JSE and ASEA host African exchanges for capacity-building

Best wishes to the organizers and all the African exchanges personnel attending the Building African Financial Markets (BAFM) seminar in Johannesburg from 10-12 September!

The Johannesburg Stock Exchange (JSE) and the African Securities Exchanges Association (ASEA), supported by the World Bank Group, are hosting the third BAFM seminar this week, bringing together representatives from stock exchanges, regulatory bodies, stockbroking firms and other interested parties from several African countries including Nigeria, Mauritius, Zimbabwe and Malawi.

Topics to be covered include the future of African stock exchanges and whether they can play a meaningful role in the growth and development of the African continent. Zeona Jacobs, Director: Marketing and Corporate Affairs at the JSE, says in a press release: “Stock exchanges play a crucial role in the development of economies by allowing companies to raise capital through an efficient and transparent platform.” Jacobs says the conference provides an opportunity for exchanges from around the continent to share ideas and learn from each other’s experiences.

“Exchanges are key parts of the economies in which they operate. Initiatives such as this form an integral part of the continued development of sustainable economies within the continent by enabling open conversations about how to strengthen investor confidence, address governance issues and promote financial literacy.”

The conference will also include sessions around the development of commodity markets, exchange traded funds, electronic bond markets and demutualisation.

Nairobi Securities Exchange CEO Peter Mwangi moves to Old Mutual Kenya

The well-respected CEO of the Nairobi Securities Exchange (www.nse.co.ke), Peter Mwangi, is to take up a new job as Group CEO at financial services company Old Mutual Kenya with effect from 1 October. Mr Mwangi has served at the NSE since 24 November 2008 and his contract was renewed in 2011 but according to regulations a CEO of an exchange can only serve 2 terms.

Mr Mwangi and his top team have made huge progress in boosting the activity and standing of the NSE. Kenya’s Standard reports that major strategic projects implemented while he was CEO include:

  • Trading treasury bonds on the automated trading system,
  • Reducing the trading and settlement cycle to four days
  • Demutualizing the exchange and selling its shares to the public.

Local press reports that in a statement sent to newsrooms Mr Mwangi says he expects the bourse to build on the foundations it set to be one of the most efficient and well capitalized exchanges on the continent.

Old Mutual continues in expansionary form in Africa, and an analyst reports: “Old Mutual has been accelerating its growth agenda within the African continent, expanding its footprint both organically and inorganically and Mr. Mwangi’ s appointment comes at an exciting time for the Group as whole as he will be in charge of spearheading Old Mutual agenda in this region. In 2013, the Group announced that it plans to invest $500M in East and West Africa, and we have already seen this as the Group has established operations in Nigeria and Ghana. In Kenya, the Group acquired Faulu Kenya which is in the process of been integrated in Old Mutual’s operating model.”

Tavaziva Madzinga, Old Mutual Africa Chief Operations Officer, was quoted on CapitalFM: “With the Group’s focus on growing in East Africa, and Kenya in particular, Mwangi will guide the delivery of Old Mutual’s commitment to provide affordable insurance and banking solutions to millions of Kenyans.”

Peter Muthoka, Chairman of the Board of Directors of Old Mutual was reported as saying: “The importance of our customer cannot be emphasised enough. We are dedicated to our vision of becoming our customers’ most trusted financial partner and we look forward to working closely with Mr Mwangi in serving Kenyans to empower them financially to achieve their goals.”

According to his profile on Businessweek: Before joining the NSE Mr Mwangi had been CEO and Managing Director of Centum Investment Company, (formerly, ICDC Investment Company until it changed its name in 2008) from December 2004 to October 15, 2008. He had joined been company secretary from 2000 to 2004 and has also been Investment Manager. His working career began as a Technical Officer in the Kenya Air Force, where he was involved in the maintenance of avionic communication systems and the development of the Air Force’s information and communication technology (ICT) strategy.

His degree is BSc in Electronic Engineering from University of Nairobi. He is also a Member of Certified Public Accountant of Kenya (ICPAK) and the Institute of Certified Public Secretaries of Kenya (ICPSK) and is a Chartered Financial Analyst.

He serves as a Director of UAP Insurance Sudan Ltd., Kisii Bottlers Limited, Mount Kenya Bottlers Limited, Rift Valley Bottlers Limited, Eveready Batteries Limited, KWAL Holdings Limited and Central Depository & Settlement Corporation Limited. He serves as a Director of Nairobi Stock Exchange Ltd., and Wildlife Works Inc. He is also a member of the Institute of Directors (IOD).

Peter Mwangi

Peter Mwangi

Ethiopia lures manufacturing with cheap power and labour costs a tenth of China’s

Low-cost manufacturing is shifting from China to Ethiopia, lured by cheap electricity and labour costs that are a tenth of China’s. Ethiopia is building a name for producing clothes, shoes and other basic goods, while also tackling transport bottlenecks. Trade and Industry minister Tadesse Haile says he wants Ethiopia to export $1.5 billion of textiles a year in 5 years, from $100 million now.
Bureaucracy and slow and poor transport links means that costs are not as low as they should be, according to an excellent report by Reuters (see “Garment-making finds new low-cost home in Ethiopia”). Ongoing power cuts and sometimes poor telecommunications, both still state monopolies, could be added to the list.

Credit: Ethiopian Radio and Television Agency (ERTA)

Credit: Ethiopian Radio and Television Agency (ERTA)

Credit: China Daily

Credit: China Daily

Reuters journalist Aaron Maasho points to Government and foreign investors building factory zones. Companies from China, India, Turkey and the Gulf are setting up manufacturing. He quotes Nara Zhou, spokeswoman for Huajian Group, a Chinese company that makes over 300,000 pairs of boots and sandals a month for retailers such as Guess from a factory near the capital: “We have to move because of manufacturing’s development in China, due to the high increase in wages and in raw materials.. Ethiopia enjoys stability, the Government is eager to industrialize and there is also the low labour cost here – a tenth compared to China.”
Ethiopia is one of Africa’s – and the world’s – fastest-growing economies. Despite the government’s socialist roots, there is no minimum wage, letting firms such as Huajian pay salaries of $50-$70 a month – still higher than the average per capita income. Desta, one of 7,500 employees at Ayka Addis Textile and Investment Group, a Turkish-owned factory 20 kilometres west of Addis Abeba, told Maasho:”Almost every young person in this locality now works here…We all struggled to make ends meet beforehand. We can now afford proper healthcare or sending a child to school.”
Ethiopia’s electricity grid offers electricity at US$0.05 per kilowatt hour, compared with $0.24 cents in neighbouring Kenya and the country is investing heavily in hydropower generation. According to Minister Tadesse: “The availability of power and the cost is cheaper than any other country in the world. We are providing power, land and labour all very cheaply.” Kenya and Uganda are also chasing investment into textiles but cannot compete on input costs against Ethiopia, where wages are 60% lower than the regional average, according to Jaswinder Bedi, Kenya-based chairman of the 27-nation African Cotton and Textile Industries Federation: “Ethiopia is a new player…They are growing and they are growing rapidly.”
The Government projects gross domestic product (GDP) growth at 11% a year, and even the 8.5% forecast for the current year 2014/5 by the International Monetary Fund is impressive. The Government is keen to attract labour-intensive investment and jobs for the 90m Ethiopians – Africa’s second biggest population – with another 2-3m born every year and population growth forecast to continue over 2% a year until 2030.
The Government says it has introduced incentives such as tax holidays and subsidized loans to investors with interest rates as low as 8%. Cheap loans are attractive as inflation is often considerably higher (it has been up to 60%), and the currency has seen steady and managed devaluation, boosting exporters and manufacturers who substitute imports.
Transport remains a bottleneck, it takes on average 44 days to import or export a container, compared to 26 for Rwanda. Amare Teklemariam, chief executive of Ayka Addis, told Reuters: “Our logistics costs are second to inputs. It affects the competitiveness of the company”. Ethiopia is 141 on a 2013 World Bank trade logistics index.
The Government says it investing an amount equivalent to two thirds of GDP into new infrastructure every year, expanding the road network to 136,000 km by next year, from just 50,000 km in 2010 and it is already working on grand plans to build 5,000 km of railway lines by 2020 from less than 800 km at the moment.
For more background see the excellent Reuters report here.

Churchill Avenue, Addis Abeba (www.tourismethiopia.gov.et)

Churchill Avenue, Addis Abeba (www.tourismethiopia.gov.et)

Zimbabwe stock exchange moving to electronic trading and CSD

Electronic trading is coming to the Zimbabwe Stock Exchange in terms of a contract signed recently with InfoTech Group of Pakistan. Meanwhile the central depository Chengetedzai Depository Company Ltd said that 3 listed companies – CBZ Holdings, Cottco Holdings and FBC Holdings – would be moved onto electronic registers from 8 September, according to local media reports.

The InfoTech Capizar software is also installed at Ghana Stock Exchange since 2008.

According to reports in the Pakistan Observer and The Nation in June, the contract with ZSE is a turnkey deployment of the automated trading system (ATS). According to a press statement by the ZSE in March, the contract was signed on 19 Mar for for the supply and installation of the Capizar ATS product by Infotech Middle East FZ LLC.

Trading floor at the Zimbabwe SE (photo from www.4vf.net)

Trading floor at the Zimbabwe SE (photo from www.4vf.net)

The agreement was signed between Alban Chirume, CEO of the ZSE, and Naseer A Akhtar, CEO & Chairman of InfoTech Group, assisted by Murad Baig, VP Business Development at IFTL-London. According to the reports, the project was expected to start soon and to be finished within 6 months (by December). The ATS replaces the current manual trading system, which uses MS Excel and other packages to create and publish data, which the new system also does.

The ZSE statement in March adds: “On 31 Jul 2013 we announced the appointment of Central Depository Settlement Company of Mauritius (CDSM Ltd) as our consultant to the automation project. The consultants have since successfully guided us through the tender and vendor selection processes.

“The immediate next steps are the study of the local environment, and the gap analysis to be carried out by the Vendor in order for us to finalise the project plans. These limited activities will be followed by the procurement of computer hardware and construction of the data centre itself. We are expecting that in 3 to 4 months’ time, the project will be in the training and acceptance testing stages with the final live date being our target within a period of 6 months from now.”

CSD going live

Chengetedzai was approved by the Securities and Exchange Commission of Zimbabwe to run a CSD, after winning a competitive tender on 27 Dec 2010. According to a recent news report in The Herald and the Chronicle newspapers, its market update statement said: “Chengetedzai Depository Company Limited would like to advise all capital markets players, issuers of securities and the investing public that the necessary regulatory approvals to commence the Central Securities Depository (CSD) operations has been granted.

“In this regard, CDCL is ready to commence the opening of investor accounts and dematerialisation (migration from paper based title to electronic securities) of approved securities, in preparation for the trading of electronic based securities.” The company urged the investing public to open securities accounts through registered custodians, who include banks, from 25 August and deposit their securities in the accounts.

According to its website, Chengetedzai won the tender in which two bidders were invited to submit proposals after an initial expression of interest round in Apr 2010. This is in terms of the Securities Act 17/2004, which established the legal basis for the Securities Commission, its mandate and the establishment of a central securities depository (CSD) to maintain securities deposits in electronic form. The SECZ was only established in 2008 and the commissioners immediately embarked on setting up a CSD.

The Ministry of Finance put a hold on the project in Feb 2011 and announced in Aug: “The CSD project was deemed by Government to be of national interest and thus Government would take 51% shareholding in Chengetedzai and that only one CSD to be set up in the country. The ZSE would also be included as a shareholder in Chengetedzai. Then followed protracted negotiations between Chengetedzai to value the “sweat equity” and this was settled on 13 June 2012 by Government and SECZ, and the Shareholders’ Agreement was signed on 26 Jun 2012, after which a new board of directors began.

According to the CDCL report: “The first task was to confirm the software to support the CSD operations and a system selection process was kicked off immediately. After visits to South Africa, India and Moscow, the decision was made to select the Depo/X system supplied by CMA Small Systems from Sweden. The purchase and implementation contracts were signed in March 2013 and in April 2013 the implementation of the project started, exactly fourteen months after the tender was awarded.”

Check this amazing profile in Daily News of 23-year-old Samuelle Dimairho who has been dreaming of transforming the ZSE (and trading on it) since he was 15 and is the driving force behind Chengetedzai.

Background on the ATS

The Africa Report magazine wrote in Jan that the contract is expected to cost $2 million and says daily turnover on the exchange was currently $1.5m on average and there were 68 listed companies, down from a peak of 83. According to the report: “Apart from enabling longer trading hours, the ATS would reduce the fraudulent sale of non-existent stocks. The automation of the bourse has been on the agenda since 2000 although plans have stalled due to liquidity constraints. However, as the new system comes on board, more companies are set to delist this year due to the harsh economic environment obtaining in the country.” It cites Chirume saying: “Tentatively, there are companies which have already shown that they might merge and there is a possibility of some de-listings.” He believed that the de-listings would not have any implications on the bourse as some of the affected counters were not trading.

According to the ZSE press release in Jan, 11 vendors expressed interest, and 4 submitted full responses. They were:
1. A consortium of local vendors led by Chartered Systems Integration in partnership with CMA Small Systems of Sweden.
2. A consortium of Infotech Middle East FZ-LLC and local suppliers.
1. National Stock Exchange of India in partnership with Valentine software of Zimbabwe.
2. New York Stock Exchange Euronext Technologies.

“The initial valuation of all bids submitted narrowed down the competing vendors to a short list of 2 – CIS/ CMA Small systems and Infotech Middle East. During the last week of November the shortlisted 2 vendors were given the opportunity to give oral presentations and demos to support their bids. The CSI /CMA Small Systems consortium was however unable to participate in the demo exercises due to other circumstances beyond their control. Additional due diligence measures were taken during the month of December and as a result of the report outcome of these efforts the Board of the Zimbabwe Stock Exchange has approved the engagement of Infotech Middle East FZ-LLC subject to a successful contract negotiations.”

Nigerian and African economies.. after the rebasing

Charts circulated by Reuters today (28 Aug) show the rebased Nigerian economy as much bigger than sluggish South Africa, and followed by Egypt, Algeria, Angola and Morocco. They also show Africa’s fastest-growing large economies over 2010-13, with oil-fuelled Ghana leading the pack with historic growth of 10.2% a year, followed by non-commodity driven Ethiopia (9.0%), Zambia (6.7%) and the rebased Nigeria at 6.4% a year.

chart circulated by Reuters

chart circulated by Reuters

Nigeria’s economic rebasing came in April, after they updated the sectors and weights of different parts of the economy. Countries are supposed to do it every 3 years, Nigeria last did it in 1990. This was The Economist’s comment in April: “The GDP revision is not mere trickery. It provides a truer picture of Nigeria’s size by giving due weight to the bits of the economy, such as telecoms, banking and the Nollywood film industry, that have been growing fast in recent years. Other countries perform similar statistical magic – Ghana, for example, added 60% to its economy in 2010.
“Its economy has been growing at an average rate of around 7% a year over the past decade. It is rich in resources, especially oil. It has energetic entrepreneurs and aspirations to be the tech hub of Africa, boasting startups such as Konga and Jumia, budding Nigerian Alibabas. In other industries it has giants such as Dangote Cement (see article), which plans to list in London—as a big oil firm, Seplat, did this week—and is likely to become part of the portfolio of many pension funds. Growing numbers of foreigners wanting to invest in Africa’s rise will buy Nigerian stocks; after Johannesburg, Lagos has the biggest, most liquid market in the region. Above all, Nigeria has lots of people: more than 170m of them”.
Most commentators at the time pointed out that the GDP revision did not mean more food in anyone’s mouth in Nigeria and numbers of unemployed are very high and the number of people in poverty has increased, despite the high annual growth rate. GDP per head is only $2,700 after the rebasing, South Africa’s is nearly 3 times as much. Nigeria’s infrastructure is extremely poor, including transport and power. They point to lack of development and the spiraling political uncertainty and The Economist added: “To absorb the millions of young people pouring into the labour market, Nigeria requires the sustained double-digit growth that China has shown to be possible.”
However, the clearest lesson, according to The Economist: “.. is for sluggish, complacent South Africa, which has long taken its status as the continent’s giant for granted. With Nelson Mandela dead, it looks ever less like a rainbow nation. The ruling African National Congress is tainted by corruption: President Jacob Zuma is trying to explain how the state spent $24m on his private home. Without economic and political reform, it will slip further behind.”
The figures in the chart come from the International Monetary Fund (IMF), Nigerian National Bureau of Statistics and analysis by McKinsey Global Institute.

JSE seminar on African capital markets development

Johannesburg Stock Exchange (credit www.jse.co.za)

Johannesburg Stock Exchange (credit www.jse.co.za)


The Johannesburg Stock Exchange and the African Securities Exchanges Association, supported by the World Bank Group, will host the 3rd Building African Financial Markets capacity-building seminar. This will be in Johannesburg, South Africa from 10-12 September.
The aim of the seminar is to promote growth and development of African financial markets by giving representatives from stock exchanges, regulatory bodies, stockbroking firms and other interested parties the opportunity to learn about topical subjects in the area of capital markets.
The seminar includes speakers from African and global securities exchanges, banks, stockbrokers, major financial institutions, issuers, multilateral organisations and regulators. The topics covered include Are exchanges playing a meaningful role in African growth and development?, Exchange demutualization – perspectives and considerations, Listings – what do exchanges need to do to get companies to list
This year is the first to introduce a series of parallel workshop sessions to allow for a more interactive environment for engagement. Workshops include constructing exchange-traded funds, building electronic bond markets and the role of exchanges in bond markets, data commercialization, effective ways to enhance financial literacy, commodity derivative exchanges, increasing market liquidity, sustainable stock exchange initiative.
The conference sessions will be held at the JSE during the day time of 11 and 12 September. The seminar will start with a cocktail function at the Johannesburg Stock Exchange (JSE) for all delegates and speakers on the evening of 10 September, and a stockbroker networking session will in the afternoon of 11 September.
The detailed programme can be downloaded from the JSE website via the link BAFM Programme on this page.

Rwanda to fund airport and power with $1bn Eurobond in 2015

Rwanda plans to return to Eurobond markets in 2015 and raise up to $1 billion for infrastructure, including an airport and power plants. As global interest rates stay low, sub-Saharan African countries have raised $6.4bn through debt issues in 2014, compared to $9.7bn in all 2013, according to Bloomberg news agency last week, citing figures from Standard Bank Group Ltd. “the continent’s biggest lender”.
Rwanda plans to upgrade the main international airport outside Kigali, to build a 150-megawatt geothermal power plant and to fund a methane-fired power project to produce up to 100 MW by extracting methane gas from under Lake Kivu.
Bloomberg reported last week that President Paul Kagame said in an interview the country felt investor demand was still strong, after its first $400 million bond in April 2013 was more than 8x oversubscribed: “We might go for double that or more, up to $1 bn.”
“People who want to see Africa develop come to Rwanda particularly because we have set up a very good environment that makes things work for us and for our partners who come invest with us.” Economic growth has averaged 7% annually over the last 5 years and the International Monetary Fund (IMF) forecasts growth of 7.5% in each of 2014 and 2015, according to Bloomberg.
The agency says that Rwanda’s non-concessional borrowing limit, set by the IMF, is $250m for the 2014-15 fiscal year. It quotes Samir Gadio, head of Africa strategy at Standard Chartered Plc , saying the IMF has raised the ceiling when African countries could turn to offshore markets at cheap interest rates: “But the other consideration is that external debt sustainability should not be jeopardized… Given the size of the economy, a $1bn Eurobond would represent around 13% of GDP, which is significant.”
The interview came on 5 Aug in Washington DC when US President Barack Obama highlighted $33bn in commitments to Africa, including $14bn in investments from companies such as General Electric Co. President Kagame said: “It’s a very significant step in the relationship between Africa and the U.S… If things are done right, the relationship, the partnership between the United States and Africa, has the potential to bypass that relationship between Africa and Europe. Also the relationship between Africa and China.”

Kigali under Vision 2020 (photo: www.TopBoxDesign.com)

Kigali under Vision 2020 (photo: www.TopBoxDesign.com)

9 African IPOs in first half of 2014 raise $808m, passing all 2013

pic: Tom Minney

Arabian Cement IPO on Egyptian Exchange in May was 18x oversubscribed. pic: Tom Minney


Initial public offers (IPOs) on African stock exchanges for the first half of 2014 has raised capital totalling $808.5 million, compared to a total of $757.5m raised throughout 2013. The data show there have been 9 African IPOs in 2014 to 30 June, compared to 18 in 2013 and 10 in 2012 on stock exchanges in Casablanca, Dar es Salaam, Johannesburg, Nigeria and Tunisia when the total raised was $342.6m.
The figures are given in a blog in the Wall Street Journal, citing figures from consultant EY.
According to the WSJ blog, domestic and international pension funds and other corporate institutional investors are putting more cash into African markets. It highlights new money from Africa’s fast-growing domestic pension funds and growing confidence in African frontier market equities, quoting Joseph Rohm, portfolio manager at Investec Asset Management: “These are nascent capital markets and they are illiquid markets. But what has been encouraging is that, for the first time in a long time, we are starting to see more capital raisings.”
He attributed the IPO increase to an earlier boom in private-equity investments: “We have known for a long time that the amount of private equity in African markets—and more broadly in frontier markets—is unprecedented and we are starting to see those opportunities coming to public markets.”
Bourse de Tunis saw 2 IPOs in 2012, but this was up to 11 last year and 2014 is also looking strong. WSJ[ blog cites Slim Feriani, chief executive officer and chief investment officer of Advance Emerging Capital, a Tunisian, who said: “In the next 5 to 10 years we are bound to see more IPOs. As it stands, some of the hidden gems are still in private hands,”
The blog also quotes Razia Khan, head of African region research at Standard Chartered, who said Africa’s IPO activity tends to be concentrated in key markets with most big deals so far in 2014 in North Africa. She added the current listing boom is evidence that the African markets are still recovering from the shock of the financial crisis in 2008: “The IPO activity lagged this recovery in growth—it’s not surprising that we’re seeing a rise, but the scale of it is interesting.”

Nairobi Securities Exchange IPO closes 12 Aug

Significant dates
24 July – IPO opens
12 Aug – IPO closes
4 Sept – Share allotment announcement
9 Sept – Self-listing ceremony
nairobisecuritiesexchange_NSE21

The Initial Public Offering (IPO) of the Nairobi Securities Exchange Limited (www.nse.co.ke) is open until 12 August. The NSE is seeking to raise KES 627 million ($7.14m) by selling up to 66,000,000 new shares (some 31% of the equity) at a price of KES 9.50 per share. The offer is open to domestic and international investors.
The IPO will culminate on 9 September with the self listing of the NSE on the Main Investment Market Segment (MIMS), making it Africa’s second security exchange after the Johannesburg Stock Exchange (www.jse.co.za) to demutualize and list itself.
Mr. Henry Rotich, Cabinet Secretary for the National Treasury, said during the IPO launch ceremony on 23 July (see press releases here): “One of the key objectives of the Capital Markets Master Plan is to build on recent market reforms to address regulatory and institutional constraints in order to strengthen market infrastructure, intermediation, oversight and governance standards. The demutualization and self-listing of the NSE form part of the government’s policies to enhance governance standards and facilitate access to our markets by a wider community of investors. “
Mr. Edward Njoroge, NSE Chairman, said: “The success of our country and the region will be mirrored both in our market and our company, the NSE. We urge all Kenyans, and other investors both far and wide, to embrace this offer with the confidence that Kenya’s growth and future success will, in many ways, be accelerated through the development of our capital markets.”
The minimum number of shares available for purchase is 500 at a cost of KES 4,750.00 (approximately $54). Thereafter purchases are in multiples of 100 shares.
The NSE is celebrating its 60th anniversary and the demutualization and share offer have taken 5 years until the Capital Markets Authority approved all in June.

Is the NSE IPO a bargain? Analysis by Ryan Hoover

Ryan Hoover of the excellent Investing in Africa blog (www.investinginafrica.net) has published his analysis of the NSE IPO here, it is well worth reading. He looks at the NSE income and expenses in the prospectus, and shows that transaction levies (fixed at 0.24% of total trade value, i.e. 0.12% on each side) are the main source of income, earning the NSE KES 405m in 2013. He breaks down the baseline earnings to come with an after-tax figure of KES 0.80 per share, giving the offer a price/ earnings (P/E) ratio of 11.8x.
Since Kenyan bonds currently yield around 11% he looks at future earnings, noting that trading volumes are up 37% in the first half of 2014. Using a forecast growth in earnings per share of 20% he believes the shares could be worth KES 19.90 in 2019 at a P/E ratio of 10x (the JSE is on P/E of 16x) and adding in dividends at KES 0.25 per year (the current level adjusted for the IPO) he sees the potential annual return at 17.4%.
Check out his excellent blog, also for the discussion following the article, which points out that the offer is likely to be over-subscribed.

Abraaj makes its first private-equity exit in Angola

Leading private-equity investor The Abraaj Group (www.abraaj.com) has exited its investment in Fibrex (www.fibrex.co.ao), its first exit in Angola. The announcement today (4 Aug) did not give details of the price or the buyer
Fibrex manufactures high-density polyethylene (HDPE) and other low-pressure plastic pipe products used in the construction industry. Abraaj invested through one of its funds in 2007 and has given operational support and since then, production volume has grown by 70%. Abraaj has supported upgrading the energy-supply infrastructure, improved governance, accounting and reporting standards, and increased environmental efficiency at Fibrex.
When Fibrex started in 1966, it was making woven bags to transport agricultural materials and fertilizers. It evolved into products such as PVC and HDPE pipes for the construction industry and it became the first company in Angola devoted to manufacturing plastic pipes and fittings. It has grown since into the domestic market leader.
In 2010 Fibrex secured ISO 9001 certification for quality management. The production facilities were further upgraded to recycle by-products of production, including plastic sawdust and fragments, and to reduce noise.

Credit: http://luanda.all.biz

Credit: http://luanda.all.biz


Abraaj’s also worked with Fibrex and Angola’s labour and trade unions to offer counselling, testing and adequate medical care to employees for HIV treatment.
The announcement quotes Davinder Sikand, Partner and Head of Sub-Saharan Africa at The Abraaj Group: “At Abraaj we have an unrivaled history of pioneering the private equity industry in Africa, where our strong on-the-ground teams penetrate relatively untapped markets and gain access to opportunities that often pass under the radar of investors that are not as well entrenched in these markets.
“We initiated our investment in Fibrex based on Angola’s strong macroeconomic conditions. The country, focused on rehabilitating its national infrastructure, showed rapid GDP growth and demonstrated significant demand for quality construction-related material and products which has helped Fibrex attain a market leading position in the country.”
Sandeep Khanna, Managing Director at The Abraaj Group: “Fibrex was not only well positioned to capitalize on the wide-scale infrastructure development of Angola, but also presented impressive growth rates sustained by its ability to retain its market-leading position despite increasing competition from new foreign entrants.
“Fibrex remains in a strong position today to capture the continued growth of the construction industry, as Angolans and the African continent more broadly seek to address their infrastructure needs. This successful experience in Angola has strengthened our confidence in the country’s investment opportunities, increased our appetite for Angolan businesses, and boosted our search for local partner companies.”
The Abraaj Group currently manages USD $7.5 billion across more than 20 sector and country-specific funds, encompassing private equity and real estate investments. Funds managed by the Group currently have holdings in over 140 partner companies across 10 sectors including consumer, energy, financials, healthcare and utilities. It operates in the growth markets of Africa, Latin America, the Middle East, South Asia, South East Asia, Turkey and Central Asia and employs over 300 people across over 25 offices in 6 regions, including hubs in Istanbul, Mexico City, Dubai, Mumbai, Nairobi and Singapore.
It has been investing in Africa for the past 29 years, deploying $2.6bn across 80 investments.