Archive for the 'Stockbrokers' Category
November 16th, 2011 by Tom Minney
Securities Africa (www.securitiesafrica.com) held its annual Charity Trading Day on 9 November. The broker-dealer teamed up with Child Welfare SA and 100% of all revenue and commissions earned on the day were donated to the charity. Mike Barnes, Managing Director and Head of Sales & Trading, said: “Despite the incredibly tough current trading environment, the day was a success as many clients supported this wonderful cause. Securities Africa and Child Welfare SA would like to thank all those who supported the initiative.” Child Welfare SA (www.childwelfaresa.org.za) is an umbrella body that represents more than 263 member organizations and outreach projects in communities throughout South Africa. Together with its member organizations, forms the largest non-profit, non-governmental organization in the country in the fields of child protection and child care and family development.
October 8th, 2011 by Tom Minney
Another step forward for Africa-based investor relations (IR) specialist Rob Stangroom, who helps companies build excellent corporate IR websites and get their results out widely and quickly to investors. He gives African companies the chance to get up to speed with best global practice in making up-to-date transparent information available and accessible to investors, analysts, fund managers and the public.
Last week he announced that Zimbabwe-based stockbroker Lynton Edwards Securities (www.lynton-edwards.com) is using data direct from corporate IR websites to service clients’ information needs about Zimbabwe-listed companies. LES uses their own website to link corporate investor relations website data, news and corporate actions directly from the listed company websites.
According to Rob in a press announcement: “This model avoids the pitfalls of having to re-process investment data for brokers, who in Zimbabwe, have traditionally struggled with ensuring that the Internet is used to efficiently disseminate data to investors. A review of a few Zimbabwe-based broker websites shows out-of-date and incomplete information and the new LES website is a win-win situation for brokers and the listed companies covered.”
We know the problem of out-of-date and irrelevant African websites only too well. When will some African companies and securities markets realize that the Internet is their window the world, their highway to give information about what they are doing to investors?
Zimbabwean companies are facing pressure to increase shareholding by “indigenous” Zimbabweans, so Rob believes a good retail shareholder strategy “should be on the agenda for every listed company. Firstly, it makes commercial sense, it makes sense from a governance perspective and lastly, it’s a means of mitigating political risk.” He adds that it also benefits the stockbrokers, who give their clients what they need.
Rob manages www.africanfinancials.com, Africa’s largest free portal of online annual reports and he also blogs on www.africaniscool.com.
October 6th, 2011 by Tom Minney
Media report that Renaissance Capital (www.rencap.com), a unit of Russian investment bank Renaissance Group, is drawing closer to a takeover of one of Zimbabwe’s largest stock-broking firms, Lynton Edwards Securities (www.lynton-edwards.com - LES). This could upset small brokerage firms for whom Rencap has been a key source of business from foreign investors that dominate the Zimbabwe market.
According to the report in Zimbabwe’s Financial Gazette, RenCap has approached the Competition and Tariffs Commission (CTC) seeking regulatory approval for the acquisition of LES. It says CTC assistant director in charge of competition, Ben Chinhengo, confirmed that the commission was scrutinising a proposed transaction, describing it as a merger between the two companies: “The commission is currently examining the merger. It takes up to 90 days and we are within that scope.” The report quoted a stockbroker as saying the market rumour is that the transaction is nearing completion.
“No intention to acquire”
However, the report also notes that both LES and Rencap have declined to confirm the transaction, and Rencap is an important source of business for many local stockbrokers. It quoted LES managing director, Murray Lynton-Edwards, saying:”We were in talks 3 years ago but nothing was concluded.” Renaissance Group’s head of Zimbabwe and Zambia operations, Robert Reid, denied it: “We enjoy a very strong relationship with local brokers. We value those relationships and we are always talking to them and that is how we have set up ourselves in Zimbabwe. At the moment we have no intention to acquire any local broker or, to seek to grow our equities business organically by applying for a licence.”
RenCap is a leading independent investment bank operating in Russia, the Commonwealth of Independent States, Central and Eastern Europe, Africa, Asia and other high-opportunity emerging and frontier markets. It has spread its business across several securities traders and some smaller stockbroking firms fear it will direct all its business towards LES. It started investment banking in Africa in 2006, committing over US$5 billion in capital-raising and financial advisory transactions.
LES was formed in 2004 and has over the years grown to become one of the biggest players on the country’s capital markets, competing closely with Imara Edwards Securities and one of the few profit-making brokerage firms on the ZSE. Stockbrokers charge 1% brokerage fees on every transaction. One source quoted said the value of the transaction would be about US$1 million.
LES has reportedly been RenCap’s preferred broking firm and a takeover would mean that RenCap would minimise its cost of trading on the ZSE and create possible dominance by LES on all foreign investor deals. LES would also benefit by having a much stronger capital base for future deals.
Rencap in Zimbabwe
Official statistics show that the ZSE is largely driven by foreign investors, whose participation continues to rise steadily: 22% in January, 53% in March and peaking at 71% in May.
Renaissance Partners, RenCap’s principal investment unit, is a major shareholder in Bubye River Conservancy, Africa’s largest privately-held wildlife conservancy, encompassing 324,000 hectares in southeast Zimbabwe. It is located in the Lowveld, 60km from the South African border, straddling the Bubye River. RenCap has also invested in a 290-hectare urban development project in Zimbabwe and has board representation in CBZ Bank, the country’s largest commercial bank by both assets and lending.
The group provided financial advisory in Essar Africa Holdings Limited’s US$750m acquisition of Zimbabwe Iron and Steel Company, now NewZim Steel.
On indigenization
Rencap’s Reid said: “We are hosting on a weekly basis, the biggest corporates from Russia, India, China and other parts of Africa. Clearly, one of the key questions they ask is what is going on with indigenisation. Those that are interested in investing here understand that there is a need for some form of local empowerment, but the challenge has always been in the implementation of these policies. It is not unique to Zimbabwe; South Africa has been trying to formulate and implement BEE (black economic empowerment) policies since the 1990s.”
August 17th, 2011 by Tom Minney
Leading emerging markets investment bank Renaissance Capital (www.rencap.com) has appointed Yvonne Ike as its Chief Executive Officer, West Africa. She will be based in Lagos.
Clifford Sacks, CEO of Renaissance Capital Africa, says in a press release: “Yvonne is an internationally regarded investment banker credited with pioneering a number of groundbreaking transactions in the West Africa region. The entire team is looking forward to working with Yvonne and benefiting from her local and global expertise.”
She has more than 18 years’ experience in financial services, including capital markets operations and fixed-income, derivatives and equities products. Over the course of her career, she has led senior teams in New York, Geneva, Hong Kong, Nigeria and South Africa.
Her degree is a Bachelor of Science in Economics. She started her career as an auditor with Ernst and Young International and has been an registered representative with the UK’s Financial Services Authority since 1994. Prior to her appointment at Renaissance Capital, Ms Ike was a managing director at JP Morgan, where she spent 15 years until 2009. More recently, she has worked as a partner at Africapital Management Limited, an advisory firm based in Lagos.
She succeeds Rotimi Oyekanmi, who has been appointed Chairman Emeritus, Renaissance Group, West Africa. Oyekanmi joined Renaissance in 2007 and will now be responsible for the build-out of Renaissance’s consumer finance business and help with Renaissance Partners’ land developments in West Africa.
Ms Ike commented: “Renaissance Capital is best placed to provide a broad range of financial solutions to help unlock the massive potential in Africa. I am excited about the firm´s unparalleled vision for Africa, the calibre of the people I will be working with and Renaissance’s execution capabilities. In addition to offering unrivalled financial, investment and management expertise in the West Africa region, we are uniquely positioned for cross-border business between Africa and other regions, particularly in emerging markets.”
Renaissance Capital, part of Renaissance Group, offers access to the emerging markets of Russia, the CIS, Eastern Europe, Asia and Africa through centres such as London, New York and Hong Kong. Its core businesses are: Mergers & Acquisitions; equity and debt capital markets; securities sales and trading; research; and derivatives. It is building practices across emerging markets in metals & mining, oil & gas and agriculture.
March 17th, 2011 by Tom Minney
West Africa’s regional stock market the Bourse Regionale des Valeurs Mobilieres (www.brvm.org) has started trading from a new base in Bamako, Mali, after leaving Cote d’Ivoire because of the political crisis. Trading restarted in the new office on 1 March, reports Bloomberg news agency, but volumes are much lower.
The bourse suspended operations on 11 February, after security forces loyal to incumbent Cote d’Ivoire president Laurent Gbagbo seized its main offices in Abidjan to prevent it relocating. Once senior personnel were safely out, the BRVM managed to move enough of the settlement and clearing operations to start operating in the new offices. At least 10 commercial banks in Cote d’Ivoire closed and Gbagbo’s forces “nationalized” them.
Bloomberg says that it is only operating for foreign investors since most of the stockbrokers were based in Cote d’Ivoire and their offices were part of the closed banks. However stockbroker Securities Africa says that only locals can trade. Clearing and settlement would also require banks, although the BRVM has an associated regional central depository Dépositaire Central/Banque de Règlement S.A.
The political crisis in Cote d’Ivoire is getting closer to civil war. International bodies including regional grouping ECOWAS and the African Union says that opposition leader Alassane Ouattara, won a 28 November presidential election and is the legal president of the country, but Gbagbo refuses to accept the verdict. The United Nations says that almost 400 people have been killed and tens of thousands have fled. The economy has virtually stopped, with all financial systems, and Cote d’Ivoire’s €2.3 billion Eurobond went into default on 30 January.
The BRVM lists some 39 securities and acts as the regional exchange for 8 countries as an African innovation when it opened in 1998. Bloomberg reports BRVM head Jean-Paul Gillet saying that the value of trading on 15 March was CFA 86 million (US$182,300), down from a daily average of CFA 200 mn to CFA 500 mn in 2010: “We managed to restart the operations of the bourse after we reconstructed the system and the environment. The volume of transactions has been a bit affected, but the prices haven’t dropped as there has been no haste in selling.
“Given the situation in the country, Ivorian companies face difficulties in taking part in trading, so we mostly have international clients at the moment. Companies can’t work from Abidjan because members of their staff are missing or their offices are closed.”
Stockbroker Securities Africa lists the market capital of the BRVM at CFA 3.5 trillion CFA francs. Sonatel (SNTS), Sonatel, based in Senegal and including France Telecom as a shareholder, is the biggest listed company with CFA 1.65 trn in market capitalization. Other listings include 8 banks, including SGBCI (Societe Generale SA) and Ecobank Transnational Inc. Ivorian companies make up 33 of the 39 listings, according to BRVM website, and the BRVM Composite Index peaked at 174.89 on 11 Jan, but has since fallen 7.5%, in line with many emerging markets indices.
February 14th, 2011 by Tom Minney
Africa’s newest stock exchange is the Rwanda Stock Exchange (RSE), launched on 31 Jan to start trading the shares of brewer Brasseries et Limonaderies du Rwanda BRALIRWA (www.bralirwa.com). The exchange replaces the Rwanda-Over-The-Counter (OTC) market which has operated since 31 Jan 2008.
Prime Minister Bernard Makuza launched the RSE and said it is a key development milestone, according to news reports: “Building a strong financial system is a key element of Vision 2020; the Government will continue to facilitate the development of the capital market.” Finance Minister John Rwangombwa said Government had sustained a stable macroeconomic environment over the years and laid the appropriate environment to attract both domestic and international investments.
The RSE was formed as a dormant company after a March 2007 decree that established the Capital Markets Advisory Council (www.cmac.org.rw) to set up and regulate the transitional process towards a full stock exchange. CMAC had run the ROTC and would now be transformed into a Capital Markets Authority to act as regulator. The legal framework aims to comply with standards of the International Organization of Securities Commissions (IOSCO).
BRALIRWA IPO
Bloomberg agency reported that BRALIRWA shares surged 62% when trading began on the RSE on 31 Jan. It quoted Robert Mathu, Executive Director of CMAC, saying the stock first traded at 220 Rwandan francs ($1.67).
The Rwandan Government aimed to raise RwFr 22.1 billion (US$37.3 million) from selling its 30% stake in BRALIRWA. Of this 128.6 mn shares, or 25% of the company, were sold in the public offer at RwFr 136 francs (22.9 US cents) per share. The Government said this was a discount to the valuation of RwFr 170 each share, in order to encourage buyers.
Government was to sell the remaining 5% of its shareholding to Heineken Group, which earlier bought 70% of the brewer from the Government. BRALIRWA sells beers such as Amstel, Guinness, Mutzig and local brand Primus and has an estimated 95% market share and also bottles Coca Cola products. Net annual revenues are reported at around $93 mn.
The offer reportedly attracted $80 mn in bids. MBEA Brokerage Services Rwanda was lead transaction advisor. The IPO campaign included investor education, TV and radio ads and Rwanda’s first research reports.
Co-transaction advisor Renaissance Capital sold 60% of the international tranche offering to international and local investors across several continents. There were share orders from Africa, Europe and the United States and the international portion was oversubscribed more than 5 times.
The shares ended the week on 11 Feb at RwFR 189, according to the market report from CMAC.
Future share offers
Bloomberg reports that the Government is discussing the sale this year of its 10% stake in MTN Rwanda, 55% owned by South Africa’s MTN Group Ltd. Minister Rwangombwa said another shareholder with a 35% stake will probably also offer its shares in public offer.
State-owned Banque de Kigali, Rwanda’s biggest lender by assets, will sell shares in May 2011 and cement-manufacturer Ciments du Rwanda Ltd., Rwanda Commercial Bank (BCR) and insurance company SONARWA are among other companies partly owned by the State who may sell stock through the RSE.
Contract to Kenya’s central depository
Rwanda contracted Kenya’s Central Depository and Settlement Corporation (www.cdsckenya.com) for a year. The company said it will train staff of the central Bank National Du Rwanda (BNR). The bank aims to procure and install a system to run a central depository for the equity market using its own staff by the end of the contract. CDSC has handled the BRALIRWA IPO and many of the biggest share offerings in East Africa, including Safaricom.
Kenyan depositories and share registrars are competing to offer their services more widely in the region.
Market structure
CMAC’s Mr Mathu told East African Business Week that the law establishing Capital Markets and the law regulating the market were to be published before end of January.
Previously the Government owned majority shares in the dormant RSE, but now it has reportedly reduced this to “at least 20%”. The private sector, including stockbrokers, holds the majority. Mr Mathu said: “We would like to see a stock exchange that is going to be pro-business, active and capable of providing a very efficient service to the investors both domestic and international.” Stockbrokers have welcomed their inclusion in the ownership of the stock exchange saying it will hold them responsible for protecting the bourse.
According to statistics from CMAC, bonds worth RwFr 26 bn have been issued and listed for trading on the ROTC, including 7 treasury bonds (RwFr 25 bn) and one Commercial Bank of Rwanda (BCR) corporate bond of RwFr 1bn. Bonds traded on the secondary market have so far generated a turnover of RwFr 654.4 mn. Two Kenyan companies, Kenya Commercial Bank (KCB) and Nation Media Group (NMG), are cross-listed.
February 14th, 2011 by Tom Minney
The Egyptian Exchange (www.egyptse.com) has decided to postpone its reopening until Wednesday 16 February. The stock exchange, based in Cairo, closed on 27 Jan after the main EGX 30 Index fell 16% in a week, and was due to open again yesterday (Sunday 13 Feb). The decision to delay the opening comes on the back of talks with regulators, stockbrokers and the Misr for Central Clearing, Depository and Registry (MCDR, www.mcsd.com.eg).
When the exchange reopens steps are expected to be in place to stop precipitous falls and price fluctuations. Many foreigners had sought to take out money and it is not yet clear how sentiment will shape up following the resignation of former President Hosni Mubarak on 11 Feb and the army take over pending democratic elections scheduled for six months time. The EGX says it is working on technical requirements needed to start trading as well as procedures to be used as soon as the trading begins. Telecommunications and Internet services may also have been disrupted.
The Wall Street Journal reported yesterday (13 Feb) that late yesterday the Central Bank of Egypt (www.cbe.org.eg) said that banks in Egypt will close on Monday and Tuesday due to workers’ strikes and the birth of Prophet Mohammad. Its emailed statement reads: “Amidst the strikes of worker in some authorities, including public banks … the central bank has decided to close banks on Monday Feb. 14 and Tuesday Feb. 15 on the occasion” of Prophet Mohammad’s birth.
Meanwhile schools and universities were reported to be reopening over the past weekend and many industries had said they were back and working close to normal by 7 Feb.
January 14th, 2011 by Tom Minney
The Nigerian Stock Exchange (www.nigerianstockexchange.com) will suspend stock brokers that do not meet the capital adequacy requirements. The NSE interim administrator Emmanuel Ikazoboh said this during a press conference on 10 January in Lagos to review of market activities in 2010 and preview 2011.
Dealing members and stockbroking firms require a capital base of N1.5 billion (US$9.8 million), while issuing houses are required to have N5 bn. Recapitalisation was put on hold by the previous NSE management in 2009 after capital markets crashed in the first quarter of 2008. When the issue was raised a few years ago, complaining stockbrokers claimed the London Stock Exchange requires £1 mn ($1.6 mn) and the US requires only US$1 mn. At that time there were 246 registered Nigerian stockbrokers, dealing in only 213 equities listed on the NSE and since then the number of brokers has risen to 254. The recapitalization requirement may lead to consolidation.
Ikazoboh said stockbrokers are heavily exposed to margin loans and in some case have made losses and are in negative equity. He said the NSE wants to protect investors whose accounts were being used by some dealing member firms to continue to operate because they do not have enough money. Some stockbrokers have asked the NSE to save them with recapitalization, but he said this would not be possible.
The NSE is working with South Africa’s JSE Ltd (www.jse.co.za) to fulfil requirements to ratify its membership of the World Federation of Exchanges (www.world-exchanges.org). This is part of Nigeria’s plans to become the world’s 20th most developed economy by the year 2020. Challenges include improving the governance structure of the NSE and the wider market.
November 30th, 2010 by Tom Minney
Many financial institutions are gearing up their staffing as they start to roll out their African operations. These include banks, stockbrokers and others. African Capital Markets News interviewed Frank Behrendt, of recruiter Clement May (http://www.clementmay.com), on the trends and the opportunities.
ACMN: Do you think Africa is a growing opportunity?
FB: I had spent 3 years in Singapore recruiting bankers for Asia. Upon my return to the UK I realised that Africa is on the move, and decided to get involved. That was March 2010. At Clement May we have built a good network of bankers – on the continent and in the hubs of London, New York, Johannesburg and Hong Kong (and Moscow) – who are focussing on Africa.
There is a great need for real talent in the African banking sector, and although there are some recruitment firms that focus on Africa, it is a very underdeveloped market in terms of quality recruitment firms (as always, the recruitment sector follows the banking sector in that regard). It has therefore been relatively straightforward to establish ourselves as an African specialist.
ACMN: What are the changing trends in African investing?
FB: Up until last year, the active players in the secondary markets of Sub-Saharan Africa were mainly boutiques. That has changed. More and more international “bulge bracket” banks are eyeing up Africa and including it in their growth strategies. Already counting some of these banks as our clients in Europe and Asia, this puts us in a strong position to address their growth plans and further extend our reach into Africa.
ACMN: Is a lot of new market infrastructure being built? Are new fields of activity opening up?
FB: Stock exchanges on the African continent are improving their services through collaboration with the big international exchanges and improved technology. Local banks are commanding a bigger portion of the volume going through the system and it seems this development is on the rise. As international bulge bracket interest in Africa is on the rise, the share in market volume that these banks can win is dwindling due to the rise of local players.
Global banks are taking a very active interest across disciplines. While the primary markets have gained in strength over the last number of years, the real evidence of increased activity is in the secondary markets. Liquidity has improved immensely over the last year or so and trading in African equities has also increased significantly, both on the ground in Sub-Saharan Africa and around the world.
ACMN: What do you see of Hedge Funds/institutional investors?
FB: More and more Hedge Funds focus on SSA. More international Asset Managers increase the portion of funds invested in SSA. More local fund houses are opening up. The appetite for SSA equities is growing exponentially as a result.
ACMN: Is there a marked increase in the number of jobs available?
FB: Definitely, yes! As the international bulge bracket banks are expanding their businesses, jobs are available on the ground and in the hubs (i.e. Johannesburg, London, Hong Kong and New York). This in turn is spurring greater hiring activity by local firms as well, and so on. Jobs in secondary markets are growing more than primary markets headcounts.
ACMN: What sort of jobs are available?
FB: Private equity jobs are and have through the last 5 years been the most abundant. M&A and corporate finance jobs have been pretty constant over the last few years, but a new surge is ongoing. In secondary markets, research teams are being built both on the ground across SSA and also in the hubs (as above). Sales and execution teams are in the pipeline. I anticipate there being a surge in Sales, Sales Trading and Trading hires in mid-2011. Most of these jobs will be based in London, Johannesburg and New York servicing the international institutional client base. But there are also many headcount needed for positions on the ground in SSA. Of these, most are in Nigeria, then Kenya.
ACMN: Is it hard to find the right people for the jobs?
FB: Not too hard. There is a huge community of very well-educated Africans around the world. Whereas, only a couple of years ago, very few of them would consider a return to their home country, these days, more and more are actively seeking to return, in order to contribute to society with their education and experience. This is obviously connected to the increased activity in the banking sector, and the remuneration packages now available.
ACMN: Are the jobs mostly being filled by Africans?
FB: The banks are mostly looking for natives of the country in which the hiring is taking place. Only for very senior positions will foreign candidates be considered. This does not stem from immigration policy only (although that can also be a consideration as visas become harder to obtain), but also from a desire to have fully culturally assimilated staff in place. Needless to say, jobs in the hubs of London, New York and others focussing on SSA are being filled by candidates from across the spectrum and regardless of nationality. I have seen quite a few bankers on Asian desks in London shift their focus to Africa.
ACMN: What skills/experience do job applicants require?
FB: Some sort of degree, preferably from an international university. MBAs are even more desirable (and a lot of professionals are taking this to heart). At least 3 years’ work experience with an international bank. As banking in Africa is still relatively vanilla and functions often overlap, specific skill sets are not as important as the desire to return home and contribute. I have seen examples of people hired for equity research, although their entire work history was in M&A etc.
October 21st, 2010 by Tom Minney
Newsagency Reuters reported (on 19 October) that financial services group Imara (http://www.imaraholdings.com) announced it had added Egypt and Morocco to its regional stock-broking footprint. The group started in southern Africa and this is its first expansion across the Sahara desert. Apparently next stop is Tunisia.
Reuters quoted Alun Thomas, chief executive of Imara Africa Securities, the group’s Botswana-registered brokerage arm, saying: “Expansion of our trading capability has primarily been driven by client demand for a wider trading capability.”
Imara is one of the key stockbrokers offering a wide trading network in Africa’s frontier markets. It offers brokerage services in 14 African markets: Botswana, Egypt, Ghana, Kenya, Malawi, Mauritius, Morocco, Namibia, Nigeria, South Africa, Uganda, Zambia, Zimbabwe and the regional West African BRVM bourse out of Ivory Coast.
Imara has also recently stepped up its research offerings. The company said there was a strong response to its banking and financial services book, covering African banks from Egypt to South Africa. Its recent offering was a review of the sugar industry in South Africa and sub-Saharan Africa and its next publication will review listed brewing companies across the African markets.
Imara Group CEO Mark Tunmer commented in a press release: “We’ve always been known for the quality of our research – a direct result of our strong on-the-ground presence across Africa. As part of our service to investors we circulate reports from Imara asset managers working on various Africa-focused equity funds.
“We decided to give more formal structure to this research effort by compiling authoritative reports on national markets and key sectors. The success of our banking book was an eye-opener. We decided to maintain momentum by creating a continuing stream of authoritative reports. We knew there was great international appetite for reliable, up-to-the-minute data on African countries. That appetite may be even stronger than we first thought.
“We plan to publish an ongoing series of investment books and reports on a wide range of national markets, key sectors and listed companies.”