New African ICT VC Fund

Last week, saw the launch of a new Convergence Partners Communications Infrastructure Fund (CPCIF) from Convergence Partners. It is a pan African fund that has raised $145 million (from the IFC, EIB, FMO, DBSA and CDC) that they are seeking to invest in companies in communications, fibre, infrastructure, data centres etc. in countries like Kenya , DRC, Rwanda, and Sudan.

The Fund will target established companies with sound management, that are aiming to improve products or quality, or add value to their services – to invest amounts of about of $20-30 million in exchange for stakes of 15-49% with a horizon of about 10 years.

Their past portfolio includes investments in Seacom, New Dawn (with Intelsat) and Internet Solutions (who are taking over at Access Kenya and they plan to open an an East African office soon. 

Separately, in a nice post, @Wanjiku asks if there’s a racial bias in ICT funding from venture capitalists in Africa. 

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 off 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  Kshs17 million ($200,000) in a transaction that values the online portal at Kshs. 220 million.  

Lonrho is selling it's 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 shares in Bullpak.

EDIT: Kestrel Capital has arranged a $1.2 million private placementof 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 health care 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 has received  an exemption from complying with the NSE requirement to make a take-over offer.

After listing at the NSE, I&M shareholders have done a swop to bring the company's investors numbers past the 1,000 shareholder mark.

  

The WPP Group (through Cavendish) is increasing its shareholding in Scangroup from 33% to 50%.  WPP is the largest  advertising group in the world is strengthen its control of Kenya and the East African market ahead of the merger of the Omnicom the No 2 firm, Omnicom (owners of TBWA) and No 3 – Publicis (of France) advertising firms – 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  at the conclusion of a  buyout offer from Dubai’s Al-Futtaim Group  who have offering 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 prices 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 some shareholders challenges of family and reputation.

Access Kenya EGM

This morning  saw what was likely the very last shareholders meeting of Access Kenya, as a public company. The Company Secretary reported receiving 11,207 proxies representing 85% of the shareholders at the extraordinary general meeting (EGM) that was to vote on the de-listing of all the issued 218 million ordinary shares of the company form the Nairobi Securities Exchange following a buyout offer that the board of directors had already endorsed and which 75% of the shareholders had voted in favour of.

A few of the retail shareholders present asked lots of questions about the deal, and it seemed they were unhappy that just over five years after they bought shares in the company at an IPO, after which the share had risen to 38 shillings, before dropping to Kshs. 4, and getting low inconsistent dividends, in between, they were now being evicted from the company.  

Some questions/topics raised:
- Why sell out for Kshs 3 billion (~$35 million) that could easily have been raised locally? The Directors 
- Was the a capital markets (CMA) rule on the minimum number of years that a company had to remain listed after an IPO? The directors said there was none, and the regulators had approved all decisions taken by the directors in the deal 
- Some shareholders said they had bought shares at about Kshs. 18, and were taking a big loss. Directors replied that Kestrel Capital, as an independent advisor, said Kshs. 14 was a good price to take and that Kshs 14 was a big improvement  from the Kshs 4 low in the past year, and Kshs. 9 when the deal was announced and shares frozen
- Were the needs of minority shareholders considered in the negotiations, and why didn't the majority shareholders simply reduce their stakes, instead of selling the company outright?
- Why was the offer to retail shareholders structured as a 'unconditional, mandatory one? The directors said that no one was being forced out of the company, and that any shareholders who wanted to remain could do so, and they will still receive annual audited accounts from Access Kenya..they noted that there were still some shareholders of Unilever Kenya which delisted  in 2009
- What is the fate of employees who own shares in the ESO..and will they be arm-twisted to vote the shareholders acceptances past the 90% threshold? The directors said Dimension Data were a $6 billion company who's parent was a $100 billion one with ambitious plans for Access Kenya and Eastern Africa.

The final results of the shareholders voted will be tabulated by Deloitte and released in two days - and payments should be made to shareholders in September 2013. 

Nairobi New Media Stocks, 5 Years Later

It's been over five years, since a wave of new media stocks appeared at the Nairobi Stock Exchange  (NSE) including Access Kenya Safaricom, and Scangroup. They are all in the news this month, but for different reasons.

For Access Kenya, the deadline for shareholders to vote on a takeover by Dimension Data was extended by a day due to a national Holiday last week, However, Dimension Data just announced that they have received acceptances from 75% of shareholders and approval the Competition Authority of Kenya and will now proceed with the takeover which will leading to a de-listing of Access Kenya at the NSE.

Safaricom shares seem to have stabilized in the Kshs 7-8 price range  after spending quite a bit of time at Kshs 3/=, well blow the IPO price of Kshs 5/= in 2008. This disillusioned a lot of retail shareholders who bought their shares hoping to quadruple them when they listed, but then had to sell them at a loss. The company has since weathered many changes, but remains the market leader in Kenya, thanks largely to M-Pesa and the floundering of their rivals (Orange, Airtel and Essar). 

Scangroup got an investment from the WPP, in 2008 who gained a controlling interest for about $18 million. The shares traded at about Kshs 72, and while they have lagged other shares this year, this is still a tremendous gain from the IPO price from Kshs 10.45. 

This week, WPP announced, that they would seek to increase their stake to just over 50% in a deal worth about $95 million. This will be done through a combination of cash, new shares and exchange of partnerships in joint companies (Ogilvy & Mather, Ogilvy Africa, Ogilvy (in Kenya, Tanzania, Mauritius) Millard Brown (East Africa, and Mauritius), and Hill & Knowlton (East Africa and Africa) which will become full subsidiaries of Scangroup over the next one year.

Private Equity Moment

Access Kenya directors have approved the sale of the company to Dimension Data and will now recommend that all other shareholders vote in favour of the deal at an shareholders EGM on August 20, 2013. The company will forward this circular to all the company's 28,000 shareholders and need to get a 75% vote approving the deal which will pay Kshs. 14 (~$0.16) per share and also de-list the company from the Nairobi Securities Exchange just six years after an IPO and listing.    

Elsewhere, the government has agreed to waive the requirement that local Kenyans have to own 20% of the company after the Dimension Data takeover.

 

Other Deals

Big Milk: According to the Standard, dairy giant Brookside has acquired a majority stake in rival Molo Milk - continuing a pattern of the company buying out it's rival's and consolidation in the milk processing sector.

Unfriendly Oil: Kenol Kobil is fighting off the takeover of a prime petrol station at Yaya area, Nairobi by a rival company - Hashi Energy. KenolKobil (management) claim an armed gang of 20 people raided the petrol station, kicked out its staff, and rebranded the outlet with the Hashi Energy logo.

Recent M&A deals approved by the Kenya Competition Authority include:

Automobiles

- The acquisition of DT Dobie Kenya (distributors of Jeep, Mercedes-Benz, Nissan, Renault, Chrysler) by Toyota Tsusho Corporation  - with a provision that implies that there will be some separation of brands above and below 1,800 cc.

- The acquisition of Cica Motors Kenya (distributors  of Hyundai Trucks and Greatwall brands) by Toyota Tsusho Corporation 

Banking, Insurance & Finance

The acquisition of Iroko Securities by Ecobank Development Corporation.

Health & Beauty

The acquisition of Laborex Kenya and Epdis Kenya by Toyota Tsusho Corporation.

Technology

- The acquisition of Comztek Holdings by Datatec in a South African deal valued at 88 million rand (Kshs 767 million)

- The purchase of all assets of Interest Africa by BSS Africa (Belgium Satellite Services)

KQ-KLM: The Competition Authority also exempted the joint venture agreement between Kenya Airways and KLM Royal Dutch Airline from the provisions of section 21 of the Competition Act which prohibits the abuse of a dominant position in the Kenyan market. 

Shares Portfolio May 2013

Performance: Compared to last quarter and year ago, the portfolio is up 9% in value from February (excluding new investments), while the NSE 20 share index is up is up 7.5% since February 2013.

The Stable

Barclays ↑

Bralirwa (Rwanda) ↑

Centum  (ICDCI) ↑

Diamond Trust ↑

East African Portland Cement ↓

Equity Bank ↑

KCB ↑

Kenol ↓

Safaricom ↑

Scangroup ↓

Stanbic (Uganda) ↑

Unga ↑

Changes

In: Centum, Portland Cement

Out: Total, EABL

Increase: Equity, Kenol, Safaricom

Decrease: None

Best performer: Safaricom (up 30%), Equity, Stanbic  

Worst performer: Kenol (down 29%)

Looking forward to:

- Dividends from Equity, Barclays, KCB, Scangroup, Bralirwa and Safaricom.

- Coldtusker writes about upcoming rights issues at the NSE including Uchumi and National Bank. 

- Still yet to venture into Kenya government treasury bonds a year later.

Other Events:

- Access Kenya is being bought out by Dimension Data and will be de-listed from the Nairobi stock exchange - pending regulatory approval, shareholder approval, and no better offers.

- Citi released bearish reports during the Kenya election on Equity and KCB based on unsustainable interest rates, and growing non performing loans, among other issues in the Kenyan banking sector. 

- Citi also had a report on Kenya Airways predicting two more years of losses, difficulty financing Boeing 787 planes without raising more capital, that is probably beyond the appetite of current KQ shareholders and other NSE investors. It mentioned the possibility of Etihad Airways extending their new code share partnership into an investment in KQ, but the airline has to remain 51% Kenyan owned in order to enjoy preferential African route rights. Other large shareholders in the airline are teh Government of Kenya, KLM airline, and the International Finance Corporation.

- The Safaricom 2013 results (PDF) results released this morning showed that revenue grew by 16% to $1.45 billion (including MPesa revenue of $256 million) and profit before tax grew 47% to $300 million. 

- Umeme of Uganda which cross-listed at the NSE has still not had a trade in Kenya despite some okay performance in the last few months.

Reading the Access Kenya Tea Leaves

one of three
Over the last few years’ shareholders have voted to allow their companies to reproduce abridged financial statement summaries in the newspaper. One of the benefits of these resolutions would be to reduce costs of administering to thousands of shareholder, who previously were entitled to receive a full copy of a company’s audited results by mail.

Now companies have the full accounts on their websites for shareholders, to download, with a summary of the annual general meeting notice, dividend, chairman statement, and financial summary that appear in daily newspapers.

Limited numbers of the accounts are still printed and kept at the company premises, and distributed to analysts, partners, or to any shareholder who requests one. However most shareholders do not have Internet access or computers to read these PDF’s and may miss out on some details of events at the company.

Three companies are about to have their annual general meetings in the next few days, and have all converted to the digital format in lieu of printed copies. Kenya Airways and Safaricom both had their financial year-end in March 2010, while Access Kenya has had a good year (2009), but their meeting was delayed by boardroom wrangles which saw a new chairman brought in, and later by a drop in first half 2010 results (announced earlier this month).

AGM - Auditors Deloitte continue in office (new Chairman Mr. Ndonye was a long time partner there)
- Shareholders will be asked to endorse a concluded deal to buy out the remaining 30% in Openview, which they describe as a company that sells IT equipment to enterprises and corporate customers. Openview had sales in 2009 of 165 million, up from 147m the year before, but it seems the minority owners opted to sell the company to AK (their right under original sale agreement), and a settlement was reached where payment was made by share transfers, but they also agreed to pay Kshs 38 million to settle some claims by AK group biz daily

Notes - Dividend of 0.3 shillings per share will be paid for 2009, amounting to about Kshs 62 million
- AK still enjoys benefit of listing as a group by paying 20% in income tax compared to subsidiaries and other Kenyan corporates, which pay 30%
- Borrowings are up to 724 million (57m in 2009), but overdraft has been reduced from 166 million to 30 million. The group still has an overdraft position of 128 million. The loans are from NIC Bank and CFC Stanbic for both US$ and KES, with the bulk of this borrowing is in US$ which is cheaper (3%) is cheaper than the shillings ones (7%), unless the shilling depreciated significantly. Interest expenses for the year were 44 million compared to 6 million in 2008
- Communications solutions limited charged 370 million as management fee and owes 364 million
- Fibre: AK paid 106 million as investment into TEAMS (62.5 shares)

Shareholders: Has 32,674 shareholders and while there are some top shareholder changes, the AK ESOP has increased stake in the company

Website AK has an active presence on twitter, but is hounded by claims of poor customer service. Also from Twitter: The board has indicated there is strong interest in acquiring the company from three Telco’s but Safaricom have denied being one of them
-@bankelele reading vacationing @alykhansatchu in the star - safaricom share dips back below IPO price as CEO denies interest in buying access kenya
- @jgmbugua MJ is lying. I have impeccable information that they have approached AccessKenya at least three times. TKL, Airtel interested too
- @coldtusker @jgmbugua @bankelele Maybe in the past but does #AccessKenya add real value to @SafaricomLtd today? [I say no]

New Media Companies Redux

It’s been two years since this blog post comparing Access Kenya and Scangroup which debuted at the Nairobi Stock Exchange (NSE) at about the same time. They are both back in the news this week for diverse reasons along with a third ‘new media’ company Safaricom, which debuted later in 2008 on the NSE.

Scangroup: has just announced plans to buy stakes of 51% in Ogilvy & Mather Africa and 50% of Ogilvy East Africa. (statement here) - two companies are both subsidiaries of UK’s WPP Group who own 27% of Scangroup.

The investor at the Scangroup notes that group has recorded growing ads in TV and radio but declining in print media. In 2009, the communications sector was their largest customers with 29% followed by finance at 15%. Scangroup has 61% of advertising market in Kenya followed by Access Leo Burnett with 13% and then Ogilvy & Mather with 10% - while their plans going forward are to do more online adverting and take the Ogilvy as their main brand across Africa

a version of this Safaricom by Squad digital, a Scangroup venture appears in the NY Times pages

Access Kenya: are in the news (details here) following their postponed by another three months of the annual general meeting that was to have taken place yesterday May 4 and payment of their divided. The company has not commented beyond a press statement.

From the blogs: On AK - a year ago, they were very very liquid while as recently as two months ago, they were hailed as a must buy stock.
from Twitter @bankelele not a shareholder, but as a concerned proxy lack of info is bad. AK should issue a profit warning or cautionary statement on restructuring
@mainaT I figure if AccessK is struggling now when internet is a growth sector, its got issues & a cash flow problem that won't go a way 4 a while…but, Centum did the same in late 08 early 09 when it was having Cflow issues that meant it couldn't pay a dividend
@roomthinker: Access Kenya customers, used to their speeds were not surprised to learn their AGM would be late
@coldtusker Y announce a dividend if u have CF shyte? For AK to say, 'no div coz expanding' is easy & plausible. Or pay only 5 cents like safcom…I think this is a bigger issue... Sold off at 22 so dont really care but I think they are in play. AK cud always delay div after AGM…I think less of cashflow issue. More of a acquisition/takeover/sale matter http://bit.ly/aJVCMm [#nairumours]

Finally we have Safaricom who initiated a spat with the government [statement here] after the Minister for Information (gazetted new rules for the sector including a fair competition one (draft here) and accusing the government regulator, Communications Commission of Kenya (CCK) of seeking to curtail safaricom’s growth through price controls and to allow competitors to increase their market share.

The next day the three other mobile companies, Yu, Orange and Zain replied in joint statement applauding the new rules and saying they were not targeted at anyone (read Safaricom) but anyone who abuses of a dominant position in the market CCK had adopted international practices to bring real competition to the mobile sector.

This is new ground for Safaricom – when Orange raised a fuss about the uncompetitive Kenyan market, it looked like GoK would side with large taxpaying Safaricom, but now that all the small (unprofitable, they admit) new mobile entrants have teamed up, some token measures are likely to be brought to rein in Safaricom which is estimated to control at least 80% of the mobile sector by most measures. How do you bring down Safaricom from 80% to 60%?

Banking on Other Income

It's crunch time in Kenya’s economy and many companies are feelign the pinch. While operations may be hurting, listed (and unlisted) companies still strive to report (increasing) profits to shareholders to they will look to unconventional income opportunities to deliver by year end:

some examples

East African Portland Cement: went from a profit warning issued at their ½ year to a full year profit increase thanks to a property revaluation exercise.

Mumais Sugar: full year profits were attained due to a tax credits they gained from investing in electricity co-generation.

Scangroup: profit in the ½ year was credited to income from their investment in Government bonds

Access Kenya: profit growth in the ½ year was attributed to the strengthening of the US$ against the Kenya shillings - and most of their revenue is dollar denominated

Counting on Other Income: Going forward, other companies can also employ similar measures to plug income gaps e.g.
- Tax breaks from listing - Safaricom
- Green energy – carbon credits, co-generation - Kengen, Safaricom
- Fibre cable/IT investment writebacks
- Property and investment revaluations
- Forex: a weak shilling is usualy good for Kenya Airways and tea companies

Centum seeks Carbacid

and other Bank Twits

Twitter is a micro-blogging tool that is relly nifty for doing mini-posts, forwards and other remarks that (are on any subject) and are maybe not worthy of a full blog post. Here’s a summary of my week on Twitter:

- @louizah Zain Vuka has ended? Please confirm
- @NTV showing IFC-funded docu on women entreprenurs - meaning manu-arsenal will be on tape delay - WHY? next @NTV ditched a static-filled channel & skipped their 'half time' piece to present second half live, on a much clearer signal! Kudos
- Sports journo era over? Player asks for trade on blog team obliges on Twitter player thanks fans on Facebook http://tinyurl.com/d967eu
- blog post Why Safaricom should spin off MPesa http://bit.ly/gYZ86
- The Central Bank of Kenya reports have become incomprehensible B.S
- Upgraded Safaricom Investor relations page has media and CEO briefings http://bit.ly/VBZ2f
- Tanzania will now recognize Kenya manufacturers mark of quality http://bit.ly/USZHg
- Delta Air round-trip intro fares from Nairobi include (ex-tax) $650-NY/DC, $975-ATL/Chi/ Dallas, $1124-LA/SF and $1440-Detroit
- @kahenya @jamesmurua likes Riviera, which has good crowd and facilities, but beer is pricey and the place is a fire-trap
- So Joe Biden met Nairobi mayor Majiwa in chicago. There, thats the end of the joke
- Safaricom CEO says M-Pesa not yet profitable http://bit.ly/TDV8D
- @leofaya says Kenyan promoters are killing Facebook http://bit.ly/zBHXB
- Today's pavement uprooting is sponsored by access kenya - as the fibre optic railway is laid around Nairobi
- @Archermishale sports conspiracy goes that where a sport wants to sway a big game, they put in a low-quality ref, but didn't happen on Wednesday
- Safaricom partners with Kenyas' largest bank KCB http://bit.ly/J4l92
- Kenya budget saga ($115 million) blamed on a typo - Quote ODB "N___ please!" http://tinyurl.com/p5hoyo
- blog post: two bank shareholder meetings same day same building same time http://bit.ly/86lNq
- @pinkm so you can only use debit, but not credit card to buy amazon books from KE? Interesting
- Ethiopian Air applies to fly from Nairobi to Amsterdam and Nairobi –Liege (Belgiu
- Land spin: Could there be a link between migingo island and the kampala land kenya got from Uganda military?
- If MTN buy Yu or Access Kenya, they will have to negotiate with MTN matatu society for use of name
- blog post Its Our Turn to Eat (is credit card worthy) http://bit.ly/YnriQ
- NMG 2008 report gives prominent mention of new digital division, Making-Nation DVD and Zuqka portal http://tinyurl.com/qkcphc
- Centum applies to the CMA to buy Kshs.350m of Carbacid shares and be largest shareholder of the Nairobi listed (but suspended) company
- Senator cards advise customers to only upload to https, not http sites. It's rare to find credit company giving card advice
- From Mars Group: Parliament's Report on the Kenya Budget inconsistencies http://blog.marsgroupkenya....

Access Kenya AGM

Access Kenya (AK) held its first AGM since listing on the Nairobi stock exchange (NSE). Here in alphabetical order is a brief recap.

Most of the questions were answered by Chairman Michael Somen and Executive director David Somen

Accounts: there were two balance sheets and P&L’s in the accounts which caused some confusion, but it was explained that one set was audited while the other was included to guide shareholders on the position of the company taking into account recent consolidations (Openview was acquired).

Blogger moment; as I was finishing my lunch, executive director David Somen was greeting shareholders and charring so I asked him about the company’s prospects: He said it's a good for investors and that AK was the second best performing share on the NSE after Equity Bank. On acquisitions he added that Kenya was not easy as most of the ISP’s of significance were not local entities, so they may look regionally for growth.

Collapsed brokers: two shareholders raised the matter of shares being sold without owners consent at different times - but each time, the chairman deferred them since they did not relate to AK shares

Computing industry one shareholder complained that the AK report was scanty on the industry (computing, ISP, technology etc.) and that the company should in future incorporate a management report on their performance in the industry. The chairman said that would be done.

Directors’ fees: while one shareholder considered it quite large, directors replied that they had actually reduced the fees 20 million from 50 million shillings before to be in line with other listed companies.

Dividend one shareholder complained that it was not enough and the company had undertaken too many corporate social responsibility (CSR) activities, diluting the dividend. The question got a lot of applause and the Chairman said they would take that into consideration in future (heavy CSR was also an issue at Standard Chartered AGM a few years ago). Another shareholder noted a dividend current liability amount, which the directors indicated was a payment owed to the directors of the company they acquired after the year end (Openview?)

Extraordinary votes
Increase share capital: from 250 million to 500 million this would give the company room to maneuver in terms of acquisitions, bonus, share splits. In answer to another shareholder, D. Somen clarified the CMA/NSE approval was not required to increase the share sin a company, but only at the time of listing
Acquire companies: up to 200 million shillings. Directors clarified that the companies falling under this clause were rather small, none larger than 5% of AK’s worth, and it would not be prudent to call an EGM (costing 1 million to 3 million shillings and several weeks time) each time this happened. Following other questions about due diligence, target companies and costs, the directors assured shareholders that all decisions would be made with a view to maximizing shareholder value and they would inform shareholders fully about acquisitions. The increased share capital would enable them to take on new shareholders whose companies they acquired. They have talked to several, but not ready to sign any deals yet
ESOP; vote to allocate new shares (about 1.35%) to the employee share ownership plans (ESOP). directors explained that it would enable them to maintain their unparalleled staff retention in the industry and that all 250 employees were shareholders which improved their commitment to the company. D. Somen explained a bit about the scheme which options were exercised over several years and ensured employees stayed on to reap the maximum from AK. This week the Nation Media Group announce plans to create an ESOP – that would be about the 3rd largest shareholder in the company, its time more oversight was given to the professional investment management of ESOP’s

Goodies: tote bag with cap, notepad and access Kenya pen. Lunch box from the Stanley hotel (beef sandwich, apple, orange, piece of chicken, Keringet bottle, soda)

Post election violence directors reiterated that they did not expected the early 2008 events to have an impact on the company’s outlook for the year which the anticipated to be 50% - 60% growth

Venue: was the Nairobi Arboretum and I heard many shareholders complain about its (i) inaccessibility – not public transport/or shuttle organized by company (ii) no directions - once they found the ‘park’, it was vast forest with no indication as to which corner the event was being held

Verdict: apart from the location, was a nice first outing for a newly listed company. It pays to have a strong chairman, able company secretary (Fiona Fox who is leaving the company after the AGM) and directors who can readily and confidently answer questions put to them by shareholders – 70% of which are mundane and/or repeated at every other AGM.

New media stocks at the NSE

Until Safaricom gets listed later this year, take a glance at Access Kenya and Scangroup - two recently listed, new media companies at the NSE. They both say they are market leaders (none of their competitors are listed), both set out to increase market share organically and by acquisitions, and their shares cost about 30 shillings ($0.48) each, three times their IPO prices.

This month, Access Kenya are gearing up for their first AGM since their 2007 listing, while Scangroup will be having their second; and while Scangroup (SG) will have a vanilla AGM (no special business), Access Kenya (AK) have a lot more going on as they will seek approval from their shareholders to;

- double their authorized share capital from 250 million to 500 million shillings (500m shares) [giving them capacity to acquire companies, split shares, or raise capital in future]
- allow the board of directors to acquire companies up to 200 million shillings (~$3 million) without having to call for an expensive extraordinary general meeting of shareholders
- allocate more shares for the company’s ESOP (employee share ownership plan)

How else do the two companies stack up?

vision:
SG vision - to be the leading marketing services company in Africa by 2010
AK vision - be the premier provider of high quality internet and other technology services to corporate and high end residential customers

shareholders : SG 44,193 ; AK 29,434 shareholders

2007 performance
SG: turnover of 4.7 billion, profit of 353 million, cash generated 165 million, assets of 900 million. EPS 1.48 and a dividend of 0.90.
AK: turnover of 882 million, profit of 171m (dividend of 0.30), cash generated of 133m, assets of 748 million (had 600m in cash, much of it unutilized from the IPO). They also have separate consolidated accounts that include the financials of Openview business systems which was acquired after the IPO.

Employee Retention key for new media companies:
SG: ESOP approval of 15m of the company's 160m ordinary shares. Staff costs were 561m including 7m to directors and key managers.
AK: ESOP that had 7.25m shares of 203m ordinary shares has been exhausted and another 2.75 to be added this year. Staff costs of 131m including 53m to key managers and directors,

Other
SG: Has a lot of subsidiaries, from acquiring customers and competitors whcih is part of their strategy. 64% of their revenue was from Kenya with the rest from Uganda and Tanzania. Their CEO was on CNBC Africa TV last month saying their focus the year would be expansions to Zambia, Ghana, Mozambique, and Angola – probably by securing contracts with mobile phone companies in those countries.

AK: was charged a management fee of 52 million shillings by subsidiary companies (shades of Sameer group companies?).
Also Access Kenya’s annual report is heavy on the marketing side with a special offer for shareholders to apply for Access Home - the fastest guaranteed residential broadband(Nairobi and Mombasa) for Kshs. 6,000 + VAT per month - a 20% discount for shareholders. One time costs include 8,500 installation and equipment of 25,000 (and VAT, though I thought all computers equipment was VAT free). An added extra for shareholders is that the package which (including 1st month) costs a total of Kshs. 45,820 (~$725) can be financed with an Equity Bank 1-year loan (but monthly repayments of 4,391 work the loan out to cost about 25%) – the offer runs till end of May , and installation to be done in June & July.

Access Kenya IPO results

Access Kenya summary
Individual applicants: who applied for the minimum 5,000 shares get 900 shares, while those who applied for 25,000 get 4,000.
Institutional investors: that applied for the minimum 100,000 get full allocation, while those that applied for 1 million get about ½ that .

Serena expands to South Africa
Serena shareholders will this month be asked to approve creation of a South African subsidiary company

CMA reforms planned
The Capital Markets Authority has commissioned a consultancy to modernize & improve its operations by strengthening its legal and regulatory framework. Part 1 of the study will have the consultants evaluate the capital markets and central depositories acts, look at secondary market malpractices & sanctions, cross border listings & trading, methods of dispute resolution among others. In Part II, the consultants will come up with revised regulations that, based on the weaknesses identified in part 1, ensure that Kenya investor laws & regulations adhere to international best practices. This is part of the FLSTAP reform program of the Ministry of Finance and consulting firms can apply by June 13.

Access Kenya IPO

IPO season is on again and this time its Access Kenya - a leading corporate ISP and telephony company.

Am yet to see the full prospectus, which should be an interesting read to see the trend of share capital and profit adjustment that is alluded to in the abbreviated prospectus published in the paper on Thursday – the day the IPO started.

The company has learnt from the Eveready listing and set out to limit shareholder numbers by setting a minimum investment for retail investors at a moderately high 50,000 shillings ($715).

Industry: The communications sector has so much happening now from - unified licences, the Wananchi ATC deal , Telkom SA/AfOL deal, Telkom Kenya re-engineering itself, EASSY vs. TEAMS cabling, fibre optics everywhere and of course Safaricom at the top of the food chain who have continually reinvested much of their record profits towards infrastructure expansion.

Investments in the sector are not cheap and with technology rapidly evolving, the 400 million shillings that will accrue to the company may not be enough for more than a few years at a company that starts off with a marginal balance sheet.

IPO results will be out in May and shares will be listed in June 2007.

Other opportunities

from the daily papers this week

Jobs

Coca Cola - East & Central Africa business unit: franchise marketing manager, hospitality manager, operations marketing representative, financial services manager financial accountant senior brand manage (2) revenue growth manager commercialization manage (2) strategy development manager, human recourse manager compensation & benefits manager quality improvement manager


Apprenticeships for mechanics at DT Dobie: applicants must be under 22 with good grades in maths, physics, English and apply in handwriting by 11/5 to DT Dobie Training Center p o box 30160-00200

Safaricom: head of customer management, head of retail. Apply to chro@safaricom.co.ke.

Soon you can dine in the skies as the Kenyatta International Conference Center has set out to revive its roof top revolving restaurant on the 27th & 28th floors of the building.