Tag Archives: M&A

M&A Moment: November 2019

A roundup of East Africa merger deals announced, ongoing, or completed in the latter half of the year 2019. Most are drawn from approval decisions from the Competition Authority of Kenya (CAK Kenya).

The deals include:

Airline/ Oil/Energy/Mining M&A

  • The CAK authorized the proposed acquisition of 863,477 Series B preferred shares in Windgen Power USA Inc. by Omidyar Network Fund LLC, Acumen Fund Inc., Stitching DOB Equity and Microgrid Catalytic Capital Partners. WindGen has operations in Kenya through its wholly owned subsidiary PowerGen Renewable Energy East Africa and the power it generates will be sold to Kenya Power.
  • Rubis, having completed the takeover of Kenol, are now going after Gulf Energy, the fourth-largest fuel marketer in Kenya with 46 stations.
  • A bid by the owners of IberAfrica, Kenya’s largest thermal power producer, to sell the company to a South African energy firm has collapsed. Read more.

Banking, Finance, Law, & Insurance M&A

  • The CAK approved the proposed merger between Commercial Bank of Africa and NIC Group on condition that they retain 1,872 employees for a period of 12 months. Post-merger, the market share of the entity will be 10.67%, making it the country’s second-largest bank.
  • Equity Group entered a non-binding agreement with certain shareholders of Banqué Commerciale du Congo (BCDC), for the purchase for cash of a controlling equity stake in BCDC, with a view to eventually amalgamating the business of BCDC with that of EGH’s existing banking subsidiary in DRC, Equity Bank Congo.
  • The CAK approved the proposed acquisition of National Bank of Kenya by KCB Group on condition that 90% of the merged entity’s employees will be retained for a period of eighteen months.
  • Fund manager ICEA Lion Asset Management has signed an agreement to acquire Stanlib Kenya’s business of managing funds, assets and investment in Kenya – including the Fahari I-REIT – in a deal valued at Kshs 1.5 billion. 
  • The business of non-deposit taking micro-finance carried on by Kenya Ecumenical Church Loan Fund has been transferred to ECLOF Kenya. 
  • The CAK has authorized the proposed acquisition of 93.57% of  Transnational Bank Plc by Access Bank Plc. The market share (of Transnational) is significantly low, and the acquirer intends to enter the Kenyan market and continue with the business of the target.
  • Exim Bank Tanzania acquired UBL Bank, a subsidiary of Pakistan’s UBL Bank, as part of its plan to expand nationwide and become a top- five bank in the country. It now has assets of 1.7 trillion Tanzania shillings. 
  • In 2017 private equity firm Capitalworks acquired AON’s shareholding in several African operations, alongside local shareholders including governments in many markets.
  • I&M Holdings unit, GA insurance has acquired 100% of Nova Insurance Company in Uganda. It is part of GA’s plan to expand across East Africa where insurance penetration remains low. (via Kenyan Wall Street).

Agri-Business, Food & Beverage M&A

  • Coca-Cola Sabco (East Africa), which owned 72% of Nairobi Bottlers, has bought 27.6% of that company from Centum Investments, along with 53.9 % of Almasi Bottlers for a total of Kshs 19.2 billion. Centum states that the stakes had a combined value of Kshs 16.8 billion. CAK approved the deals on condition that it continues to operate current bottling plants in Nyeri, Eldoret, Nairobi, Molo and Kisumu for at least three years and retains 1,749 of the 1,760 permanent employees for the same period. Also that Almasi reserves 20% of the storage space in its coolers to SMEs for products (excluding products of Coca-Cola’s three largest global competitors). Coca Cola shall also allow Coastal Bottlers to distribute other non-alcoholic ready-to-drink brands.
  • The CAK approved Vivo Energy B.V.’s proposed investment in Kuku Foods which operates 24 outlets in Nairobi, Mombasa, Nakuru, Eldoret, Kisumu and Nanyuki under franchise from America’s Kentucky Fried Chicken (KFC).
  • The CAK approved the proposed subscription of 33.9% and joint control of Maziwa by Pledge Holdco, which is wholly-owned by Texas Pacific Group (TPG). Maziwa is owned by Bainne and distributes of milk and milk-related products in Kenya, Uganda and Zambia under the brand name ‘Lola’.  The CA determined that the main players in the processed milk market, were Brookside Dairy (40%), New Kenya Co-operative Creameries, (25%), Sameer Agriculture (14%) and Githunguri Dairy Co-operatives (12%) while the merged entity will have a market share of 3.9%.
  • The CAK approved the acquisition of 100% of Aquamist Ltd by Aquapani Ltd. Aquapani is newly incorporated in Kenya as a wholly-owned subsidiary of the Menengai for the sole purpose of this transaction. The deal is being done alongside Aquaplast which manufactures PET bottles, jars and closures and Polycarbonate plastics for refillable water containers mainly for the bottling business of Aquamist.
  • The CA-K approved an investment by Stitching DOB Equity and Acumen Fund into Coconut Holdings which had a turnover of Kshs 162 million in 2018. More here.
  • The CA-K approved the acquisition of 100% of Gilani Butchery by Upland Meat Products. Gilani had s turnover of Kshs 116.9 million in 2017.

Health and Medical, Pharmaceutical M&A

  • US pharmaceutical firm Johnson & Johnson has teamed up with private equity firms, South Africa’s Inqo Investments and London-based Sumerian Partners, to buy out Naivasha-based South Lake Medical Centre in a deal valued at nearly Kshs 100 million. The hospital was acquired from Flamingo Horticulture which had established the facility to serve its low-income farmworkers.  
  • Interswitch has acquired eClat, expanding its reach into Nigeria’s health-tech sector. The move is the latest in a series of strategic investments into Africa’s growing digital marketplace by the firm. Asoko has tracked 8 other deals in the Nigerian health care industry since 2015, of which the eClat deal is the second involving a health-tech firm. Investors were most active in the pharmaceutical segment, with three deals in that space over the period. (via Asoko) 
  • The CAK authorized the acquisition of 54.23% of AAR Health Care Holdings by Hospital Holdings Investments. In addition to constructing a hospital, the acquirer is targeting equity investments in clinics and hospital chains across East Africa. The target operates 21 primary outpatient healthcare clinics in Kenya.

Logistics, Engineering, & Manufacturing M&A

  • The  CAK authorized the proposed acquisition of all ARM Kenya‘s (Under Administration) businesses, assets and properties by National Cement Company on condition that the merged entity ensures continued operation at ARM’s Kaloleni and Athi River plants and retains 95% of ARMs 1,100 employees.
  • The CAK authorized the proposed acquisition of the plastic manufacturing business of Metro Plastics (Kenya) by Metro Concepts East Africa on condition that the acquirer absorbs at least ninety employees. Metro Concepts East Africa, a company incorporated in Kenya, is ultimately owned by Ascent Rift Valley Fund, a private equity Fund incorporated in Mauritius, with minority control in investments across East Africa.
  • CAK has authorized the proposed acquisition of control of Chemi & Cotex Kenya by Unilever Overseas Holdings B.V on condition that the acquirer continues providing the products (Whitedent, Bodyline, Baby Soft, Skin Glow, Siri, U & Me, Lovely, Barnister and Tressa) in the market for at least three years.
  • The CAK approved the proposed acquisition of an additional 47.5% shareholding in Speedex Logistics Ltd by Suresh Naran Varsani. The transaction will result in a change of ownership from joint to sole control.
  • The CA-K approved the acquisition of direct control by Tuffsteel in Hwan Sung Industries Kenya which has a turnover of Kshs 5.8 million in 2018.
  • The CA-K has approved the proposed acquisition of 100% of the publicly held shares in Panalpina Welttransport Holding (Panalpina World Transport Holding) A.G by DSV. In Kenya, Panalpina Airflo provides freight forwarding services of perishable goods, mainly fresh vegetables and cut flowers.. Post-transaction, CA-K data shows that the the merged entity will have a market share of 18% air freight services [current leaders are Kuhene + Nagek (28%) Panalpina Airflo (15%) Freight Forwarders Group (9%) Air Connection (8%) Siginon Freight (7.5%) Bollore (6%) Schenker (4%) and DSV (3%)], 6% of the sea freight sector [current leaders are Maersk Line (18%), Century Cargo (14%), Mediterranean Shipping Company (11%), Filiken Transit (9%) Damco (7.5%) Panalpina (4%) Kuhene + Nagel (3%) DSV (2%)] and 1.5% of overland services and logistics .

Real Estate, Tourism, & Supermarkets M&A

  • The CAK approved the proposed acquisition of 100% of Quick Mart by Sokoni Retail Kenya, which is owned by Adenia Partners of Mauritius, a private equity fund manager. Quick Mart, incorporated in 2006, has 10 supermarket outlets located in Kiambu, Nairobi and Nakuru counties. In October 2018, Sokoni had acquired Tumaini Self Service, another retailer in Kenya with 13 outlets located in Nairobi, Kiambu, Kajiado, and Kisumu counties. EDIT Quickmart has recently undergone a merger with Tumaini Self service stores and the merged entity will be the third largest retailer in Kenya, backed by a strong institutional investor, with plans to open 6 stores over the next year.
  • The CAK approved the proposed acquisition, with controlling rights, of 22.32%  of the Riara Group of Schools by Actus Education Holdings AB. Riara operates six learning institutions in Kenya which offer the 8.4.4 and British Curriculum education systems. The CA found that of the schools offering British Curriculum, Braeburn Schools with 10.2% of the students, Aga Khan Academy 7.1%, Srimad Premier Academy 3.8%, and Oshwal Academy 3.4%. The CAK has approved the acquisition of 100% of the shares in Abercrombie & Kent Group of Companies by Heritour Ltd. One of Abercrombie’s Kenya subsidiaries is a tour operator that offers tourist accommodation in the Maasai Mara.

Telecommunications, Media & Publishing M&A

  • The CAK authorized the proposed acquisition of 100% shareholding in Eaton Towers Holdings by ATC Heston B.V 
  • BRCK has acquired the Surf Network. BRCKs Moja Network passed 300,000 unique monthly users in January, with 1,500 mobile nodes in buses and matatus across Nairobi and Kigali. The new acquisition takes them close to 500,000 active monthly unique users,  and they state this is the largest public Wi-Fi network in East Africa, and second-largest on the continent. 
  • Co-creation Hub (CcHUB), the leading technology innovation centre in Nigeria, acquired Kenya’s iHub for an undisclosed fee. The deal will see the iHub become part of the CcHUB’s network, while retaining its name and senior management structure.  The move comes seven months after CcHUB expanded into Rwanda, with the launch of its Design Lab. 
  • The Airtel-Telkom merger is still ongoing. Kenya’s Parliament has raised some queries about the transfer of government assets and shares as has the Ethics and Anti-Corruption Commission. Rival Safaricom also stepped in and pressed for the two companies to settle a combined debt of Kshs 1.3 billion they are owed before the transfer is completed. They also argue that the merged entity will have an outsize frequency allocation (77.5 MHz of spectrum serving 17.3 million customers) compared to Safaricom (who serve 31.8 million customers with 57.5 MHz) and ask that this is rebalanced. EDIT December 14: The Competition Authority has approved the proposed acquisition of the mobile operations, enterprise and carrier services business of Telkom Kenya by Airtel Networks Kenya with conditions including; the merged entity shall not sell or transfer its licenses (Network facility provider, applications service provider, content service provider, submarine cable landing ) and frequency spectrum (800 MHz, 900 MHz, 1,800 MHz, 2,100 MHz), with the 900 MHz and 1,800 MHz ones reverting to the Government after they expire. Also, the merged entity shall honour all agreements and not enter any sale agreements (for five years). It shall retain 114 Telkom Kenya employees for two years and 115 others of the merged entity and not enjoy preferential access to the 4,204 kilometers of fibre managed by Telkom on behalf of the Government.
  • The CAK authorized the proposed acquisition of 100% of  De La Rue Kenya by HID Corporation on condition that all existing contracts De La Rue has with the Kenyan Government are honoured.
  • The CAK has authorized the proposed establishment of a joint venture and the acquisition of control of certain assets of Kul Graphics, The Rodwell Press, Printfast Kenya, Digital Hub and Colourprint by The Print Exchange on condition that the parties retain 100 permanent employees of the merger parties for a period of one year after completion of the transaction and the 72 contractual employees serve to the end of their contracts.  In May 2019, the directors of the six companies had announced plans to merge due to the printing industry’s price sensitivity and demands for new technological innovations that had created financial and operational challenges for them.
  • The CAK has approved the acquisition of 80% of iWayAfrica Kenya by Echotel International Proprietary. iWayAfrica Kenya provides a range of ICT services. The CA estimated market shares for the main providers of retail Internet access services to be Telkom Kenya (28%), Liquid Telecom (25%), Safaricom (14%), Internet Solutions (13%) and Simbanet (4%). iWayKenya is at 1.2% and Echotel at 0.6%.
  • It was announced this week that two of Tanzania’s best-known telecommunications companies – Tigo and Zantel – have completed there merger, combining their operations on both mainland Tanzania and Zanzibar. (via Arden Kitomari)
  • The CA-K approved the acquisition of direct control of Digital Packaging Innovation Holdings and A-One Plastics by Rifts Investments.
  • ScanGroup is set to sell two of its subsidiaries for more than Sh2.4 billion in a deal that was triggered by a related transaction involving its London-based parent company WPP Plc with Bain Capital. Read more.

Other M&A

  • The business carried on by Pa’shante Enterprises in Nairobi has been sold and transferred to Pashante Greens Africa.
  • The assets and inventory of Mapflex East Africa at Airport North Road will be transferred to Actiflex Ltd. 
  • The business of a barber and spa carried on Crystal Barber and Spa on Kiambu Road has been sold and transferred to Esther Kinya Guantai. 
  • The CAK authorized the proposed acquisition of Honos Parent Ltd by Doctor No Parent Ltd. CR Honos has operations in Kenya through its subsidiary, Kenya Kazi Limited that provides manned guarding services — secure journeys/events, VIP protection, and cash in transit – as well as alarms fire suppression & detection.

Since the last update in January 2019

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.