Archive for the 'Rwanda' Category
October 9th, 2010 by Tom Minney
Rwanda’s Capital Markets Advisory Council (www.cmac.org.rw) has launched a 2 weeks’ pre-offer campaign across the country to sensitize people ready for the initial public offer (IPO) of BRALIRWA. The Government is selling its 30% shareholding in Rwanda’s main beer and soft drinks manufacturer and distributor. Heineken previously bought 70%. from the Government and remains the major shareholder.
According to a report in the New Times newspaper (www.newtimes.co.rw), no date has yet been set for the IPO and discussions continue, but it is still expected this year.
The paper quotes Celeste Rwabukumba CMAC Operations Manager:”This is the first phase of the campaign and we are targeting opinion leaders, business people as the IPO take place soon.” He said that the campaign would inform the public about the benefit of buying the Government shares which are intended to benefit them.
The pre-offer campaign started in the Northern Province and will then move to other parts of the country. It will include media such as radio, television and newspapers.
After this IPO, Government is expected to sell its shares in other major companies, including MTN Rwanda and Sonarwa, an insurance company.
CMAC is the overseer and regulator of Rwanda’s stock markets. It also charged with contributing to Rwanda becoming a competitive financial centre in the region.
October 7th, 2010 by Tom Minney
Renaissance Capital (www.rencap.com), the Russian emerging-markets bank with operations in Africa, plans to expand next year into Egypt and at least 3 other African countries, according to a 5 October interview published on Bloomberg. Rencap says on its website that its core businesses areas are Mergers & Acquisitions, equity and debt capital markets, securities sales and trading, research, and derivatives. It says it is building “market-leading practices across emerging markets globally in metals & mining, oil & gas and agriculture.”.
Clifford Sacks, CEO of the South African unit and head of Pan-African Equities, told Bloomberg from Johannesburg the bank may buy or start a brokerage in Egypt that would also cover Morocco and Tunisia. Hasnen Varawalla, global head of corporate finance, added that it also plans to move into Angola, Uganda and Rwanda. Rencap is bsed in Moscow, and currently operates in African nations including Ghana, Kenya, Nigeria, South Africa Zambia and Zimbabwe. Bloomberg quotes Varawalla: “Each of these countries will see a huge development in their capital markets. We are looking to expand into another 5 or 6 countries in Africa.”
The bank is half-owned by billionaire Mikhail Prokhorov. It started its African business in 2007. According to Bloomberg last year it participated in 24 transactions across 13 African countries, including the $955 million sale of Central African Mining & Exploration Co. to Eurasian Natural Resources Corp. Africa accounts for a quarter of RenCap’s investment-banking business. Varawalla told Bloomberg that Non-Russian activities will generate more than 50% of revenue within 2 to 3 years.
In July, it paid ZAR207 million (then US$27.3 million) to acquire BJM Securities, the brokerage business of South Africa’s Barnard Jacobs Mellet (BJM) Group. A press release by Rencap describes BJM: “Founded in 1985, BJM Securities is the leading independent full service broker-dealer in South Africa. The firm is known for its outstanding research franchise, having been ranked No.1 in South African research surveys.
The Firm entered South Africa in February 2010 and appointed Clifford Sacks. The press release quotes him: “The combination of a leading independent brokerage in South Africa with award-winning research franchise and Renaissance Capital’s unparalleled expertise in capital markets and M&A, complemented by our unique access to global emerging markets creates a powerful platform across research, sales and trading in Africa’s largest economy.”
October 4th, 2010 by Tom Minney
High on the agenda of Rwanda’s Parliamentary Standing Committee on Economy is the bill to regulate the capital market, which has been in Parliament for more than a year, reports the local The New Times newspaper (www.newtimes.co.rw).
Once the law is made effective, the Capital Market Advisory Council (www.cmac.org.rw), which is currently developing and managing the Rwanda Over-the-Counter market, will become the official regulator, called the Capital Market Authority. The OTC market will be the Rwanda Stock Exchange (RSE).
The Director General of Communication and Outreach in Parliament, Augustin Habimana, reportedly told The New Times that the Committee has already discussed the bill several times, and that it will hold further debate before submitting it to the plenary session for approval.
“What usually happens is that initially the bill comes to the parliament, is reviewed and then it’s sent to the relevant Committee. So far, what I can tell you is that the Committee has met several government representatives, and several ideas have been exchanged in the process,” he said.
CMAC reportedly says that 7 members will operate in the Rwanda OTC market and are grouped in 3 categories of membership: stockbrokers, dealers and sponsors. Stockbrokers buy and sell on their own account and on behalf of the investing public, dealers trade with their own funds and sponsors provide advisory services to companies looking to raise capital.
A decree by the Prime Minister established the CMAC in March 2007 to help set up and regulate the transitional process as the Government put a stock market in place. The market dual-lists Kenya Commercial Bank shares, 4 treasury bonds of 2- and 3- years duration (the latest, a 2-year bond launched on 17 August, offers a yield of 9.5%) and a 2017 corporate bond issued by Rwanda Commercial Bank (BCR).
The initial public offer for brewer and soft drinks manufacturer and distributor Brasseries et Limonaderies du Rwanda (www.bralirwa.com) is still expected this year. Vincent Munyeshyaka the Chairman of the Capital Market Privatization Committee, the body that oversees and coordinates the process of divesture through the capital markets, told The New Times: “The IPO will take place before the end of this year but the delay was caused by the government time table that is the budget process and elections,” in particular the recent Presidential elections.
The valuation continues, although the price is expected to be good. BRALIRWA is the only brewer and estimated to have 95% market share, as well as the Coca Cola franchise. It is owned 70% by international Heineken Group and 30% by the Rwandan Government. The Government will sell 25% to the public and 5% to Heineken.
Government has said that advisors will be a consortium of MBEA Kampala, MBEA Security Services Kigali and Renaissance Capital of Nairobi as the lead transaction advisor. Lead sponsoring broker is Dyer & Blair Investment of Kenya and African Alliance, also Kenyan, is co-sponsoring broker. Kenya’s Central Depository and Settlement Corporation (www.cdsckenya.com) said recently it will provide registrar services.
Future Government share sales are to include 2 more of the country’s biggest companies: MTN Rwanda and Sonarwa, an insurance company.
September 8th, 2010 by Tom Minney
Rwanda’s capital market regulator told Bloomberg newsagency on 7 September that it had approved the cross listing of shares in Nation Media Group Ltd. (www.nationmedia.com), East Africa’s biggest media company, on Rwanda’s over-the- counter (OTC) securities market. Robert Mathu, executive director of the Capital Market Advisory Council (CMAC – www.cmac.org.rw) reportedly said: “We approved on condition of fulfilling pending things like submitting an information-disclosure document. They could cross-list toward the end of this month.”
Nation Media will be the second company to trade on the Rwandan OTC, and is one of 4 cross listings expected, as reported previously. Kenya Commercial Bank Ltd. cross-listed its shares in 2009. Six bonds also trade on the Rwandan market, including a two-year, 2.5 billion-franc ($4.3 million) security sold last month, according to the Rwandan central bank. A combined 21.5 billion Rwandan francs has been raised through bond sales on the Rwandan market since 2008, according to CMAC data. On average, about 8,400 shares currently trade on the Rwandan market every month, generating turnover of 1.4 million francs, according CMAC data cited by Bloomberg.
Nation Media is owned by the Aga Khan Fund for Economic Development SA. Its primary listing is on the Nairobi Stock Exchange and the company announced plans in March to list in Rwanda, Tanzania and Uganda.
“Nation Media’s listing gives investors in Rwanda an opportunity to participate in the leading media company in the region, and gets Rwanda to participate in regional integration of East Africa’s capital markets,” Mathu said. “It is a small market, but promising to grow. We expect an initial public offer by BRALIRWA from the private sector this year.” The listing of Brasseries et Limonaderies du Rwanda SA (BRALIRWA) as reported previously on this blog would be a major event. The Government plans to offer 25% of BRALIRWA to public investors and to sell 5% to Heineken NV, which earlier bought 70% of the shares from the Government.
June 29th, 2010 by Tom Minney
Preparations continue in Rwanda for the listing of BRALIRWA, originally said earlier this year to be coming “very soon”. It will be the first Initial Public Offer on the Rwanda Over-The-Counter stock market. Recently Government officials announced the advisers, according to a report in New Times (www.newtimes.co.rw) newspaper.
Brasseries et Limonaderies du Rwanda (www.bralirwa.com) is the only brewer and estimated to have 95% market share, as well as the Coca Cola franchise. It is owned 70% by international Heineken Group and 30% by the Rwandan Government. According to previous reports, the Government wants to sell 25% to the public and 5% to Heineken, but was examining applications to be the transaction adviser and sponsoring broker.
Government has said that advisors will be a consortium of MBEA Kampala, MBEA Security Services Kigali and Renaissance Capital of Nairobi as the lead transaction advisor. Lead sponsoring broker is Dyer & Blair Investment of Kenya and African Alliance, also Kenyan, is co-sponsoring broker.
Sanjeev Anand, the Managing Director of Commercial Bank of Rwanda (BCR) said last week that BCR will join Kenya Commercial Bank as receiving bank, although KCB is the lead receiving bank, according to the report: “Applications will be presented to BCR which will reconcile them with the funds.” He said they had won the role through bidding and on the basis of expertise: “We have the capability to do it, given our experience in preparing IPOs in other countries like Uganda and elsewhere, and we are proud to be involved in the first IPO in the country.”
So far trading on the Rwanda OTC has been mainly treasury and other bonds, with limited trading in the dual-listed shares of KCB. The Rwanda OTC is operated, developed and regulated by the Capital Markets Advisory Council (www.cmac.org.rw).
June 9th, 2010 by Tom Minney
Rwanda’s Capital Markets Advisory Council (www.cmac.org.rw) expects 4 more Kenyan cross-listings this year on the Rwanda Over The Counter market, which is run by CMAC, bringing the total to 5, according to a report in The New Times newspaper (www.newtimes.co.rw).
Robert Mathu, the Executive Director of CMAC, is reported as saying that the Nation Media Group (www.nationmedia.com) has made a formal approach and mentioned it in their annual report, and the CMAC also expects interest from Equity Bank, Kenokobil and TPS Serena. The companies are already doing business in Rwanda and elsewhere in Eastern Africa.
He is reported as saying: “This means a lot for the Rwandan market as it gets more products and increases the capital markets standards of trading as well as the infrastructure to make it easy for investors to invest.”
The companies also plan to cross list on other regional markets as the East African markets move to much closer integration. Mr Mathu said that cross listing is not about raising new capital and the companies will offer 100% of their shares to Rwandan investors at the trading prices on the Nairobi Stock Exchange (www.nse.co.ke).
The first cross-listing is Kenya Commercial Bank. The big step for this year would be teh first local Initial Public Offering for brewery BRALIRWA, covered on this blog in February.
May 13th, 2010 by Tom Minney
Rwanda Investment Group S.A. (www.rig.co.rw) has temporarily suspended plans to issue a bond with a value of RWF 23.1 billion (US$40 million) to RWF 28.9 bln ($50 mln), in order to to finance a new cement factory. The group says costs may be high, due to low liquidity and high interest rates, according to a report in the local New Times (www.newtimes.co.rw) newspaper.
RIG was set up in 2006 by 41 shareholders, comprising of 6 institutional investors, 4 mid-sized private companies, and 31 individuals, mainly Rwandese entrepreneurs. They contributed US$ 25.1 mln as start-up capital to capitalise the group.
The bond had been intended to finance the construction of the new cement factory for Cimerwa, in which RIG has a controlling stake. Earlier RIG had announced that it had signed an agreement with a Chinese manufacturer, Pengfei, to upgrade the fuel-fired plant into one that burns peat and to increase production from 100,000 metric tons to 600,000 metric tons. RIG Director General Fiacré Birasa was reported in the newspaper as saying the group will contribute 30% of the funding to build a $70m cement plant in Cyangugu. The rest is to be raised from other equity investors and other channels.
M. Birasa was reported as saying that RIG has put the plans on hold as they wait for better market conditions: “The market has high interest rates and as investors we should closely watch the trend, see the growth possibilities of having slightly low rates.” He also reportedly said the the $50m bond could be too much for local market capacity and that RIG was considering partnerships with regional and international stakeholders. “We are still holding because the market is not responding. RIG’s equity is $25m which is bigger than local banks’ liquidity.”
The Central Bank recently lowered its key repo rate (at which it lends to commercial banks) by 0.5 percentage points from 7.5% to 7% to boost liquidity.
Rwanda is set to hold presidential elections in August.
April 5th, 2010 by Tom Minney
The sale of 56 enterprises has made at least Rwf 75 billion (US$131 million) for the Government of Rwanda. According to a report in the New Times newspaper (www.newtimes.co.rw) Minister for Finance and Economic Planning, John Rwangombwa, told members of the Senate in mid-March that initially the plan was to sell 94 of its companies.
He is reported as saying: “10 of them were later scrapped off the list, seven liquidated and 56 sold off. Right now, 19 institutions are up for sale.”
He said the proceeds of the sales are being used in development projects, including as part of the national budget. The sale of Terracom, currently renamed Rwandatel (www.rwandatel.rw) made possible investment in fibre optics.
Minister Rwangombwa said that the Government had removed some companies from the sale list because it had realised that some were “so bankrupt” that no-one would buy them and so they were liquidated, and Government repossessed others because they posed environmental hazards.
He added that Government had set up a department in the Rwanda Development Board to monitor and evaluate the performance of privatised companies, compared to previously when it only focused on selling, without follow up. He said Government had taken back some companies which were allegedly mismanaged: “You can tell from the companies we have repossessed and resold to other investors. They are doing so well, a good example being Rwandatel.”
February 2nd, 2010 by Tom Minney
The Rwandan capital markets are set for growth in 2010, including plans for a first local initial public offer (IPO) and developing the Rwandan stock exchange. In an interview with East Africa Business Week (www.busiweek.com), the Executive Director of the Rwanda Capital Market Advisory Council (www.cmac.org.rw) Mr. Robert Mathu outlined what to expect.
The first public offering of shares could come “very soon”, he said: “We are working on BRALIRWA and it will come very soon because it is a big company and it will meet all requirements. However, with small companies, I am looking at two years.” Brasseries et Limonaderies du Rwanda (www.bralirwa.com) is the only brewer and estimated to have 95% market share, as well as the Coca Cola franchise. It is owned 70% by international Heineken Group and 30% by the Rwandan Government. According to previous reports, the Government wants to sell 25% to the public and 5% to Heineken, but was examining applications to be the transaction adviser and sponsoring broker.
Other future transactions could include Government selling shares in cellphone company MTN Rwanda (www.mtn.co.rw) and insurance company Sonarwa (www.sonarwa.co.rw), which is estimated by Government to have 75% of all insurance premiums.
The Rwandan Government has also said that it wants to sell off its shares in other profitable firms but Mr Mathu says these companies are not in a hurry to go public: “Many of them may not have all the requirements because they have not bothered. They have had no reason in the past to try to meet the requirements. For example, one of the basic requirements is that a company must provide audited financial statements. In Rwanda, companies used to prepare accounts only to convince the taxman that they are fine. However, this is not enough for us; we have to see what accounting system they are using, the quality of accountancy and their corporate social responsibility.
Rwanda is framing the capital market through 3 pieces of legislation: 1) The law establishing the future Capital Market Authority; 2) A law regulating capital markets; and 3) A law regulating the Collective Investment Schemes (CIS). The market is waiting for a law to split the Rwanda Stock Exchange from CMAC, which established the Rwandan Over-The-Counter market 2 years ago and will continue to be involved, but would also seek to recruit energetic people to develop and run the future RSE.
Mr Mathu says that collective investment schemes (normally pension funds, insurance funds and collective savings plans such as mutual funds and unit trusts) as critical to market development: “CIS contribute a very significant proportion in the development and deepening of the capital market because without a collective investment scheme every investor would invest directly in the market. We needed the law to make sure that investment managers handling the money has the right qualification and that they have to disclose their investment strategies and policies to the public.”
He adds that Rwanda has benefited from membership of the East Africa Securities Regulatory Association (EASRA) and East Africa Stock Exchanges Association (EASEA). It is part of plans to develop an integrated East African capital market and also part of an agreement with the International Finance Corporation to develop this. Mr Mathu said the dual listing of Kenya Commercial Bank shares is a learning opportunity: “KCB cross listing has helped us to assess our system in terms of being able to serve investors by accessing and buying shares. Therefore, it has given us a lesson, we are working on it, and very soon, you will see us conducting our equities business more effectively.” Eventually Rwanda will introduce electronic trading in securities, which is the route for integration with the regional securities market.
January 25th, 2010 by Tom Minney
A new fund is making good progress in raising up to US$55 million to be invested in business start-ups and small and medium enterprises in Kenya, Rwanda, Uganda, and Tanzania. The Fanisi Venture Capital Fund was set up with help from Norwegian Investment Fund for Developing Countries (Norfund) and incorporated in Luxembourg. Norfund is also an investor and a shareholder in the management company, Fanisi Capital Ltd.,,which is majority owned by Nairobi-based Amani Capital Ltd.
Fanisi has raised $40 mln in commitments and expects to reach its goal in the next 12 months. On 22 January, the Internatonal Finance Corporation (www.ifc.org), part of the World Bank group, announced it will invest $7.5 mln.
According to an IFC press release: “The fund plans to make investments between $500,000 and $3 million in a variety of sectors, ranging from manufacturing to technology, helping smaller enterprises and start-ups get the capital they need to create and expand businesses. It also will set up a business services support facility to help pipeline companies overcome technical and governance limitations, pre- and post-investment.”
It quotes Ayisi Makatiani, head of the fund’s investment team and CEO of the fund nabager: “IFC’s early and continued support to the Fanisi team has been extremely helpful, especially for a local and first-time fund management platform.”
IFC’s Gender Programme has agreed to support the business services facility, and IFC’s Rwanda Enterprise Development Programme will provide training support to the fund’s portfolio companies.
Haydee Celaya, IFC Director for Private Equity and Investment Funds, said, “IFC is investing in this local private equity fund that focuses in growing SMEs and startups at a critical time, when the region needs long-term financial and advisory support. The investment also will help build local fund management capacity.”
IFC is currently seeking a capital increase to strengthen its ability to create opportunity for the poor in developing countries—including by investing in private equity funds that target small enterprises in developing markets. Smaller enterprises are responsible for much of the job creation in the East African region.