Kenyan M&A

Compared to one year ago

On-Going Deals

Auto’s: - This week Al-Futtaim held a press conference to reaffirm their commitment to African market that is being spearheaded by their takeover of CMC  in Kenya.  More than anything the event was meant to showcase that the group founded in 1930,  but which few in Kenya had heard of before the deal, is a serious legitimate company (unlike shadowy China Road & Bridge that has a $3.8  billion contract to construct a standard gauge railway in Kenya.)

 

They have several car franchises 65 years of Toyota in UAE, Volvo, Honda vehicle assembly parts & service, used car business  and is also in engineering, financials services and the retail mall development business in the Middle East  and Asia

 

Al Futtaim  are long term investors will retain the CMC brand as it has a 65 year good history that will overcome the last two bad years . But they will de-list the company as they believe that being a private company will give them the flexibility to move faster and reclaim customers and brands that have been lost such as Land Rover. 

Interestingly, the opportinuity to buy CMC was presented to them by one of their banks who knew of their interest in Africa. The company then had to work very hard to meet and bring the feuding key shareholders on board to back the buyout.

EDIT Kenya’s competition authority has now approved the acquisition of 100% of CMC Holdings by Al Futtaim Auto

- Scania East Africa Limited  have taken over the purchasing, importing, assembling, fitting out, selling, servicing  of trucks, buses and chassis in Kenya that was previously carried out by Kenya Grange Vehicle Industries.

- EDIT Actis buys 36% of AutoXpress, East Africa’s leading tyre distributor, with 20 stores in Kenya and Rwanda.
- EDIT  Merali and Sameer complete buyout of 14.9% of Firestone's stake in Sameer Africa.

Banking

 

- CBA returns to Uganda after 47 years
- Fina Bank has changed over its operations in Kenya, Uganda and Rwanda to GTBank East Africa after Guaranty Trust Bank concluded the acquisition of a 70% stake in Fina Bank Group for $100 million through combination of a capital injection and acquisition of shares from Fina Bank shareholders.  

- Pakistan’s MCB Bank to acquire Kenya’s Middle East Bank (via the Standard)

- EDIT Kenya’s  competition authority  has approved the acquisition of 73.35% of Genesis Kenya by Centum Investments

- EDIT Letshego Holdings  of Botswana has acquired Micro Uganda, a year after acquiring Micro Africa Ltd of Rwanda.

Food &  Beverage

- Art Caffe acquired Dormans increasing their outlets from 4 to to 11 and giving them a presence in more shopping malls like Yaya, Karen and City Mall in Mombasa where Dormans had shops.

 

However the Art Caffe were rankled by a quite in a local newspaper referring to their customers as being upmarket compared to Dorman's ones. 

  

EDIT: Kenya’s  competition authority  has now approved the acquisition of 7 coffee shops of Dormans by Art-Caffè.

- Pearl Capital partners have invested $1.5 million in KK Fresh Produce. 

EDIT Kenya’s  competition authority  has approved  the acquisition of Rafiki Millers  by Tiger Brands.

EDIT Kenya’s  competition authority  has approved the acquisition of Magic Oven Limited by Tiger Brands.

Beauty: A Netherlands-based private equity fund, TBL Mirror Fund, has bought a minority stake in a high-end Nairobi salon chain that is seeking capital to expand across East Africa.

 

EDIT 

Advertising: Kenya’s  competition authority  has approved the acquisition of additional 16.48% shareholding in Scangroup Limited by Cavendish Square Holdings BV.

Health: Kenya’s  competition authority has excluded the acquisition of 100% of Adcock Ingram Holdings Limited by CFR Inversiones SPA from the Act

Hotels: South Africa’s City Lodge acquires Kenya’s Fairview Hotel  afterFairview Hotel firm agreed to sell the outstanding 50% of the joint venture 

Insurance: Kenya’s  competition authority has approved the  acquisition of 66.38% of Phoenix of East Africa Assurance Company Limited by Mauritius Union Assurance
- EDIT  Britism American (BritAM) completes buyout of 99% of Real Insurance

Oil

- Kenya’s  competition authority  has excluded the acquisition of a 55% participating interest in Block 11A from ERHC Energy by CEPSA Kenya

- Kenya’s  competition authority  has excluded the acquisition of a 55% interest in Block 2B in Kenya from Lion Petroleum by Premier Oil 

Transport
EDIT - Precision Air  of Tanzania seeks a bailout from Kenya Airways?
EDIT - Transcentury to reduce stake in Rift Valley Railways (RVR)?

Other

India  Exits

- Ambani reports a Kshs 2 billion profit from Kenya real estate.. Ambani’s Reliance Industries in 2007 entered into a joint venture with Delta Corporation, which has developed high-end office blocks and a mid-to-low cost residential estate in Nairobi. Delta Corporation now says it plans to exit its real estate investments to venture into hospitality and gaming businesses. 

- Essar to finalise sale of its Kshs 8.5 billion Yu stake in March ..the firm says it needs the Sh8.54 billion immediately and more cash in the short term to widen its footprint in Kenya and upgrade its network from 2G to 3G.

- Essar also faces a Kshs 430 million hit in its Kenya oil refinery exit ..the government and Essar Energy Overseas are engaged in compensation talks following the Indian firm’s decision to exit the refinery.

New Deals

Agriculture: At Rea Vipingo, Bid Investments withdrew their offer and have signed up with Vania Investments who are offering a new Kshs 55 per share  bid - worth Kshs 3.3 billion ($39 million) -  for the company that will leave it listed at the NSE

 

E-Biz: 

- There's a potential change in ownership, at MyStrawberryStore 

- EDIT-  Kenya’s  competition authority  has excluded the  acquisition of 999 Ordinary shares 

of My Kenyan Network Limited by African Jobs as the two have a combined turnover of Kshs 12.6 million

Regulator Issues

Pepsi came to Kenya and took on Coke but have not made much impact. They are now saying that has Coke been unfair ..PepsiCo says that rival bottle has been curtailing its marketing campaigns geared at gaining a larger share of Kenya’s soda market in the complaint to the Competition Authority of Kenya (CAK).

Synovate directors risk jail, hefty fines..Competition watchdog asks Tobiko to prosecute Ipsos-Synovate's chiefs for failure to seek regulatory approval of the firm’s acquisition of its predecessor Synovate.

In South Africa The Competition Commission plans to address anti-competitiveness between retailers despite concluding its exclusive lease agreements probe.

The investigation established that the respondents (3 supermarket chains)  were dominant in certain local markets and that they would often compel landlords not to deal with competitors (by entering into exclusive lease agreements with landlords in return for agreeing to ‘anchor’ the centre).

Jobs: Rwanda's Agaciro Development Fund is seeking an investment office. Deadline is Feb 14.

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.

Scangroup & Ogilvy Redux

Scangroup shareholders today did their part and unanimously approved the proposed deal to buy into Ogilvy Africa as they also endorsed the creation and allocation of new shares to be swapped under the deal.

This will give Scangroup (thorough Ogilvy) an opportunity and footprint to enter about 8 African countries as a minority partner and links with 15 affiliates, and CEO Bharat Thakar mentioned that creation of a Pan-African agency was fulfillment of a long ambition and the only way to grow the company since the Kenyan (and east African) advertising market was saturated.

The deal still hinges on approval of South Africa authorities for the share swaps (otherwise Scangroup/WPP will have to pay $5 million to complete the deal). By using shares to complete the deal, Scangroup's war chest of cash at WPP is still available and ready to be used to seek majority stakes from these new Ogilvy partners around Africa.

Scangroup & Ogilvy Africa

At the end of April Scangroup announced a deal to buy into the Ogilvy Africa group and has now invited its shareholders to approve the transactions.


1. The acquisition of 51% in O&M Africa and 50% in Ogilvy East Africa will be structured as
- O&M Africa: 51% is to be acquired by payment of $238,360 (Kshs 19 million) cash and transfer of 6.2 million shares of Scangroup worth Kshs 166 million.
- Ogilvy East Africa: 50% will be acquired by payment of Kshs 13 million to Ogilvy south Africa (paid in US$) and transfer 4.4 million shares worth Kshs 118 million, and a payment to fellow shareholder Russell Holding of one euro and payments to Koome Mwambia comprising cash of Kshs 20.6 million and transfer of 3.12 million Scangroup shares worth Kshs 82.4 million
2. Shareholders will have to approve creation of 14 million new shares and waive their pre pre-emptive rights to allow the new shares to be allotted to Ogilvy South Africa and Koome Mwambia.

Winners
- Scangroup gain entry via minority shareholding in Ogilvy into Namibia, Cote d'Ivoire, Senegal, Burkina Faso, Cameroon, Gabon, Zimbabwe, Nigeria and non-equity affiliates in 11 other African countries to create a Pan-African agency
- Koome Mwambia sells out his shareholding gets cash and becomes a top 10 shareholder in Scangroup and he is to enter into a management agreement to remain MD Ogilvy East Africa
- MD Bharat Thakar gains a pan African footprint and loses just 5%

Losers
- Local investment bankers: No transaction advisers were appointed and the IM only has an opinion from BDO East Africa that issue price of Kshs 26.4 is fair and reasonable and Deloitte's calculation of these price (now trades at Kshs 36)- Kenyan corporates whose choice of partners in media, PR, advertising got smaller – as Scangroup, Ogilvy, Hill & knowlton, Blueprint, Mindshare , Millard brown, Squad digital, Smollan are all under one roof.
- Scangroup if the share swaps are denied by the South African authorities, will have to pay Kshs 427 million ($5.2 million) to proceed

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

Pepsi to Kenya?

. Nairumour that after an absence of many years, Pepsi will re-enter the Kenyan market in the near future to resume battle with Coca Cola, possibly through their South African partners. If so, it will cap a great year for investment to the country, and that despite 2008 being a relatively tough year for investors and companies, with the post-election violence, business disruption, high fuel and energy prices, depressed consumer spending, P & P madness (pirates and politicians) collapsing stockbrokers, there was a steady flow of new investments and new products that happened this year.

Re-cap of some notable ones

Banking
- Takeovers concluded - Ecobank take over of EABS, and Stanbic merger with CFC (now CFCStanbic)
- UBA licensed (2009)
- Gulf African and First Community (Shariah banking kicks off)

Beverages
- Summit Lager a new beer from Keroche Industries
- East African Breweries launched Alvaro (malted soft drink)
- Coca Cola launched Novidia (another malted soft drink) and also started selling Minute maid
- KETEPA launched Safari Iced Tea

Communications
- WPP buys into Scangroup
- 2008 saw the launch of two new mobile operators - Orange (France Telkom) and Yu (Essar/Econet) to battle Safaricom and a re-energized Zain
- Altech buys into KDN
- A long-running fight over one(EASSY)submarine cable, gave birth to three different ones being laid to Mombasa
- Wananchi launched Zuku (TV, Broadband, Phone)

Transport, Energy & Manufacturing
- Tiger brands buying into Haco
- An investment in the Kenya Oil Refinery at Mombasa was still under battle between Libyan and Indian Investors
- Jinchuan (China) to bail out Tiomin?
- Mirambo and PD Toll to salvage the Rift Valley Railways
- Delta Airlines (USA - but postponed to 2009)
- Air Arabia started flights to Kenya

Tourism
- Libyans took over the Grand (Laico) Regency
- The Tribe opens.

Exits
- Chevron (Caltex) sold out – bought by Total
- Unilever (de-listing from the NSE)
- Roy Puffet from rift Valley Railways

Take Crash Positions

The Nairobi Stock Exchange (NSE) halted trading today for 15 minutes after the index fell by over 5%. (damn: just as I'm ready to sell some shares)

Elsewhere:

Safaricom: AKS says that pre-IPO shareholders lockout window has ended - so now can Vodafone start buying up some Safaricom shares and stem our losses?

Equihealth while other banks are sleeping, Equity Bank leads the way again this time venturing into health insurance. They have four plans starting as low as 6,700 (~$100 a year that include pre-existing conditions, HIV/AIDS, maternity, dental, eye-disease. (wow, medical insurance is a minefield, but Equity can sets its own terms in the industry and change the rules in the medical insurance industry)

The EDIT plans are;
- Mango @ cost Kshs. 6,700 per person per family for inpatient (Kshs. 13,300 per person for in & out patient), covers up to Kshs. 75,000
- Passion @ Kshs. 8,500 per family (Kshs. 15,100 per person for in & out patient), covers up to Kshs. 150,000
- Melon @ Kshs. 16,000 per family Kshs. 27,600 per person for in & out patient), covers up to Kshs. 500,000
- Apple @ Kshs. per family (Kshs. 35,700 per person for in & out patient), covers up to Kshs. 1 million

Scangroup: (Bharat Bank) As part of the sellout employee shareholders are seeking shareholder approval to sell up to 25% of their shares during the lockup period which is supposed to end in August 2009

Scangroup Sellout Part II

More details on the Scangroup sale of a controlling stake to the WPP Group (UK) are out now. The mechanics will involve:

- Investment of Kshs. 1.325 billion [~$18.2 million] into Scangroup (with Kshs. 400 million for working capital, Kshs. 650m for acquisitions, and 30% for in-house improvements including new ‘office space’)
- Existing shareholders approving increase in share capital from Kshs. 180 million to 240.7 million [~$3.82 million]
- Creation of 60.7 million new shares which will be offered to Cavendish Square Holdings (WPP subsidiary) at Kshs. 22 per share (Scangroup currently at 28.50). This will dilute existing shareholders stakes by about 8% each
- WPP get the right to nominate two directors and are locked in till 2012
- WPP will become largest shareholder at 27.5% followed by MD Bharat Thakar 20.6% and chairman Andrew White 11.93%
- Retail bail?; scangroup now has about 39,000 shareholders, down from 44,000 earlier this year

Scangroup sellout, new bank?

Scangoup takeover WPP acquires effective control over Scangroup which was listed on the NSE in 2006, by buying 27.5% of the company, but not taking over or de-listing. They also have pre-emptive rights over a chunk of CEO Bharat Thakar (and largest shareholder) stake when his lock up period expires in 2011. Aly Khan (Rich.co.ke) points out that the slumping NSE offers cheap company shareholding buy opportunities e.g Scangroup and Unilever Tea (going private)

More Libya: 2010 may see another bank to Kenya this time Libyan / Ugandan Tropical bank. Does Kenya need another bank really? And $19 million share capital won’t go very far these days.

Entrepreneur Opportunity: The 2008 Pioneers of Prosperity Africa Awards rewards six business leaders of Africa who serve as role models to Africa’s aspiring entrepreneurs and demonstrate business excellence, innovation and profitability. Submissions will be accepted from Botswana, Cameroon, Cote d’Ivoire, Ghana, Kenya, Namibia, Nigeria, Rwanda, South Africa and Uganda and a total of $350,000 will be awarded to the winners. D/L 31 August 2008.

Scangroup AGM

Excerpts from the 2008 Scangroup AGM, Q & A session held today at KICC.

top issues were dividend cheques and bonus shares

Misplaced shareholder cheques: The question was posed by Mr. Shah, who’s probably the second most famous public shareholder after Mr. A W Chami and who had waited for nine months for a dividend cheque error to be corrected, and was faced with bank charges of several hundred shillings for his efforts.

In response company said they were working to sort out shareholder cheque and unclaimed dividends issues
- Said the figure was now down to 3.2 million shillings. (which if unclaimed after a few years, will go to CMA)
- Passed some blame on to stockbrokers who have not reconciled some accounts since the IPO
- On cheques, they have an arrangement with their bankers (CFC), so customer could cash their cheques for free can (at the CFC upper hill branch)
- Said electronic (EFT) payments had not been successful because a lot of information provided by shareholders was wrong.

Bonus shares; several shareholders argued for bonus shares. Chairman replied times that – it was not the right time, they will cross that bridge when they get there, when they need to they will adjust their capital, will look at fund raising at that time (shares were not the only avenue available)

CSR company is weak; Chairman replied they are doing more this year including some work with IDP’s.

Marketing company that does not market! can the company do some advertising so it becomes well known?; CEO replied that they pitch to corporates and there’s not a marketing person in East Africa who is not aware of the company or its affiliates.

ESOP; It was good to have discussions at this AGM on the company’s employee share ownership plans (ESOP) – as CEO Bharat Thakar explained that the board had approved for 6 million shares a per year to be availed through the ESOP to key revenue drivers and to ensure that senior managers were very well incentivized. All managers get targets, which entitles them to some options at the end of the year. The Chairman added that that the shares were not free, were paid for by managers to the company and were priced on the date of acceptance i.e. market price. The report 2007 report noted that was ESOP set up under a trust deed in February 2008 but that no options have been granted so far, though shareholders have approved 15 million shares.

African ambition different shareholders challenged the board their ambition to be the biggest media buyer in Africa by 2010 when they (i) didn’t have the capital (ii) had dormant offices in Malawi, Mozambique, Zambia and Nigeria. The first shareholder was actually asking the company to give bonus shares/increase float (from the current 160 million shares, to at least 250m) while the CEO answered to the second - that all the offices were active, (except Nigeria) and were used for billing companies in those countries.

Cross listing one shareholder asked them to cross list as their market was also Uganda and Tanzania. Chairman said it would make sense at the right time, but it was also very expensive to do.

Super sleuth one eagle eyed shareholder pointed out, and the company confirmed the error; that the top ten shareholders (printed in the annual report) had 66, not 50% of the company shares

Goodies lunch offered, at KICC grounds, but no details.

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.

NSE Briefs

Scangroup: It was a pleasant surprise to pick up the newspaper this morning and see results from Scangroup (company earnings usually break at theNSE site) for the year ended in December 2007.

Turnover was up from 3 billion to 4.7 shillings billion, and profit after tax was up from 279m to 353 million shillings (27%) as were EPS (1.48) and dividend per share of Kshs. 0.90 – which is not bad for a share that was oversubscribed 3X just 16 months ago.

KCB: Good and not so good news form the notice of their upcoming AGM (May 9). The company will be cross-listing it shares in Uganda and Tanzania but also proposes to carve out an employee share ownership scheme (ESOP) from the creation of new shares in a proposed rights issue (reserving 150 million of the 400 million new shares). ESOP shares are controversial unless they are bought from the pool of existing, issued, shares.

Kenya Re IPO

Better late than never, along comes the Kenya Re IPO shuffled to the top of the privatization deck . The ace card is still Safaricom, while Kenya Pipeline should be a joker in waiting.

It’s nice to venture back into the IPO game (after passing on the last two - Access Kenya, Eveready) and I should have my Kshs 19,000 ($288) ready to go after getting the prospectus(Minimum is 2,000 shares for individuals at 9.50 per share).

The IPO delay has not been explained, but the former managing director and financial controller of Kenya Re did not help matters by getting indicted for corruption related offenses just as the process was underway nor did a late attempt to absorb the run- down Kenya National Assurance (KNAC 2001) into Kenya Re.

Despite the 2,000 share minimum for individuals you can expect it to be over-subscribed going by the numbers who applied for Eveready and the amounts individuals applied for with Kengen. While recent IPO's (Access Kenya, Eveready) have not performed as well as earlier ones (Kengen, Scangroup, that could all change now .

Foreign and institutional investors got burnt in Kengen (the first IPO in years) after they applied for millions of dollars worth of shares only to end up with $1,000 each. Subsequent IPO's have defined specific allocation criteria – for individuals, employees, corporate investors, others and now even insurance companies. Corporates/institutions have also been given another incentive in that they unfairly won't have to pay until they know how many Kenya Re shares have been allocated to them.

The market is still down , as I and am sure many others have traded less this year. Most activity had revolved around new share issues and recently split shares and the reduced trading has meant less income for the brokers.
Some say it is because of the falling prices or shares are still too expensive/overvalued, others says it is because of stockbroker misdeeds.

Dividend by EFT
In another move to curtail rising shareholder costs Scangroup has twice tried to entice investors to get their IPO refunds and now dividends by signing up direct bank transfers (EFT's) to get money straight into their accounts. EFT's offer faster payments, by pass risky cheques (can get lost in post office and investors have take about two weeks to get funds), but while EFT’s are free are most bank’s it’s also a sly way of passing on the cost of dealing with shareholders to shareholders themselves.

The most expensive round of beer you'll ever buy

Archer has regaled us with some great bar tales of late. So here’s a nairumor to caution/silence all those big talkers and big spenders who take one tusker and suddenly become as generous as a politician tuning a stewardess by buying rounds of drinks and sharing their million shilling investment plans and income secrets.

It is said that someone with ulterior motives will cozy up to you to listen, and maybe get a free drink for listening. Usually such a person would be a sly thief eyeing one of the three fat nokia's you've laid out on the table. Now there's another fox that’ll befriend you and ask for your business card. That person could be tax agent who'll Google (check up on) your records at the Kenya revenue Authority the next day to see how your big bar talk measures against the small income tax returns you filed at the KRA.