Archive for the 'Infrastructure' Category
February 15th, 2010 by Tom Minney
Telecoms have attracted some of Africa’s biggest and most lucrative equity deals and the 14 Feb sale of $10.7 billion of telecom assets further indicates the rising power from the East, this time India.
On Sunday the Kuwait News Agency (www.kuna.net.kw) reported that the board of directors of Kuwait’s Zain Group (formerly MTC or Mobile Telecommunications Co. – www.zain.com) unanimously approved the sale of the group’s assets in Africa (except operations in Sudan and Morocco) to India’s Bharti Airtel.
The Kuwait Stock Exchange (www.kuwaitse.com) earlier on Sunday announced the suspension of Zain stocks until the group decides on sale of its affiliate in Africa. Shares in Zain were apparently up 23% since 4 February and rose nearly 4% on 11 February.
According to Reuters newsagency, Bharti had resumed its hunt for emerging market acquisitions after its planned $24 bln merger with South Africa’s MTN failed in September. There have been discussions of Zain group selling its assets in Africa since October.
Reuters says Zain is the third-largest telecoms operator in the Arab world. A consortium of Asian investors has been trying to buy a stake from Kuwaiti family conglomerate Kharafi Group for 2 dinars per share, or about $13.7 bln, reportedly for a 46% stake.
February 2nd, 2010 by Tom Minney
The Commonwealth Business Council has a top lineup for its Africa Investment Forum, due to be held from 8-10 February in Accra, Ghana in conjunction with Ghana Investment Promotion Center (GIPC). Investors and government leaders from over 30 countries will profile investment opportunities in sectors including energy, agriculture infrastructure and manufacturing to an international audience of 500 businesspeople. It will be opened by President of Ghana, John Atta Mills, and the theme is “Accelerating Intra-African Trade and Investment”.
Many African investment promotion agencies from West, East, Central and Southern Africa, will showcase projects to international investment banks and financial institutions. Discussion themes include:
• Addressing the Infrastructure Gap
• Oil and Gas Development: Planning for an Effective Energy Mix • Telecoms and Services: New Business Opportunities/ BPO
• Investing in Agriculture and Improving Food Security
• Micro Finance and New Financial Instruments
• Enabling Growth: Improving the Investment Climate
• Promoting Trade: New Strategies for Africa
Speakers include two presidents (John Atta Mills, Ghana and Hifikepunye Pohamba of Namibia), Dr Ngozi Okonjo-Iweala (World Bank Managing Director), Cyril Ramaphosa (Shanduka Group) and Dr Ibrahim Assane Mayaki (CEO of the AU’s NEPAD Programme). For more information see the CBC website http://www.cbcglobal.org.
January 8th, 2010 by Tom Minney
An exchange that will be able to trade a basket of commodity and currencies derivatives for trading on its platform and could later add trading in debt and equity products is to start trading in Mauritius in March, according to an interview on Reuters.
The Global Board Of Trade Ltd. exchange (www.gbot.mu) was due to open this month, but is still waiting to build critical mass of brokers, aiming for 25-30.
In an interview, Joseph Bosco, the COO of GBOT, told Reuters that the regulators in Mauritius are processing four broker licences and anticipate another 12 in the pipeline. Trading is electronic and members can be anywhere in the globe, according to the website.
The main promoter is Financial Technologies (www.ftindia.com) company from India, listed on the National and Bombay Stock Exchanges.
Bosco says the market will help African firms and companies investing across Africa to hedge their risks in a continent which has experienced volatility. He says it will be a “multi-asset exchange that will be a gateway for Africa to the rest of the world”> According to the GBOT website, it is “strategically located at the crossroads of Africa and Asia” and “offers an ideal platform for global investors to access many of the world’s fastest growing economies… GBOT endeavours to introduce modern market mechanisms into Africa’s financial market ecosystem and to serve as a platform of choice for the global investing community.”
GBOT is licensed by the Financial Services Commission (FSC), the Regulator for non-bank financial services sector in Mauritius, for derivatives trading in commodities and currencies.
Bosco reportedly told Reuters that they intended to start with six dollar-based currency pairs – including Mauritius rupee, euro, yen and sterling – and are now adding the Kenyan and Ugandan shillings. The report says the exchange will trade in 14 commodities, including precious metals, base metals and agricultural commodities.
It expects to trade futures contracts in zinc, copper, aluminium, nickel, gold, silver, platinum, coffee, sugar and maize as well as crude oil and carbon credits. It looks to add options contracts in future.
Kenya was an example of price volatility in its currency and stock prices, including after disputed elections in 2007. Bosco said: “We are giving them risk containment mechanisms; we are helping them to hedge themselves against uncertainty or unforeseen circumstances”.
October 18th, 2009 by Tom Minney
Leading emerging markets investor Actis (www.act.is) tells African Capital Markets News that Africa will have a large role in US$750m Actis Infrastructure 2 fund, which closed on 6 October. The pan-emerging markets fund focuses on power generation and transport. “We are assessing investment opportunities across the continent and we will be looking to invest a significant proportion of our fund in Africa”, says Actis in an email to this blog.
Paul Fletcher, Senior Partner at Actis says: “The need to build infrastructure in emerging markets is one of the great investment themes of our time – power, roads, ports, airports and bridges – these are the means through which these countries will continue to grow and prosper.”
Actis, which took over many operations of the former CDC (Commonwealth Development Corporation), has invested in Africa for more than 60 years. Their African presence includes 40 people based in offices in Lagos, Johannesburg, Nairobi and Cairo, with many investment professionals in London. The fund says having people in country is the best way to build strong relationships to support business and investee companies. Local knowledge and relationships are invaluable for sourcing investment opportunities, developing local partnerships, and managing political and regulatory risk.
Partners Michael Till and Torbjorn Caesar lead the 14-strong infrastructure team, which has a combined 140 years of infrastructure experience and even longer in emerging markets. Their expertise includes infrastructure investing, operations, project finance and project development, having completed investments in over 20 countries in the fund’s target regions.
Actis already has infrastructure investments in Kenya, Tanzania, Uganda and Cote d’Ivoire. Approved and screened deals in the pipeline combine development and expansion across Africa and also India, Latin America and China.
The Actis Infrastructure 1 fund, established in 2003, included investments in 34 power investments across Africa, Latin America and emerging Asia. These were exited in 2007 through strategic asset sales to third parties. The fund generated a cash multiple of 2.0x and realised $1.7 bln and an IRR of 23.3%. Before 2002 Actis also had considerable transport experience.
The fund manager’s investment strategy also includes private equity and real estate. Actis closed its $2.9 bln private equity pan-emerging markets fund, Actis Emerging Markets 3, in November 2008.
October 16th, 2009 by Tom Minney
The International Finance Corporation (www.ifc.org), a member of the World Bank Group, is investing $100 million into bringing the benefits of better telecommunications to many Nigerians via Helios Towers Nigeria Ltd. (www.heliostowers.com). HTN builds and maintains a network of telecommunications towers and leases space to providers of wireless telecommunications services.
According to an announcement on 13 October, the IFC is leading a $250 mln capital injection that will help Helios Towers increase its network to 2,000 sites nationwide. On 21 August, the IFC disbursed $50 mln in mezzanine financing and on 30 September 30 signed an agreement to lend another $50 mln in senior debt. IFC is arranging a further $150 million in senior debt from other commercial and development finance institutions. The towers and better coverage will help wireless operators roll out services more economically and extend affordable mobile services to the edges of towns and countryside.
The principals of Helios Investment Partners (www.heliosinvestment.com) founded HTN in 2005 to capitalize on very strong growth in mobile telephony in Nigeria by deploying the successful tower leasing business model pioneered by US-based companies such as Crown Castle International and American Tower. The business is characterized by high operating leverage, recurring revenues underpinned by long-term contracts, and high returns on invested capital.
Helios says in sub-Saharan Africa, the model exhibits the high growth characteristics of wireless communications and the defensive characteristics of a real estate business. According to the website, Helios and affiliated entities invested approximately $12 million and hold a majority interest in the company on a fully-diluted basis. Nigeria’s telecommunications sector has developed significantly, but 43% teledensity shows there is still room for growth. As HTN develops its network, operators outsource non-core activities and infrastructure and focus on developing products and services.
Kayode Akinola, HTN Director and Investment Principal at Helios Investment Partners says: “IFC’s long-term investment enabled us to leverage additional funding from capital markets, which is often not readily accessible for frontier markets,” said. “Nigeria remains one of the most high-growth telecom markets worldwide and wireless infrastructure sharing will continue to play a critical role in supporting operators in efficiently providing services to customers.” Helios aggregates more than $575 mln in capital commitments and also manages the $110 mln Modern Africa Fund.
Mohsen Khalil, IFC Director for Global Information and Communication Technologies, says: “Affordable mobile telecommunications enable access to knowledge and services, innovation across sectors, and more efficient delivery of government and business services, all of which will contribute to economic growth and opportunity creation.”
IFC supports sustainable economic growth in developing countries by supporting private sector development, mobilizing private capital, and providing advisory and risk mitigation services to businesses and governments. New investments totaled $14.5 bln in fiscal 2009, helping address the financial crisis.
September 24th, 2009 by Tom Minney
Emerging Capital Partners (ECP) announced on 22 September it has committed $25 million to Wananchi Group Holdings (www.wananchi.com/), a leading East African media and telecommunications company specializing in pay television and high-speed Internet services in Kenya and Tanzania. ECP is an international private equity firm focused on investing across Africa and this is its 10th investment in African telecoms. It still has stakes in Zain Gabon, MTN Cote d’Ivoire and Cellcom (GSM operator in Liberia and Guinea).
The equity investment will help upgrade and expand Wananchi’s existing network infrastructure to provide East Africa’s first triple-play service, consisting of digital pay television, high-speed Internet and Voice-Over-IP services.
ECP’s CEO Tom Gibian says, according to the website (www.ecpinvestments.com) “ECP has been active in the African telecom sector for nearly a decade. Following on the tremendous growth in African mobile penetration over the last 10 years, we view broadband and related services as the next “game changer” in African telecom. Wananchi’s product offering, network infrastructure and strong management are ideally suited to address the significant unmet demand for media and broadband services in East Africa.” So called “triple play” has been a major driver for growth of telecom companies in developed and emerging markets for the past decade.
Wananchi presently serves the retail and corporate markets in Kenya and Tanzania through its consumer and corporate divisions. The consumer division operates under the Zuku brand and provides cable television and broadband Internet services to residential customers in Kenya using a combination of hybrid-fiber-coaxial and WiMax technologies. The corporate division operates under the SimbaNET brand and is a leading provider of Internet and virtual private network services to corporations, local governments and non-governmental organizations in Kenya and Tanzania using a combination of metro-fiber, WiMax and VSAT technologies.
Cost and infrastructure used to limit East Africa’s pay television and Internet services and penetration rates of cable television and broadband Internet throughout Kenya and Tanzania are less than 1% each. South Africa’s penetration rates for pay television and broadband Internet are approximately 15% and 4% and Mexico’s 24% and 20%. East Africa’s demand is growing, spurred by strong GDP growth, the emerging middle class, and new undersea fibre cables that make services more accessible and affordable.
Regional venture capital fund manager East Africa Capital Partners (www.eacp.co.ke) formed Wananchi Group in 2007 through acquiring several smaller companies. EACP chairman, Mark Schneider, is a leading cable entrepreneur and co-founder of United Global Communications which was acquired by Liberty Media in 2004 and grew to become one of the largest cable companies in the world with operations in over 20 countries in Europe, Latin America and Asia.
Bryce Fort, ECP managing director, says the firm “is looking forward to working with EACP and Wananchi, two of East Africa’s world-class institutions.”
September 18th, 2009 by Tom Minney
Some US$8 billion was invested in developing Information and Communications Technology (ICT) in Africa in 2008. According to Nigeria’s Daily Independent newspaper (www.independentngonline.com) the Secretary-General of International Telecommunications Union (ITU), Hamadoun Toure, announced this at a recent African Telecom Development Summit 2009, held in Abuja, Nigeria, praising the advances of the last 10 years.
The report quotes Toure: ”It has been an extraordinary decade for Africa and it gives me great personal pleasure to see how the continent has taken huge steps forward in bringing connectivity to African people. Just ten years ago, virtually nobody in Africa had a mobile phone; today across the continent mobile cellular subscription teledensity has reached 32.6%, with some 250 million subscriptions in Sub-Saharan Africa” – creating enormous progress in Internet access.
Nigeria is the largest market, with over a quarter of all subscriptions. Toure says more than 30 mln Africans now have access to the Internet. Between 2000 and 2008, Nigeria alone has added 11 mln new Internet users, 40% of the new users in Africa. But Africa still lags in broadband access, with only 635,000 fixed broadband subscribers.
Toure is the first African elected as the Secretary-General of ITU, umbrella body of more than 700 telecommunications organizations. He called for developments in policy and regulatory frameworks and political will by African Governments to promote ICT roll-out.
September 3rd, 2009 by Tom Minney
The Kenya Electricity Generating Company (KenGen) has received regulatory approval from the Capital Markets Authority for a corporate bond with a nominal value (face value) of KSh15 billion (US $196.8 mln). The offer is open from 8-29 September. The bond aims to raise capital for an additional 500 MW of generating capacity
According to a report on Reuters on 31 August, the bond would yield 12.5% net interest for investors. Kenya is one of several East African countries where fast economic growth has led to power shortages. Kengen produces about 80% of the electricity output, mostly in hydropower stations, and wants to expand geothermal generation by about 500 MW by 2012.
KenGen’s Managing Director, Eddy Njoroge, reportedly told an investor briefing that, if the bond was oversubscribed, the company had the option to take up an additional KSh 10 bln, although they have not yet decided whether to opt for this. “We have the projects even if we get 25 billion shillings,” he said.
The term of the bond is 10 years. Interest will be paid in the first two years and the principal sum would be redeemed every 6 months for 8 years in equal installments. The minimum investment would be KSh100,000 (approx $1,300) and extra investments would be in multiples of KSh100,000.
Standard Chartered Bank is reported to be lead arranger, KPMG the financial adviser and Standard Investment Bank the lead sponsoring broker. Retail investors are expected to take 20%, local and foreign institutional investors the rest.