March 11th, 2010 by Tom Minney
The Aureos Africa Fund, which closed its fundraising in January with US$381 million, has completed a $10 mln investment in a leading Nigerian leasing company, C&I Leasing Plc. (www.c-ileasing.com). The fund is believed to be the largest fund ever to focus on investing in small to mid-sized businesses across Africa, and the latest investment brings its total investment in Nigeria to $40 mln.
Aureos Capital Ltd (www.aureos.com), a leading private equity fund management company specialising in investing in small to medium-sized businesses in emerging markets, manages the fund. Jacob Kholi, Managing Partner of Aureos in West Africa, comments in a press release: “Leasing is a fast-growing part of the financial services sector in Africa and we are delighted to have invested in a market-leading business that has ambitious expansion plans.”
C&I was established in 1990 and offers companies both operating and finance leases on various classes of assets. The company is active in other services such as car rental, car distribution and other logistics services. In 2007, C&I acquired a Ghanaian lease provider as part of its regional expansion strategy and is also exploring growth opportunities in the telecommunications, oil and gas, and fast-moving consumer goods (FMCG) sectors.
Davinder Sikand, Regional Managing Partner of Aureos in Africa, adds: “As with many other emerging markets, African economies have grown steadily throughout the global downturn. Nigeria is the second-largest economy in Africa after South Africa and with GDP increasing at over 5% per annum, Nigeria offers serious opportunities for private equity investment in SMEs with regional growth ambitions.”
“The success of Aureos in the region reflects its excellent deal sourcing capacity by having seasoned teams on the ground, and the ability to build a well diversified portfolio.”
Kholi says: “Whereas the Nigerian stock markets fell by more than 40% over the last two years, Aureos’ first generation fund’s portfolio in Nigeria grew by approximately 19% in value over that same period. We are excited to be forging strong relationships with small and mid-cap Nigerian businesses, and for Aureos Africa Fund to be able to capitalise on the strong track record we have built with our first generation Aureos West Africa Fund.”
“This new investment… is a demonstration of our commitment to West Africa, with the majority of our Nigerian companies having expanded their revenue base throughout the region.”
Aureos Capital is a private equity fund management company which specialises in providing expansion and buy-out capital to unlisted mid-cap businesses across Asia, Africa and Latin America. Since establishment in 2001, Aureos has increased its funds under management to over $1.2 billion and extended its geographical footprint to over 50 emerging markets, by establishing 16 regional private equity funds.
March 10th, 2010 by Tom Minney
The Government of Botswana has ended its P5 billion (US$722 million) bond issuance programme with an oversubscribed auction by the Bank of Botswana (www.bankofbotswana.bw) last Friday, 5 March, according to a report in Mmegi newspaper (www.mmegi.bw). The fundraising programme started in 2008 and raises funds for Government investment in large development projects under the National Develolpment Plan (NDP 10).
The central bank auctions Government bonds and treasury bills every six months, in March and September, and the auctions are open to members of the public.
The auction was the first time to launch a new, longer-dated 15-year-bond, providing the much needed benchmark for long-term borrowings. This was reportedly under allotted, with only P195 million of the P700 million on offer being allotted, despite total bids received being P 824 million. This may indicate that the market was demanding a heavier yield than Government was willing to pay.
According to the news report, there was overall oversubscription. The 6-month treasury bill fully allotted at P800 million and oversubscribed by P400 million. The 2-year bond was fully allotted at P200 million against P301 million of total bids received, the 51/2 years was slightly under-allotted, with P192 million of the intended BWP200 million being allotted.
The paper quotes Olebile Makhupe, Head of Global Markets at Standard Chartered Bank: “We have recently observed a shift in the Botswana yield curve with long-term yields picking up, reflecting expectation of higher rates in the future. In addition, long-dated asset yields have in the past reflected excessive demand rather than appropriate pricing for risk or where investors expect rates to be in the future”, she said.
Makhupe added that this trend seems to be changing, as availability of long dated assets has improved in the past few years.
“However, more work can still be done to create a platform for investors to liquidate their bond holdings when they need cash, rather than having to wait for the investment to mature, allowing for what is called secondary market trading,” she said.
According to today’s market report of the Botswana Stock Exchange (www.bse.co.bw), 10 Government bonds and 22 corporate bonds are listed, but trading does not seem very active.
March 10th, 2010 by Tom Minney
The members and directors of the Nairobi Stock Exchange (www.nse.co.ke) have approved the demutualization of the Nairobi Stock Exchange, subject to enactment of requisite laws that will provide the legal framework. A draft law is available on the website of the Capital Markets Authority (www.cma.co.ke).
According to the latest weekly roundup from stockbroker Kestrel Capital (www.kestrelcapital.com), the NSE will change its name to Nairobi Securities Exchange and will have an approved share capital of KES 1bn (US$13 million). In the new proposed ownership structure, Treasury will own 10%, the Investor Compensation Fund (IFC) 10% and stock brokers will collectively own 80%, which they will share equally among themselves.
Newsagency Bloomberg reported that the decision was taken at a meeting on 4 March. It cites Chairman Edward Njoroge as telling reporters that a team has been working on the demutualization and separating ownership from management, as well as the valuation. Earlier, CEO Peter Mwangi said the NSE would trade its shares on the exchange.
March 7th, 2010 by Tom Minney
The website www.africaniscool.com has been upgraded with a newsletter. According to CEO Rob Stangroom: “Our newsletter contains mostly original content and is targeted at investors, regulators and listed companies in Africa. Our goal is to increase awareness of issues related to online shareholder communications. Best of all, our Dilbert column provides the lighter side of investors, the internet and IR.
“Sign up to the newsletter on www.africaniscool.com – on the landing page. I look forward to your feedback. Cheers and thanks for your support.”
The site also includes a good blog by Rob, including interesting feedback on investor views on Africa after the visit by Christopher Hartland-Peel of London stockbroker Exotix (www.exotix.co.uk).
March 7th, 2010 by Tom Minney
Conservation tourism pioneer Wilderness Safaris (www.wilderness-group.com) is aiming to get a primary listing on the Botswana Stock Exchange (www.bse.co.bw) and a simultaneous secondary listing on the Johannesburg Stock Exchange’s Africa Board (http://www.jse.co.za/Markets/Africa-Board) on 8 April. The share offer in Botswana and South Africa closes on 26 March. If successful, it will be the Africa Board’s second listing.
The company opened its offer on 26 February. According to Botswana’s Sunday Standard newspaper, the public offer is for 3 million ordinary shares at P4 ($0.5765 in today’s rate on www.xe.com) in Botswana and R4.56 ($0.6167) in South Africa and is fully underwritten. It closes on 26 March. Before the public offer, the company placed 56.3 million ordinary shares by way of a private placement, also at a price of P4 per share, says the newspaper.
According to an announcement on the company website it is “a strategically significant step in its evolution, designed to enable it to take full advantage of growth opportunities, to give the public an opportunity to participate in its future success, to develop a broader shareholder base and to simplify corporate structure.” Wilderness aims to use its tourism model to the fullest in contributing to conservation in Africa.
Growth in this manner is designed to allow the company to fulfil its objective of using its tourism model to the fullest extent possible in contributing to conservation in Africa.
Andy Payne, the CEO of Wilderness Holdings, says: “We believe that our unique positioning, iconic international brand and management’s long track record of financial and operational delivery present investors with an attractive growth and performance platform.”
Wilderness Safaris’ core philosophy is one of building sustainable conservation economies through responsible tourism, which shares the benefits of tourism with local communities and ensures that pristine wilderness areas are protected profitably.
The 26-year-old business is invested in 7 southern African countries and operates specialist travel businesses in 6 countries and 49 aircraft. It employs more than 2,700 people, most of whom come from remote rural communities.
The Chief Executive Officer, Andy Payne was reported in Sunday Standard as saying the company’s strategic objective was to double the number of owned Wilderness bed-nights by 2015, as well as to double the area under its influence by expanding into regions that complement its biodiversity and experience. It owns 53 destinations comprising of 930 beds and further manages 17 destinations with 280 beds.
The website says that Wilderness is “run by a group of likeminded wildlife enthusiasts who came together to build a successful safari business, delivering a unique experience for guests, fair returns for shareholders and stakeholders, while ensuring that southern Africa’s pristine wilderness areas remain sustainably protected.”
Thanks also to www.southafrica.info.
March 5th, 2010 by Tom Minney
Imara Holdings Ltd (www.imaraholdings.com), an investment banking and asset management group with operations in 10 countries mostly in southern Africa, aims to expand in Zimbabwe, according to Zimbabwe’s Herald newspaper. It is currently listed on the Venture Capital Market board of the Botswana Stock Exchange (www.bse.co.bw) and the Herald reports that it wants to buy the rest of the shares in Zimbabwe’s Imara Capital Zimbabwe (Pvt.) Ltd (www.imaracapital.com), which it owns 32%, and also to dual list on the Zimbabwe Stock Exchange (www.zse.co.zw).
The report says that Imara Holdings has proposed a share deal in which local shareholders and the management will get a shareholding in the parent in return for their shares in the local company. The dual-listing on the bigger exchange could make the shares more liquid and the dollar-based ZSE is attractive to international investors. Imara management reportedly refused to comment, possibly while the transaction is under approval by authorities.
Imara Holdings website does not mention the transaction, although it has been publishing cautionary announcements since 31 July 2009. It describes the group as “medium sized”. It has offices in Botswana, Malawi, South Africa and the UK, and associate offices in Malawi and Zimbabwe as well as working relationships with Stockbrokers Zambia, Namibia Equity Brokers and Mac Capital in Dubai.
According to the Holdings website: “We are independent and privately owned, enabling objective decision-making in the service of our clients. We are active participants in the region’s financial markets and maintain one of the largest research coverage of regional equities. Funds under management exceed US$ 135m and funds under administration exceed US$750m.”
Imara group services fall into three primary operating areas:
• Corporate Finance & Advisory Services
• Institutional and Private Client Asset Management
• Securities Trading
Imara Capital is one of the associates listed in Zimbabwe, others being listed on the website as Imara Edwards Securities (Pvt) Ltd, Imara Asset Management Zimbabwe (Pvt) Ltd and Imara Corporate Finance Zimbabwe (Pvt) Ltd. The Herald report says these are wholly owned by Imara Capital.
On 8 January Imara signed a licence agreement to become the 7th member of Global Alliance Partners (www.globalalliancepartners.com), of which Mac Capital Dubai is already a member. Bernard Pouliot, chairman of GAP and of the Quam Group based in Hong Kong, said Imara joins the alliance at a very opportune time when Chinese interest in Africa is growing: “Imara is good for the alliance and for China. Alongside other members of GAP, we are committed to hit the ground running when an umbrella investment scheme by African countries is developed and eventually implemented.”
The other GAP members are Quam Financial Services Group for Hong Kong and China, Capital Partners Securities for Japan, KT ZMICO for Thailand, Thanh Cong Securities Company for Vietnam, and Westminster of Hudson Securities in USA.
In December, Imara Holdings announced it had recently acquired a majority equity stake in the Botswana stockbroking company Capital Securities (Pty) Ltd., one of 4 licensed stockbrokers on the Botswana Stock Exchange, established in March 1999.
“Shareholders are advised that negotiations relating to a further regional acquisition, which was announced in a Cautionary Announcement published on 31 July 2009 and in subsequent renewal announcements, are still ongoing. Shareholders are therefore urged to continue to exercise caution in their dealings in Imara securities,” says the Botswana announcement published in December.
March 5th, 2010 by Tom Minney
Apologies for the lack of postings, currently travelling in Ethiopia, normal service should resume next week..
February 25th, 2010 by Tom Minney
The Ethiopian Commodity Exchange (www.ecx.com.et) was to host a consultative meeting of representatives from different African commodity exchanges this week on 25 February to form the African Commodity Exchanges Association. The CEO of the ECX, Dr Eleni Gabre-Madhin, was reported to have told a press conference in Addis Ababa that Ethiopia could offer to host the secretariat for the association. United States Agency for International Development (www.usaid.gov) sponsored the gathering.
The idea was first brought up at a United Nations Conference on Trade and Development (www.unctad.org) forum in Lusaka in September 2009. Its theme was: “Improving the Functioning of Commodity Markets in Eastern and Southern Africa through Warehouse Receipt Systems and Market-based Interventions.”
The previous day, 24 February, was a daylong “knowledge forum” held with the United Nations Development Programme (www.undp.org). This would involve sharing experience, best practices and challenges of establishing and working with commodity exchanges in Africa.
Participants were to come from Ghana, Nigeria, Uganda, Zambia, Tanzania, Sudan and Zimbabwe. Executives of the National Derivatives and Commodities Exchange of India and the South African Futures Exchange are also expected to take part. ECX has recently hosted groups from Kenya, Zimbabwe, Sudan, Ghana and the Philippines to look at Ethiopia’s experience and see how it helped the market.
Takele Teshome, programme analyst on Food Security and Recovery at the UNDP, reportedly says UNDP is funding the ECX with $1.5 mln a year, since 2008.
Last week on 17 February the ECX launched Direct Specialty Trade (DST), a new platform where producers of specialty coffee can transact directly with international buyers seeking to purchase premium beans on a fully traceable basis. In a press release by the ECX, Dr. Eleni said by coordinating buyers and seller, DST adds value to farmers, who can benefit from greater competition and to buyers, who can discover truly special coffees.
DST also enables trade of certified coffees, such as Organic certified, Fair Trade, RainForest, among others. She said DST is established as a monthly bidding session in which small farmer cooperatives and commercial growers may deposit specialty grade coffees in advance in ECX warehouses A condition for participation in DST is that farmers will receive a minimum of 85% of the final export price, a historic first for Ethiopia’s coffee farmers who normally are believed to receive below 40%, among the lowest share of the final price in the world. DST is an innovative way to enable direct trade that is reliable, fully traceable, transparent, and sustainable.
According to the release, on the first day, 44 lots of specialty coffee that came for the first DST session, their sellers being 35 primary cooperatives and 9 commercial growers, while 27 registered international buyers, representing coffee importers and roasters in North America, Europe, and Japan came to buy the high-quality coffee. The lowest price given was $2.15 dollars while the highest went as high as $4.02, according to Fortune newspaper (www.addisfortune.com).
Dr. Eleni said international buyers pre-register for the DST session and are able to order samples and to participate in a cupping session prior to the bidding: “DST closes the real gap between farmers seeking to benefit from the international market and buyers interested in tracing these coffees to their origin. DST also raises the visibility and profile of all Ethiopian coffee, and thus is a clear win-win for all.”
February 24th, 2010 by Tom Minney
Standard Chartered Private Equity Limited (www.standardchartered.com) recently announced $47.5million investment for a minority stake in Seven Energy (www.sevenenergy.com), a leading Nigerian gas exploration and development company, according to a report in Nigeria’s Vanguard newspaper.
Seven Energy was formed in 2007 and is focused on the provision of gas to leading industrial firms in Nigeria. Standard Chartered envisages that, in the medium term, the investment will Seven Energy’s existing management team in its drive as a pioneer and consolidator within Nigeria’s gas industry.
Christopher Knight, the Managing Director/ CEO of Standard Chartered Bank Nigeria Limited was reported as saying: “We are proud to invest in Seven Energy as Seven’s value proposition is uniquely hinged on the monetization of Nigeria’s substantial gas reserves to meet the country’s growing energy needs. Our established footprint in Asia, Africa, and the Middle East, along with our long history of supporting trade flows to and from these regions, places us in a unique position to provide vital funding to growing companies in growing economies.”
According to the report, Dr Yemi Osindero, Head of Standard Chartered Nigeria’s private equity business, says: “This will be an active year for us in Nigeria. We have long term equity capital available to assist good companies that want to accelerate growth. We also have a knowledgeable team to assist the management and shareholders of our investee companies to achieve their objectives.” Dr. Osindero will join the board of Seven Energy.
Marlon Chigwende, Head of Standard Chartered’s African Private Equity business, says: “We will continue to invest equity capital in strong businesses and management teams across the African continent. After a year of turmoil in the international debt markets, we see a clear need for committed equity to support growth.”
Standard Chartered Plc, headquartered in London and listed on both London and Hong Kong stock exchanges, ranks among the top 25 companies in the FTSE-100 by market capitalization. It has operated for over 150 years in some of the world’s most dynamic markets, leading the way in Asia, Africa and the Middle East. Its income and profits have more than doubled over the last five years, primarily as a result of organic growth.
February 23rd, 2010 by Tom Minney
The Aureos Africa Fund is busy with its mission – it says it is the largest fund ever to focus on investing in small to mid-sized businesses across Africa. Earlier this month it announced that it had closed its fund-raising after gathering US$381.1 million. The fund has already invested approximately $120 mln in 10 companies operating in a variety of sectors and regions.
It is managed by Aureos Capital (www.aureos.com), which specializes in investing in mid-sized businesses across the emerging markets and says that it was supported by a broad range of institutional investors attracting institutions from the US and Europe as well as Africa.
Sev Vettivetpillai, CEO of Aureos Advisers Ltd comments (in a company announcement): “Considering the weak fundraising environment for private equity over the last two years we are delighted with the strong interest shown by investors.”
“Many institutional investors are becoming aware that they have little or no exposure to what is becoming an increasingly robust and vibrant part of the global economy. As with many other emerging markets, African economies have grown steadily throughout the global downturn and unlike the western economies they have not had to saddle themselves with large public sector deficits to achieve that out-performance.
“Governments in Africa are now wedded to prudent fiscal and monetary policies, and legislative reforms continue to make Africa a far more welcoming environment both for foreign direct investment and for local entrepreneurs.”
The International Monetary Fund (www.imf.org) forecasts average real per capita GDP growth of 4% for Africa in 2010 compared to an average of just 1.1% for advanced economies.
The Aureos Africa Fund targets initial investments of up to US$10 million with a focus on businesses that have strong potential to expand on a pan-African basis within two to three years via “buy and build” strategies and/or through carefully executed organic growth. The focus is on returns generated from growth as opposed to leveraging and financial engineering.
According to Davinder Sikand, Regional Managing Partner of Aureos Africa: “Our strong performance in Africa has been based on adding value to our investments by offering day-to-day and strategic help to the businesses we invest in. We have a very strong local presence and that is an essential ingredient in today’s world of emerging market private equity.
“Small and medium-sized business are becoming increasingly important players in domestic and regional markets across Africa – they are a key driver of the continent’s economic growth.”
Aureos has funds under management of approximately US$1.2 billion and a geographical footprint covering over 50 emerging markets in Asia, Africa and Latin America, through the establishment of 16 regional private equity funds.
Investors in Aureos funds include institutional investors, bilateral and multilateral development finance institutions and high net worth individuals.
Investments made already include:
• A market leader in milk production in East Africa with one of the largest and most modern milk-processing facilities in the region.
• A leading Nigerian biscuit manufacturers with an established distribution network.
• A well capitalized and rapidly growing insurance company headquartered in Nigeria.
• One of the largest cement companies in Senegal, considered to be the most technically advanced and environmentally efficient cement company in West Africa.
• A fast-growing information and communication technology company in West Africa.
• A leading provider of building management & security software and business software in Southern Africa.
• A leading provider of business software and technology solutions with offices in Kenya, Uganda and Rwanda.
• A diversified manufacturing company includes industrial contracting and South Africas largest ship repair company.
• A West African residential property developer and real estate management company.
• A leading leasing company in Nigeria with a subsidiary in Ghana.
In conclusion, Davinder notes that the Funds pan-African structure helps to diversify the economic and political risks that have historically been associated with investing in Africa.
