, this is the country’s biggest corruption scandal to date. Based in South Africa, Sethi is a Tanzanian-born businessman with a reputation for dubious past dealings in Tanzania, Kenya, South Africa and the United States. Sethi claims to have bought 70% of IPTL’s shares from Malaysia’s Mechmar Corporation, now in receivership. Yet Standard Chartered Bank Hong Kong (SCB-HK) claims to have purchased IPTL’s debt for $76 mn. in August 2005 and says Mechmar was already in liquidation when Sethi claimed to have acquired the shares.
  • The Tanzanian behind IPTL, former BoT employee and self-styled international consultant James Rugemalira, is also under investigation over the $75 mn. that he was paid by Sethi for his company’s 30% share in IPTL.
  • Both Sethi and Rugemalira have lived up to Kabwe’s description as ‘aggressive litigators’. Their strategy has been to steer the acquisition of IPTL away from non-Tanzanian jurisdictions (Malaysia and Britain), from other interested parties (SCB-HK) and lawyers, receivers and liquidators in Malaysia and Hong-Kong. In this way, SCB-HK’s property rights in IPTL have been summarily dismissed and attempts by SCB-HK’s lawyers to negotiate a compromise with Tanesco have all been blocked. Furthermore, the findings of the International Centre for Settlement of Investment Disputes over IPTL’s overcharging Tanesco for power supplied and the proposal for a solution involving SCB-HK claims have been ignored. Tanzanian courts have been complicit in rubber-stamping IPTL’s transfer to Sethi’s PAP. None of this helps improve the country’s image abroad.

Other

  • The unfolding details about the Tegeta Escrow case resulted in the removal of four ministers back in 2014. On Saturday, the energy minister, Sospeter Muhongo, resigned over his alleged role in the affair last year that saw $180m (£116m) taken from the country’s central bank. The move follows the removal from office of the attorney general, Frederick Werema, the energy secretary, Eliakim Maswi, and the housing minister, Anna Tibaijuka, who was sacked over the transfer of $1m to her private bank account Chairs of three parliamentary committees have also resigned following the scandal: Victor Mwambalaswa, energy and minerals committee; Andrew Chenge, parliamentary budget committee; and William Ngeleja, legal affairs and governance committee.
  • Back in December 2014, Stanbic Bank Tanzania released a short statement on the-then parliamentary report on Tegeta Escrow and their role.

 

Kenya – Dubai: Fresh Exports & Chamber Commerce Trade

There’s a delegation from the Dubai Chamber of Commerce & Industry in Nairobi this week and they were hosted by the Kenya National Chamber of Commerce and Industry (KNCCI). The Dubai Chamber announced that they will open a representative office in Nairobi, their fourth in Africa, after Addis, Accra, and Maputo – to do market research, discover opportunities for partnership and value addition, support Dubai businesses in Kenya and give Kenyans information about business opportunities in Dubai.

dubai-flag

Kiprono Kittony said Kenya imports about $900 million from Dubai and exports about $300 million. He said that some challenges of business in Kenya include double taxation between the counties, infrastructure to the counties, corruption, but that he saw endless trade opportunities for their 14,000 members in 45 counties.

Naushad Merali said that when he first went to Dubai in 1982, it was smaller than Mombasa, but it had since transformed, thanks to Sheikh Mohammed’s leadership.  He said Kenya was one country with a stable currency and Dubai investors would not have to worry about moving money in and out the country – and that while manufacturing was difficult due to dumping from Asia, the advantage was if you were doing agro-business, especially of things that are grown here. A Stanbic bank executive said they were the largest bank in Africa said they were ready to finance projects in infrastructure energy, renewable energy, tourism, electricity transmission etc. – and that while banks are able to do projects of $25 – $ 60 million, with larger than $100 – $200 million, ones there was need to syndicate across borders.

bananas-for-dubai

Hot button issue. Kittony also spoke of Kenyan flowers that go to Amsterdam and then get re-shipped to Dubai. He added that Kenya had developed a disease-free livestock belt that could export to Dubai and the Gulf states (GCC). Someone else said that there are only 5 Kenyan fresh products on Dubai supermarket shelves (including mango and avocado) out of a potential 70 others, and lots of fresh stuff is sent to Europe where it is repacked and relabeled before being shipped to Dubai. While someone else said the lack warehouses and charter flights from Mombasa and Eldoret were the problem, another said that there were 14 Emirates flights a week, along with others from Kenya Airways and Etihad (and Qatar) – so flights were not the problem. Another said that Kenya had simply not marketed itself fully to Dubai in terms of what it could produce and export and get to Dubai via a 4 hours flight or a 12-day ship ride. Kiprono later lamented that flights flew into Eldoret, full of cargo, and flew out largely empty – while they could carry flowers, coffee, bamboo and other things.