African Capital Markets News

Sub-Saharan African sovereigns outside SA to raise $7bn in fixed income

African countries (apart from South Africa) are set to place $7 billion of debt this year, buoyed by low interest rates and a huge global appetite. According to this article in Bloomberg Businessweek by Roben Farzad, this year’s debt issues will be more than the previous 5 years combined and African capital markets are feeling the boom.
No wonder international investors who are “grabbing for yield and growth” (according to Farzad) are looking to Africa which the International Monetary Fund forecasts will grow at 5.6% this year against 1.2% in developed countries. But Africa’s terrible infrastructure, including electricity, bridges, roads and wastewater treatment, is costing African sat least 2 percentage points of growth. Some of the new bond proceeds are likely to go on infrastructure, which needs investments of up to $93 billion a year.
The article cites research from JP Morgan Chase that average yields on African debt fell 88 basis points in the past 12 months, to 4.35%. “Nigeria, Gabon, Ghana, Ivory Coast, Namibia, the Congo, Senegal, and the Seychelles have all seen their borrowing costs fall this year.”
“It’s a hugely exciting story,” Jim O’Neill, the chairman of Goldman Sachs Asset Management who plans to retire this year, said in an April 23 interview with Bloomberg Television in London, writes Bloomberg reporter Chris Kay: “The only thing one has to be a little bit careful of are many of those markets are still very undeveloped and suddenly there’s a lot of people around the world regarding Africa to be sort of fashionable and trendy.”
Farzad wonders how easy it will be to “service so much easy-money debt when the credit cycle turns, or if commodities and political stability decline. At least for now, though, you get the impression that sub-Saharan Africa has turned a corner in global capital markets.” And journalist Chris Kay quotes Charles Robertson, global chief economist at Renaissance Capital: “For governments, great, don’t look a gift horse in the mouth. I still don’t believe investors are getting risk-adjusted returns in the dollar-bond space.”
According to Kay, debt-forgiveness programmes have helped 45 African nations cut debt to about 42% of gross domestic product this year from an average 120% in 2000, according to data compiled by Bloomberg and IMF estimates. South Africa’s Finance Minister Pravin Gordhan says debt will peak at 40% of GDP in 2016, compared with more than 100% for the U.S. and an average 93% in the eurozone.
Another reason why Africa offers lower risk is that taxpayers have no expectations of massive social and other spending in nearly all countries. Meanwhile global appetites are shown by the $20 trillion reportedly invested in debt at less than 1% yield.

Some potential issues
Nigeria planning to offer $1bn in Eurobonds and a $500m Diaspora bond, according to Minister of State for Finance Yerima Ngama. It was recently included in JP Morgan and Barclays local bond indices. Yields on the existing $500m Eurobond, due 2021, were down to 4.05% by 3 May, from a peak of 7.30% in October 2011.
Kenya really boosted investor confidence in Africa with its peaceful outcome after elections on 4 March and the Finance Minister Robinson Githae said on 11 March they could be in line to issue up to $1bn by September.
Ghana fuelled by an oil boom, has seen its debt yields on the 10-year bonds down 3.43 percentage points to 4.82% since their issue in October 2007, said Bloomberg.
Zambia successfully raised $750m last year at 5.625% and is thinking to return for another $1bn. Yields were up 20 basis points to 5.66% by 3 May.
Tanzania has asked Citigroup to help it get a credit rating before issuing a maiden Eurobond of at least $500m. Finance Minister William Mgimwa said a total of $2.5bn was bid for a private offering of $600m of Government debt in March. According to this story on Reuters that bond’s pricing and structure at the time had shocked markets and appeared to benefit investors: “The cheaply priced US$600m seven-year private placement was described as a “disaster” by one banker. And certainly the immediate secondary market performance looked terrible. The bonds jumped 2.75 points on their first day of trading.. That works out at a cost to the government of US$4m a year in coupon payments, assuming that the bonds could have priced at the tighter level.”
Angola did a private sale of $1bn in debt in 2012 and will go for $2 billion this year, according to Andrey Kostin Chairman of VTB Bank OJSC, who helped arrange the first issuance, last October.
Mozambique and Uganda may also issue foreign currency bonds of $500m each, according to Moody’s last October.
Gabon’s $1bn of dollar bonds are down 4.78 percentage points to 3.13% since they were issued in December 2007.

Jacana merges with InReturn Capital, launches $75m private equity fund for SMEs

Entrepreneurs running small and medium-enterprises (SMEs) in West and East Africa stand to benefit from a new $75 million private equity fund. The announcement follows the news on 29 Jan that two long-term partners are merging.
InReturn Capital (www.inreturncapital.com) is a private-equity company based in Nairobi (Kenya) that invests in SMEs across East Africa, and it plans to close a legal merger in the first quarter of 2013 with London (UK)-based Jacana Partners (www.jacanapartners.com), a private equity specialist in SME investments, which has been building capacity in private equity managers in Africa.
The new partnership will offer a significant boost for East African entrepreneurs seeking value-add expertise and growth capital. InReturn was investing in transaction size of $0.5m-$1.3m and the partnership with Jacana will mean increased access to private equity investment, dedicated investment teams on-the-ground coupled with international private equity expertise and larger deal sizes of between $1m-$5m.
InReturn has rebranded as Jacana Partners. The two firms have been working together for 3 years. Jacana’s West African operations (previously Fidelity Capital Partners) rebranded in August 2012. This creates a leading pan-African SME private equity firm with pan-African coverage which will manage the new $75m SME fund expected to close later this year.
Jacana currently operates in 6 markets (Ghana, Kenya, Liberia, Sierra Leone, Tanzania and Uganda) and intends to move into 2 new countries with the new fund, possibly Ethiopia, Nigeria and/or Francophone West Africa. It is the only pan-African private equity company with a permanent commitment to the SME sector.
Jacana has invested over $20m to date in 20 portfolio companies employing over 1,300 people. In East Africa, 5 investments have been made to date in a stone quarry, an eye care centre, a supplier of tarpaulins to the relief sector, a serviced office provider and a logistics company and several other transactions are contemplated in the next few months.
Professor Njuguna Ndung’u, Governor of the Central Bank of Kenya commented in a Jacana press release: “East Africa is undergoing a period of rapid economic growth largely fuelled by the expansion of our small-to-medium sized enterprises – key generators of job creation and GDP growth. The merger being rolled out today brings scale to the financing of SMEs which will boost their contribution to East Africa’s economic growth. It is my expectation that we shall see more similar initiatives to scale up financing to SMEs that lie at the heart of development blueprints for governments in the region.’’

Passionate about Africa’s entrepreneurs

Anthony Gichini, Partner at InReturn Capital said: “The merger of InReturn Capital with Jacana Partners represents a big step forward in private equity investment for SMEs in East Africa. Jacana’s unique model combines international private equity experts with highly-experienced local teams, meaning our entrepreneurs benefit from strategic advice from international business experts as well as dedicated African investment managers on-the-ground who can add-value and provide hands-on management support. This combination is our winning formula which helps us build strong businesses and deliver superior returns.”
Simon Merchant, CEO of Jacana says: “Jacana Partners is a pan-African private equity firm that invests in entrepreneurs, builds successful SMEs and delivers sustainable financial and social returns. We do this because we are passionate about entrepreneurs as the key drivers of job creation and long-term economic development in Africa. Jacana is uniquely structured to overcome the challenges of private equity investing in SMEs in Sub-Saharan Africa. Combining internationally experienced private equity veterans with highly skilled teams on-the-ground, Jacana has the experience, knowledge and resources to structure great deals, grow sustainable businesses and deliver superior returns.
“By merging our African and European operations, we are consolidating our business into a single fund manager, operating under the Jacana brand. As well as investing the remaining capital from our existing funds, the new Jacana will deploy a new $75m SME fund that we are currently in the processing of raising from international investors.
“The new fund will allow us to significantly increase the scale and geographic reach of our operations and will be invested in SMEs in up to 8 countries in East and West Africa. We firmly believe that a unified Jacana operating under the unique Jacana identity is the optimal platform upon which we can fulfill our mission of building the best SME private equity team in Africa, creating sustainable jobs and supporting long-term economic growth.”

IFC to issue $50m (NGN8 billion) Naija bond in Nigeria

The International Finance Corporation (www.ifc.org), part of the World Bank group, plans to issue a $50 million (NGN 8 billion) local-currency Naija bond in Nigeria to support the domestic capital markets and increase access to local-currency finance. IFC bonds are rated triple-A by Moody’s Investors Service and Standard & Poor’s and the Naija bond is likely to appeal investors such as pension funds, insurers, asset managers, and banks wanting to diversify their portfolio while investing in high-quality assets.
It is part of an extensive programme by the IFC to issue more local currency bonds in a range of countries. IFC launched its Pan-African Domestic Medium-Term Note Programme in May 2012. It focuses on Botswana, Ghana, Kenya, Namibia, Rwanda, South Africa, Uganda and Zambia. IFC has obtained approvals to issue local-currency bonds in Kenya.
According to Solomon Adegbie-Quaynor, IFC Country Manager for Nigeria, quoted in this IFC press release: “The IFC Naija bond will support the Government’s efforts to deepen domestic capital markets in Nigeria. It will help pave the way for other issuers in the domestic markets and makes available funds that can be put to work in the local economy.”
Jingdong Hua, IFC Vice President and Treasurer, added: “Vibrant domestic capital markets are the foundation for lasting growth—and in Africa, they can mobilize capital to close the financing gap for key sectors such as infrastructure and housing. The IFC Naija bond will be a milestone achievement as we continue to work with governments and local authorities to strengthen domestic capital markets in the region.”
Local currency proceeds from the African bond will be used to support IFC’s development programme for the private sector. IFC’s committed portfolio in Nigeria stands at $1.1bn, the largest country portfolio in Africa and the eighth-largest globally. It will be the IFC’s first naira-denominated bond and the first bond placed by a non-resident issuer in Nigeria’s capital markets.
IFC issues bonds as part of its regular programme of raising funds for private-sector development, and to support the development of domestic capital markets. In many cases IFC is the first, or among the first, non-resident issuers. Last 30 June (2012), IFC had outstanding bonds totalling $45bn in 11 currencies. Before the current programme, IFC worked with Ghana, Zambia, and 8 members of the West African Monetary Union to establish local-currency bond programmes, including bonds in CFA francs during 2006 and 2009.
The IFC Naija bond is the result of collaboration with the Nigerian Government, regulatory authorities, and market participants. Chapel Hill Advisory Partners Limited and Standard Chartered are lead managers of the transaction.
IFC is the largest global development institution focused exclusively on the private sector, financing investment, mobilizing capital and giving advice to businesses and governments. Investments reached an all-time high of more than $20bn in the 2012 financial year.

Africa’s bourses should work together to channel investors

Africa’s 24 stock markets should learn to work together better if they are to seize high levels of investor interest, said Nicky Newton-King, CEO of South Africa’s JSE Ltd (www.jse.co.za), Africa’s biggest securities exchange. She was speaking in an interview with agency AFP.
“The appetite for Africa is very, very high. I think everybody is trying to find their way, to participate meaningfully in that. All of us who are privileged enough to run exchanges, need to figure out that these waves of investor appetite aren’t yours by right. Once they come you have to be able to ride them properly. We should not be taking this as business as usual, this is a business opportunity.”
The International Monetary Fund forecasts the aggregate economy of sub-Saharan Africa will grow at around 5.7% next year, presenting a giant opportunity.
Newton-King said on 7 Dec that one way to channel the investor interest through African markets would be to make it easier to invest across borders and to improve liquidity in small markets so that assets can be bought and sold quickly.
The JSE already works closely with the Namibian Stock Exchange (www.nsx.com.na) and she said it is looking to make deals with two other African bourses. She said that creating a single pan-African bourse is not currently on the agenda and the JSE is concentrating on improving the continent’s financial plumbing including allowing cross- and dual-listings and easier order-routing.
“I think it is far more about collaboration. Were we not to have any exchanges on the continent I think we would have wanted to create a single exchange that would service multiple jurisdictions out of one legal base. That’s the most efficient way to do it, but I’m a bit of a realist. Once you try to do cross-border mergers and acquisitions, you run into much more trenchant issues of a regulatory nature, all of which stem from ‘how do we protect the local investor?’, ‘how do we make sure the local market grows?”
Newton-King identified liquidity as a key challenge to attract foreign investors: “Really big trades are not going to go to illiquid markets. The average day’s trade on the JSE is more than the average annual trade on Kenya and Mauritius put together. There are amazing companies in both of those countries.”
She said that allowing Kenyans to invest in joint-listed South African stock in KES shillings, or by allowing South Africans to more easily place orders into Nigerian stock markets would attract more foreign investors. She adds that there are benefits from cross-listing (securities being traded on more than one exchange), as the JSE learned when its leading shares moved to London: “When Anglo-American cross-listed in London, the amount of trades in Anglo-American increased. South Africa’s percentage of trade in Anglo-American decreased, but the decreased percentage was worth more. In those cases you have to think quite bravely.”
She was echoing a theme about Africa’s securities exchanges needing to become more liquid to serve the growing needs both of investors and of enterprises seeking capital.This theme has been strongly stressed by Sunil Benimadhu, CEO of the Stock Exchange of Mauritius, since he took over as Presdient of the African Securities Exchanges Association in October 2010, as reported on this blog.
The JSE has consistently offered to work closely to help other exchanges to develop and the author of this blog was GM of NSX when it linked its trading and broker systems in 1998-9. Exchanges in Southern Africa and in East Africa are stepping up the pace of collaboration. The Committee of SADC Stock Exchanges (COSSE) is working to forge more links,improve technology and other connections and take other steps to improve markets and boost liquidity, as reported here.

“Nigeria the new gateway to African capital markets”
The Nigerian Stock Exchange (NSE – www.nse.com.ng) aims to transform Nigeria into the gateway of African capital markets. Oscar Onyema, CEO of the NSE, on 12 Dec said this at a national competition for secondary and tertiary schools and colleges in Lagos. Priorities for the NSE management in 2013 will continue to be innovations in technology and new product development. Onyema promised more technology-based solutions and data services and said the NSE would advocate changes in policy and would also continue cleaning and restructuring, and making the market accessible.

Rise of pension giants set to transform investment in Africa

New giants are arising in African investments – the domestic pension funds. In Nigeria the National Pensions Commission (PenCom) estimated registered pensions to be worth US$14bn in June 2011, with asset values up by 8% in three months; Namibia’s Government Institutions Pension Fund alone is worth some $6bn; South Africa’s pension funds grew at a compound annual growth rate of 14.3% in US dollar terms over 10 years to December 2010, including over 28% in 2010 and Tanzania’s pension industry was audited at $2.1bn for 2010, and growing by 25% a year.

The number of pensioners is set to soar, according to United Nations figures, as the number of people over 60 years in Africa will rise from 55m in 2010 to 213m by 2050, compared to 236m Europeans over 60 years old by 2050. Current pension funds cover only 5%-10% of Africans ranging from 3% in Niger but it used to be 80% in North African countries such as Egypt, Libya and Tunisia. Pensions are not available at all in some countries.

Regulatory reforms are driving the growth of African pensions. Recent reformers include Cote d’Ivoire, Gabon, Kenya, Nigeria, Senegal and Uganda. Ghana created a National Pensions Authority with a 2010 act. Reform in Kenya, including investment guidelines and a new regulator, resulted in strong growth and good investment returns. Tanzania passed the Social Security Regulatory Act in 2008. The rising pension industry is likely to boost fund management and equity industries, exits for private equity and even to fill some of the $45bn annual funding gap for infrastructure. For instance, In January 2012, Tanzania’s National Social Security Fund signed an agreement to finance 60% of the $137m cost of building Kigamboni Bridge. South Africa’s $130bn Government Employees Pension Fund is a major investor in the Pan-African Infrastructure Development Fund which raised $625m in 2007 and is targeting $1bn on its second offering.

For more details on Africa’s pension industry, please check my article published in The Africa Report magazine and website, here is the link www.theafricareport.com and for brief profiles of 6 giant African funds, check here.

IOSCO global regulator gives bigger role to emerging markets – 80% of its membership

The 86 emerging markets members of the world’s securities markets regulator, International Organization of Securities Commissions (IOSCO) (www.iosco.org), form 80% of IOSCO membership and are increasingly important in the global economy. They have backed the setting up of IOSCO Foundation, to boost funding so IOSCO can scale up research, education and training and technical assistance. IOSCO, the leading international policy forum for securities regulators, is recognized as the global standard setter. The organization’s membership regulates more than 95% of the world’s securities markets in 115 jurisdictions and it continues to expand.
IOSCO’s Emerging Markets Committee (EMC) met on 19-21 Nov in Santiago, Chile, and was reported in this IOSCO news release. It includes the world’s fastest growing economies and 10 members of the important G-20 group of countries. New members are still joining, boosting its role in IOSCO. The Chairman of EMC has a seat on IOSCO’s influential Financial Stability Board.
EMC Chairman Vedat Akgiray of the Capital Markets Board, Turkey said: “Since the distribution of global economic wealth is continuously changing in favour of today’s rapidly growing emerging markets, as the future candidates for being developed economies, ‘proper’ securities regulation in today’s emerging markets is tantamount to ‘proper’ regulation of tomorrow’s developed markets. Therefore, emerging markets within IOSCO and the global financial system are much more important than they were in the past.”
A task force is working on ensuring emerging markets have a stronger voice in IOSCO. According to Akgiray: “A stronger role for the EMC in the future is supported by its members, given its growing importance in the global financial markets and international bodies. The new structure and the functions of the EMC in IOSCO after 2014 will be designed in the coming months, with more importance given to market development and capacity building activities.”
EMC members also debated their perceptions of major emerging risks in their jurisdictions, as part of an IOSCO effort to anticipate systemic risks before they disrupt markets. They warned of spill-over effects from developed economies’ crises, the unintended consequences of some global regulatory reforms as they are applied to emerging markets, sudden capital withdrawals and their impact on liquidity, and the expanding regulatory perimeter. Members highlighted the following as major concerns and challenges, among others:
• Capacity-building, investor education, financial inclusion and literacy to rebuild trust in capital markets;
• Strengthening corporate governance, developing SME financing and corporate bond markets;
• Predominance of bank financing;
• Complex financial products and institutions;
• Risk management and risk-based supervision,
• Development of corporate bond markets

Foundation
IOSCO secretary-general David Wright who started in March (see IOSCO press release) said one of his core priorities was boosting IOSCO’s funding to help aid its work in assisting emerging market regulators with technical advice. He was reported on eFinancial News as saying: “Helping develop emerging markets’ securities markets and ensuring that they are fully on board at a decision-making level is fundamentally important to the global economy.
“As banks become ever more constrained in terms of leverage, and the public sector is starved of cash for years, if not decades, then the securities markets will have to play a much greater role in capital allocation. For that reason, we must have a vision for a truly global securities market, based on the application of rigorous standards.”
The Foundation is to be proposed at the IOSCO Board meeting in March 2013 in Sydney. Paul Muthaura, Acting CEO of the Capital Markets Authority Kenya, said: “The Capital Markets Authority Kenya and indeed the whole East African Securities Regulatory Community warmly welcome the launch of the IOSCO Foundation. This initiative is central to mobilizing the critical resources necessary for capacity building, training exposure and research support that are at the core of supporting emerging markets to converge with international standards of the Foundation.”

MMoU
A key tool of IOSCO is the framework for the Multilateral Memorandum of Understanding Concerning Consultation and Cooperation and the Exchange of Information which enables regulators to exchange information in the case of an investigation, boosting international enforcement and effective global regulation of securities markets. IOSCO members who have not yet signed are encouraged to do so by January 2013. So far 89 IOSCO members have signed and another 30 are invited to be listed in Appendix B, members who are committed to becoming signatories but lack legal authority to comply. Two members of EMC have not applied to sign the MMoU. South Africa, Nigeria and most recently Tanzania are Appendix A signatories in Africa, as reported on this blog in May.
Ranjit Ajit Singh, the Vice Chair of the EMC and Chairman, Securities Commission Malaysia, said: “Our role as securities regulators in emerging markets has become undeniably more challenging as capital markets in emerging economies grow in size and take on a more significant role in financing global economic growth. The Emerging Markets Committee will therefore need to play an increasingly more significant role within IOSCO and the wider regulatory policy framework to contribute to international efforts in regulatory reform and market stability.”

NOTE: Vedat Akgiray, Chairman of IOSCO’s Emerging Markets Committee, Vice Chairman of IOSCO’s board and Chairman of the Capital Markets Board in Turkey will be a speaker on the panel “Capital Market Reforms: Impact of Global Regulations on Emerging Market Economie” next Monday (3 Dec) at the African Stock Exchanges Association conference (ASEA 2012) in Cairo, Egypt. Other speakers are Dr Ashraf El Sharkawy, Chairman of the Egyptian Financial Supervisory Authority (EFSA) and Bob Singletary, PFS Senior Capital Markets Advisor and Principal, Lenzie Fisher Hendry LLC (and I will be moderator). For more details of the conference, look here: http://www.aseaegypt2012.org.

Nigeria’s SEC pushes for privatization listings, stockbroker consolidation and NSE demutualization

Nigeria’s Securities and Exchange Commission (www.sec.gov.ng) hopes to boost liquidity on the Nigerian Stock Exchange (www.nse.com.ng) by getting previously privatized enterprises to list their shares. Arunma Oteh, Director General of the SEC, also said that demutualization of the NSE is on track, according to a report in the local Vanguard newspaper, and the commission is still working on the framework and guideline to before the exercise starts.
Oteh said the SEC is to meet the Bureau of Public Enterprises (BPE): “The Commission will be working with the BPE to ensure that already privatized entities before now are listed on the NSE based on the agreement they had with the Bureau. For instance Eleme Petrochemical, one of the companies previously privatized, is doing well and the portion of government shares could be listed on the exchange to allow the indigenes own stake and participate in the fortune of the entity.” She said recently privatized power sector companies could boost the volume and value of transactions by listing on the NSE.
She also praised efforts by the NSE to attract more companies to list: “This is the reason why the Commission approved the multiple listing requirements recommended by the NSE. This has not been in existence before now.”

Demutualization
Demutualization is a process for turning an exchange from a mutual association, usually owned by stockbrokers and other stakeholders, into a for-profit company. It can split ownership from licences to trade and in some cases, such as London and Johannesburg, the stock exchange itself becomes a listed entity. Ms Oteh said: “The committee on demutualization has finished its work and we are currently working on the frame work and guideline that will be put in place. Once we are through, the Commission will announce it. Demutualization will ensure owners of the Exchange get real value of their entity.”
She also said the SEC is working with the Association of Stock-broking Houses of Nigeria (ASHON) to consolidate stockbrokers and a committee on market development is still working to find ways to address minimum capital requirements, upgrading technology, and capacity-building, among others. She said a new guideline is expected from the National Pension Commission (www.pencom.gov.ng) which will further boost activities in the market.

Falling yields mark a boom in Nigeria’s bond market

Nigeria’s debt market continues to boom with growing volumes in the local debt market and inclusion in the JP Morgan Government Bond Index-Emerging Markets (GBI-EM) from 1 October as Africa’s second entrant after South Africa, Yesterday (31 Oct) the Debt Management Office (DMO – www.dmo.gov.ng) was reported by local newspaper This Day as saying it had received bids totaling NGN1.7 trillion ($10.8 billion) for Government debt in the 12 months to Sept 2012 and had issued a total of NGN852bn in debt over the period.
Nigeria has been tipped by many leading research houses and banks as one of the most promising African markets for local-currency debt, after strong performance for the naira (NGN) against the US dollar ($) and strengthening bond prices and falling yields.
Demand picked up strongly after JPMorgan announced in a note to clients on 15 Aug that its GBI-EM Index may include Nigerian debt maturing in 2014, 2019 and 2022 in a gradual inclusion starting 1 Oct and finishing by year-end. The bonds, with a market valuation of $3.2bn as of August, may represent about 0.59% in the index. JP Morgan sub-Saharan Africa economist Giulia Pellegrini was quoted in an article on Bloomberg as saying about $170bn of assets are benchmarked to the JPMorgan index. Market estimates are for an inflow of up to $1.5bn into the market by funds tracking the index. Central Bank of Nigeria (CBN) Governor Lamido Sanusi lifted a requirement in 2011 for foreign investors to hold local-currency debt for at least 1 year and this was proving successful in attracting investors and improving liquidity, said Pellegrini.
Nigeria is rated B+ at Standard & Poor’s (BB- Fitch), along with Venezuela and Zambia, four steps below investment grade and the outlook is “stable”. Bloomberg says the daily trading of naira amounts to as much as $200mn, according to Citigroup Inc., compared to about $14bn of South African rand (ZAR) being traded daily, according to a 2010 survey by the Bank for International Settlements. “The country’s external buffers are gradually being restored,” Razia Khan, the London-based head of Africa research at Standard Chartered, wrote in a 18 Sept note to clients. “It is all important that this process continues for Nigeria to be able to safeguard both price stability and growth should these be put to the test by weaker oil prices in the future.”
Nigeria’s sovereign bond market is put at $23bn but secondary market trading is still a fraction of trading in South African foreign debt. Angus Downie of Ecobank says the daily trading in government securities could grow by up to $50m from previous levels of $400m/day with foreign investors likely to remain significant, and his colleague Paul Harry Aithnard, Group Head of Research at Ecobank, says that the ZAR was previously seen as the proxy for Africa, but the NGN is attracting investors looking for an alternative. Samir Gadio, emerging markets strategist at Standard Bank, said: “It’s now seen as a market that can’t be ignored internationally and one of the frontier markets where you need to have a position.”
Yields on Nigeria bonds have been falling as investor interest grows. There has been some profit-taking but inflation prospects are improving and reserves are being grown. However, there is still considerable scope for more deepening in the Nigerian market, and private banks are still avoiding some sectors, including agriculture and small-scale construction. In January 2011 the Nigerian Government issued a 10-year $500m Eurobond at a yield of 7% and carrying a coupon of 6.75%, but by mid-October 2012 the yield had fallen to 4.57% according to the DMO and the closing price was $114.79. Yields are also down on debt from Gabon, Namibia and Ghana.

Africa’s best real estate developer is private equity group Actis

Leading African private equity group Actis has won the title for “Best Developer in Africa” in the 8th annual global Euromoney Real Estate Survey run by finance magazine Euromoney. To collect data for the award, Euromoney was canvassing the opinions of senior real-estate bankers, developers, investment managers, corporate end-users and advisory firms in over 70 countries since March. It was the biggest Euromoney real estate poll with over 1,900 responses. Actis invests mainly in retail and office developments in high-growth markets such as Ghana, Kenya, Nigeria, Tanzania and Zambia. It launched its first real estate fund in 2006 and concentrates on institutional quality investments. It is sub-Saharan Africa’s most experienced private equity real estate investor and developer, according to a press release.

Current Actis developments include Ghana’s first green-certified building One Airport Square in Accra; East Africa’s biggest retail centre Garden City in Nairobi, and Ikeja City Mall in Lagos which welcomed 45,000 people on its first day of trading in December 2011. Past investments include Accra Mall in Accra and The Junction in Nairobi.

According to the press release, David Morley, Head of Real Estate at Actis, said: “Sub-Saharan Africa has a population of 800 million people and is the fastest urbanising region in the world; an increasingly sophisticated consumer class seek places to live, eat, shop and relax in the face of chronic undersupply. There is tremendous opportunity for those who take up the challenge and we are very proud to see our work recognised in this way.” Euromoney Editor Clive Horwood said, “The winners of this year’s Euromoney survey are those that exhibited the ability to innovate and make best use of the inherent strengths of their organisation. In Africa, in particular, there are great opportunities for those companies best equipped to operate in challenging markets. Through the Euromoney real estate survey, the market has recognised Actis as the leader in this field.”

Nairobi’s Garden City
In July Actis confirmed its investment in Nairobi’s Garden City, a 32-acre mixed use development on the recently expanded 8-lane Thika Highway. This will be a 50,000 sqm retail mall, with commercial premises, 500 new homes and a 4-acre central park, offering family friendly leisure space for Kenyans and visitors to the city. The park will also house an outdoor events arena for the staging of concerts and shows. Groundbreaking is due in December 2012 and completion targeted for May 2014, according to a press release.

Actis is working with leading retailers, including a flagship store for South Africa’s Game, their first in Kenya. Letting is underway with specialist agents Knight Frank Kenya and Broll in South Africa. There are detailed discussions with other foreign retailers looking to enter the rapidly-expanding Kenyan market, such as South African fashion group, Foschini. There is a strong focus on environmental features and the aim is to achieve the first LEED (Leadership in Energy and Environmental Design) certification for a retail mall in East Africa. This brings down operating costs for tenants by reducing electricity and water consumption.

Accra Mall sold
In May Actis confirmed that it had sold its 85% shareholding in Ghana’s Accra Mall to South Africa’s commercial and retail property developer Atterbury and financial services group Sanlam. Actis managed the development process, invested the equity and raised the debt to finance the project, working in partnership with renowned Ghanaian entrepreneurs, the Owusu-Akyaw family. The mall opened its doors in July 2008 fully let, and attracts 135,000 shoppers each week, according to a press release.

Accra Mall is Ghana’s first A-grade shopping and leisure centre, home to international brands such as Shoprite and Game, as well as Ghanaian brands including Kiki Clothing and Nallem. The trade sale demonstrates an increasing interest in Ghana by foreign investors and also reflects the acute demand for high quality real estate assets in sub-Saharan Africa.

Actis 100% owned
Also in May, Actis said it had bought the UK Government’s remaining 40% shareholding in the company. In the deal announced on 1 May, the government will receive a cash payment of US$13m (£8m) and will participate in future profits as Actis’s investments are realised over the next decade. To date, Actis has invested £1.7bn on behalf of the UK government’s direct finance institution CDC and has returned £3.1bn to CDC and by extension the British taxpayer.

Paul Fletcher, Senior Partner at Actis, said: “When Actis opened for business in 2004 our purpose was to attract private capital to countries that were dependent on aid and to legitimise them as investment destinations. Over the last eight years our work in Africa, Asia and Latin America, investing in over 70 companies employing 113,000 people, has shown what is possible. Successive governments have shown real vision backing a private sector model like Actis. We are pleased that HMG has realised the value of their decision to support Actis from the start. We look forward to continuing our work, investing in high quality companies in high growth countries and delivering strong returns for our investors.”

Securities Africa Financial is new name for Nigerian SE stockbroker

Pan-African stockbroker and financial services firm Securities Africa (www.securitiesafrica.com) has acquired a Nigerian stockbroker, Skye Stockbrokers Limited, in June and this week it announced that it has successfully changed its name to Securities Africa Financial Limited. The company has appointed Mr. Afolabi Folayan as Managing Director.

The stockbroker was previously owned by Skye Bank Plc and it was sold to Securities Africa Limited and local shareholders in compliance with a 2011 regulation by the Central Bank of Nigeria on universal banking. Securities Africa Financial Limited is a licensed member of The Nigerian Stock Exchange and regulated by the Securities & Exchange Commission of Nigeria. It has been busy with rebranding the company. Securities Africa Limited is an award-winning Pan-African financial services firm with offices throughout Africa, Asia, Europe and the Americas.

Securities Africa Financial Limited delivers a wide range of capital markets and investment banking services to state governments, pension fund administrators, insurance companies, multinational conglomerates, and institutional investors throughout Nigeria. It has served as lead manager on numerous capital market transactions with leading companies and institutions, notably IHS Nigeria Plc, Tanalizers Plc, Law Union and Rock Insurance Plc, and Lagos State among others.

Mr. Folayan’s previous job was as Executive Director for WSTC Financial Services, where he successfully managed the company’s stock-broking and portfolio management businesses. He has wide experience in Nigeria’s capital markets.

Michael Barnes, Managing Director of Securities Africa, commented in a press release: “Given the numerous changes presently underway across the Nigerian capital markets, we are pleased to announce the appointment of Afolabi Folayan as Managing Director of Securities Africa Financial Limited. Afolabi brings a wealth of experience to the role and his leadership will be an enormous benefit to the company and our clients. Our business has made substantial progress in Nigeria, and Afolabi brings a unique blend of knowledge and expertise as well as a broad range of relationships, both in the corporate world and financial community.”