Archive for the 'Tunisia' Category

Tunis Stock Exchange IPO is largest listing

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The listing of Société d’Articles Hygiéniques (SAH), on the Tunis Stock Exchange yesterday (9 Jan) after a private placement and an oversubscribed initial public offer (IPO) is the largest listing on the Tunis bourse (Bourse de Tunis), with the company valued at TND 270.5 million ($163.5m). It is a successful exit for leading African private equity firm Emerging Capital Partners which scored a cash multiple of 2.4x on exiting the investment.

The private placement for 90% of the shares attracted 85 local and international investors, signalling a return by international investors to the Tunisian capital market. The public offer in the Tunisian IPO was over-subscribed 22.1 times, according to a press release. Adel Grar, Chairman of the Tunisian Brokerage House Association, said: “The IPO of SAH is a milestone.. it demonstrates the ability for a local or foreign investor to exit through the Tunis Stock Exchange.”

SAH (www.lilasbebe.com.tn) is Tunisia’s leading manufacturer of feminine and baby hygiene products and operates under the “Lilas” brand. ECP has invested since 2008 and, according to the announcement, “has supported SAH as it increased its customer base to 17 countries across North and sub-Saharan Africa, created subsidiaries in Algeria and Libya, and developed a paper mill factory in Tunisia.” Products include baby diapers, feminine-care pads, disposable diapers, bathroom and facial tissues, kitchen towels, hand towels and tissue wipes.

“Over the last 2 years, SAH has grown at 17% per year, despite a difficult economic climate – testament to its focus on product innovation, diversification and locally produced, high quality offerings. SAH’s sales are expected to exceed TND 200m ($120m) in 2013 and the company currently employs over 2,000 people.” According to a 2011 profile in The Africa Report, also on the ECP website , SAH was founded in 1995 by wife and husband team Jalila Mezni and Mounir el Jaiez.

The sale was of 14,176,590 shares, representing 48.99% of the capital at listing and the fixed offer price of TND 9.35 per share.

Nayel Georges Vidal, Director in the Tunis office at ECP, said in the press release: “Under the guidance of Ms Jalila Mezni, the company has worked hard to more than double its performance over the last 5 years. With ECP’s support, SAH has expanded its production capacity, brought new products to market, expanded beyond Tunisia, and built a strong customer brand – all made possible by its employees’ dedication to improving its systems, governance and product range. We firmly believe that SAH will continue to create further value for its shareholders – which include many foreign investors showing renewed interest in the Tunisian stock market.”

Private equity firm ECP was founded in 2000 and has raised more than US$2bn for growth capital investing in Africa. It was one of the first firms dedicated to Africa and has investments in more than 50 African companies through 7 funds. It boasts “more people on the ground than any other firm” with more than 70% of its investment professionals, who hail from 12 African countries, in 7 local offices.

Its private equity investments include financial services, telecommunications, retail and consumer, natural resources, agriculture and infrastructure in over 40 African countries. In 2013 Africa AM magazine was awarded ECP as “PE Fund of the Year”. Private Equity Africa awarded it for mid-cap “PE Deal of the Year” as reported here, for investment in casual dining chain, Nairobi Java House.

African Development Bank starts move to Cote d’Ivoire in 2013

Africa’s top lending institution the African Development Bank (AfDB) has announced that it will start moving its headquarters and 1,500 employees from Tunisia to Cote d’Ivoire (Ivory Coast), with first staff to move this year. It had abandoned Abidjan in 2003 during the series of civil wars.
This is not news to those paying attention at the AfDB’s annual meetings summit in beautiful Marrakech, Morocco, from 27-31 May. The Boards of Governors of the AfDB and of the African Development Fund (ADF) announced the return of the AfDB to its headquarters in Abidjan.
However, for those of us who were not, the formal press release came out yesterday, and was covered in the Financial Times blog beyondbrics. The bank held about $32.25bn in assets issued loans and grants worth $6.46bn in 2012. Its funding goes to governments and businesses on the continent.
Donald Kaberuka, the AfDB President, said in the press release: “The first group of staff will leave before the end of 2013. The AfDB will celebrate its 50th anniversary in November 2014 in Abidjan”. There had been increasing bank meetings in Abidjan this year and the news was widely anticipated.
According to Borzou Daragahi writing in the FT blog: “The African Development Bank’s move, to begin by the end of the year, delivers a blow to the economy of Tunisia, which is recovering from a 2011 uprising and the ensuing political instability. But it will bolster confidence in Ivory Coast, a sub-Saharan African nation emerging from years of war and political unrest. It marks a milestone in what many analysts see as the resurgence of sub-Saharan Africa in general and the Ivorian commercial centre of Abidjan in particular.”
It quotes an unnamed “development official” in Tunis as saying: “If the bank can survive in Abidjan, it sends a very strong signal that Abidjan is back as the commercial heart and economic centre of west Africa.”
According to the blog the announcement stunned many staff, of which nearly 70% were hired since the move to Tunisia. However, it adds that some bank staff had complained of being treated poorly by locals in Tunis, an Arab country where darker skinned Africans are sometimes regarded as illegal migrants.
According to the press release, the Board of Directors of the AfDB Group had instructed its management during the annual meetings held in Arusha, Tanzania, in 2012 to prepare a “roadmap” (will they drive there? Surely planes are better) for a well-planned and organized return. This should “guarantee the institution’s stability, business continuity, and the well-being of staff and their families”. The AfDB’s Advisory Committee of Governors, meeting in Tokyo, Japan, in October 2012, consented to the roadmap, recommended its approval by the Board of Governors, thus opening the way for the return to Abidjan
Wikipedia describes Abidjan as the largest city in Cote d’Ivoire in 2011 and “third-largest French-speaking city in the world, after Paris and Kinshasa, but before Montreal”. In 2006, national authorities said there were 5,068,858 residents in the metropolitan area and 3,796,677 residents in the municipality, making it second only to Lagos in the region. Although the political capital is Yamoussoukro, Abidjan is the economic capital and also a cultural hub in West Africa, with a lot of industry. It in Ébrié Lagoon, on several converging peninsulas and islands, connected by bridges.

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.

Tunisia Stock Exchange positive on economic prospects

Share prices on the Tunisian Stock Exchange (Bourse de Tunis – www.bvmt.com.tn) have been moving ahead all November, starting with a positive reaction to the meeting between Rachid Ghannouchi, leader of the Islamist Ennahda party and stock market executives only days after the election and moving forward as the politics progressed well. Even before the election results were finalized from the 23 October election that swept Ennahda to power, Ghannouchi was meeting the bourse on 26 Oct to send the message that the government would be “business friendly”. It is the first Islamist party to win power since Hamas’ 2006 victory in Palestine.
According to Bloomberg, the TUNINDEX dived from a close of 4636.67 on 20 Oct to 4538.41 on 24 Oct, but bounced back very fast and reached 4718.16 by 8 Nov. The index has been moving sideways since 4730.69 close on 18 Nov, back to levels last seen in early February. The low was 4033.43 on 25 Feb. The recent high was 5695.82 on 30 Sept 2010.
According to a report on Reuters, a party official said Ghannouchi met the market executives “to send the message that the stock exchange is very important and that he is in favour of more listings to accelerate economic growth and to diversify the economy.” Reuters adds that the Tunis stock market index fell sharply when trading resumed after the Sunday election, but rallied on news of the meeting and prices were up 1.13% by mid-morning.
Reuters reports that Ghannouchi spent 22 years in exile in Britain and has stressed his party will not enforce any code of morality on Tunisian society, or the millions of Western tourists who holiday on its Mediterranean beaches: “He models his approach on the moderate Islamism of Turkish Prime Minister Tayyip Erdogan”, according to writers Tarek Amara and Christian Lowe.
Tunisia’s Constituent Assembly held its historic first session on 22 Nov and Ghannouchi signed a coalition agreement with the heads of two junior coalition partners, Moncef Marzouki of Congress for the Republic and Mustafa Ben Jaafar of Ettakol. In the election, which saw a turnout of over 90% of registered voters, Ennahda took 89 seats of the 217-member assembly, Congress won 29 and Ettakol 21. Under the new agreement, Ennahda secretary-general Hamadi Jbeli will hold the most powerful post of prime minister, while Marzouki will be in the largely ceremonial role of Tunisian president. Ben Jaafar will be speaker of the assembly, which has the task of drafting a new constitution. They pledged to hold elections within a year.
There is a challenge to get the economy moving. Reuters cites Central Bank of Tunisia (www.bct.gov.tn) governor Mustafa Kamel Nabli saying on 24 Nov that the economy grew 1.5% in the third quarter but growth in 2011 will be close to zero. Unemployment stood at 18.3%. However, the draft budget presented earlier in November foresees 4.5% growth in 2012, after 3.7% growth in 2010. Nabli told Reuters “”We expect GDP growth of 4 percent next year but the European crisis will dampen these figures.” The World Bank, European Union, the African Development Bank and the French development agency has been giving an emergency $1.4 billion funding package. Nabli said another $5 bn will be needed next year to support the budget.

Bigger role for African Development Bank, considering move back to Cote d’Ivoire

Moving back to Cote d’Ivoire may be on the agenda for the African Development Bank (www.afdb.org), according to an interesting story on the website www.devex.com (you may have to sign in to read it?). The bank fled from Abidjan in a rush in 2003, as rebels advanced on Abidjan in the brutal and all-encompassing civil war. Now the new Cote d’Ivoire President Alessane Ouattara wants it back. and it was on the agenda at the bank’s AGM in June in Lisbon, although it may take up to 3 years before this happens.
The article also notes that the bank is increasingly important and playing a bigger role as an African institution in channeling funding to African projects.
In January 2011, the bank lived through Tunisia’s jasmine revolution, although one bank staff member told me that it did not much affect the area around their building, as street action was mostly concentrated in other parts of town. They did miss a few days work, before bosses had them back in action.
According to the article, AfDB president Donald Kaberuka said uncertainty over the permanent location of the bank had a “significant effect” on morale, frustrated “horizon planning” and was difficult for the human resources department. Some bank staff may be happy to leave Tunis, others not.
Ouattara, who got into power in April 2010 after being blocked by his predecessor, Laurent Gbagbo who disputed the election result, is moving fast to re-establish Abidjan as the financial hub for West Africa and has been lobbying hard for the bank. It is not sure what the criteria for the move are, but it is possible they will need to see at least another successful multi-party election and a period of stable government.
The AfDB attended Ouattara’s inauguration and was a leader in an accelerated package of loans to help the new administration and initial renovation has started for the bank’s headquarters in Plateau district, according to the article.

New confidence, bigger role going forward
Then bank also led multilateral lenders to sign of $1 billion in loans to Tunisia’s new administration. Kaberuka, a former finance minister from Rwanda, reportedly says that after the political shocks, swift intervention can limit collateral damage. The African Development Bank is credited for its role after the 2008 global financial crisis in encouraging African states to apply fiscal restraint but to ease potential economic disruption through investment in infrastructure, and many countries are praised for successful countercyclical interventions.
The article also argues that the bank is increasingly the biggest and best bet for Western donors who are its principal shareholders. Experienced author Mark Ashurst writes: “As the bank’s loan book grows bigger and more diverse, donors, including the United States, Germany and the United Kingdom, are keen to devolve the task of managing their African exposure to an African institution.” He adds that the bank has done a skilful job of developing a terminology that avoids words such as “conditionalities” and uses “policy-based lending” and success in developing the skilful balancing acts required to work with nations. It also reflects aspirations for greater African voices in international development policy and it is likely that more international financial institutions could devolve administrative work to the AfDB.
In 2010 the African Development Bank passed the World Bank and became the leading source of multilateral financing for new African infrastructure. The same year, the bank’s sixth general capital increase included pledges to treble the bank’s reserves to $100 trillion by 2021, signalling new confidence. The bank’s loan book is stsill less than the sum of China’s resources-for-infrastructure swaps but the AfDB is much more closely involved than other lenders in African institutions such as the African Union and the Economic Commission for Africa and has a unique standing in the regard with which it is seen in Africa.
The article goes on to argue about the bank’s changing role as growth of 5% a year or more becomes the norm in Africa for coming years. This includes work to support bond and capital markets and leveraging private capital (20%), infrastructure (40%), budget support (20%), industries, including mining and manufacturing (20%). It is well worth reading Mark’s article in full here.

Silk Invest says Egypt elections will be turning point

Mark Voss of fund manager Silk Invest (www.silkinvest.com) foresees a turning point for the Egyptian market in a recent note. He also notes growth in Tunisia, with companies back to pre-revolution levels, tourism boom in Morocco, giant growth in Ghana and telecom payments innovation in Kenya.
He says the company clearly sees value in the market, but the evolving politics has cast a cloud on investor sentimenty. “We believe this is now lifting as the country’s election commission chief announced a roadmap for parliamentary elections – and a crucial step in transitioning to civilian rule, from 21 November to 4 March 2012. This should also pave the way forward for the Presidential elections by early next year. Going forward, we suspect that this may mark a turning point in the market’s fortunes.” He adds that there is no shortage of lenders to help the country get back on its feet. He adds that core inflation was 6.9% in August from 8.7% in July and Suez Canal revenues climbed 8.5% year-on-year in August.
Also on the post-revolutionary theme, he looks at Tunisia and said it “continued its upward trend with many companies now back at their pre-Jasmine revolution price levels”. Tourism in Morocco was surging and by end of July was up nearly 10% year on year.
For the rest of Africa he pointed out that the IMF forecasts 13% GDP growth for Ghana this year and noted the Chinese gave a US$3 billion loan for further infrastructure developments. In Kenya: “interest rates were notched slightly up to help control inflation and reduce local currency volatility. Following an unexpected increase in harvested maize, food inflation in the country is expected to decline”. Telecoms innovation continues full speed in Kenya, as Airtel Kenya unveiled an online payment system enabling mobile subscribers to use handsets to make purchases online, while Safaricom and I&M Bank launched a service that allows M-pesa customers to transfer money from their accounts to a pre-paid visa card – which can be used globally.

SANAD Fund to target SMEs in North Africa and Middle East

Tiny, small and medium businesses in Egypt and Tunisia, later Algeria and Morocco, are set to benefit from a new €30 million ($43.2 mn) SANAD Fund for MSME (www.sanad.lu). This was set up in August 2011 by German development bank KfW Entwicklungsbank with funding from the German Ministry for Economic Cooperation and Development and the European Commission and will offer debt and equity financing to partner institutions in the Middle East and North Africa (MENA) region that serve micro, small and medium enterprises (MSMEs). Other target countries include Middle Eastern countries such as Lebanon and Jordan.
The fund is expected to attract further investments from public and private bodies. The partners who will help invest the money will be banks, microfinance institutions, financial service providers, leasing and factoring companies, guarantee funds or venture capital funds. The fund will also offer them technical help to build their skills and reach.
Development finance alternative asset manager Finance in Motion GmbH (www.finance-in-motion.com) and Oppenheim Asset Management Services S.à r.l. (www.oppenheim.lu) will manage the new fund which will be structured as a Luxembourg-based Specialized Investment Fund, SICAV-SIF, involving different share classes.
By facilitating access to finance in the region, SANAD – literally “support” in Arabic – aims to strengthen the MSME sector and local financial markets in the MENA region in line with the principles of responsible finance.

Tunis Stock Exchange seeks to support growth

Tunisia’s stock exchange, the Bourse des Valeurs Mobilières de Tunis (www.bvmt.com.tn), aims to play its role in faster economic growth in coming years. On 9 July, Mr. Mohamed fadhel Abdelkefi, President of the BVMT’s management committee, announced a 5-point development strategy for 2011-2013. This will include:
1. Develop the financial market culture and awareness through media and education outreach campaigns and open days
2. Deepen the capital market by making more companies eligible to list
3. Further develop the bond market including possibly a secondary mortgage market
4. Improve the IT platforms, including a new electronic trading and information platform in 2012
5. Develop BVMT staff and human resources through additional training programmes.
There are 58 companies listed for trading. According to CEO Mohamed Bichiou foreign participation makes up about 20% of the market capitalization, which was TND 13.2 billion ($9.6bn) on 30 June. At its 2011 peak on 7 January the TUNINDEX was at 5,217.41, before crashing 23% to a low of 4,033.43 on 25 February after the stock exchange closed during the revolution. It then gained, slipped back to 4,077.05 on 26 May but has since been climbing well and closed at 4,476.94 on 24 August, up 9.8% in 3 months. The construction and building materials index has been the best performing followed by industrial and basic materials companies, while banks have been the worse performing (many investors expected them to take hits on loans to people linked to the former regime of President Ben Ali), followed by insurers.
The first listing of 2011 was technology company Telnet Holding on 23 May at the new BVMT headquarters. The IPO for 2,070,000 shares at TND5.80 each had closed after attracting 3,950 applicants and being 3.2 times oversubscribed. The share started trading at 6.37 and closed on 24 Aug at 9.70. The BVMT is seeking to encourage more listings. During 2010 there were 5 listings, partly encouraged by the reintroduction of tax incentives for companies which list more than 30% of their capital before 2014 to benefit from a 5-year reduction in corporate tax rates, from 30-35% (depending on the sector) to 20%. They included Carthage Cement, one of the most active stocks this year, which raised TNB134.9mn ($98.7mn), and automobile distributor Ennakl which raised TND128.4mn ($93.7mn) as well as insurance company Assurances Salim, reinsurer Tunis Re and Modern Leasing.
Recently the World Bank, African Development Bank, European Union, and Agence Francaise de Développement said they would finance a programme of reforms covering administration, the financial sector, and social services. The World Bank has reportedly offered to lend $500mn for this. Tunisia is in a recession after 2 quarters of GDP shrinkage, including 3.3% in the first quarter. In June the World Bank said it expects GDP growth of 1.5% for 2011, and said Tunisian industrial output was down by more than 15% in the first part of 2011, while foreign tourists’ arrivals fell 45% in the first quarter of the year. The bank says “the pace of economic activity should pick up in Tunisia in 2012” although no rate was given and would be around 5% in 2013.Creating jobs is a key challenge.

Tunisian and Egyptian regulators freeze securities trading pending investigation

Tunisian financial authorities have ordered stockbrokers not to allow 123 companies to buy or sell securities. A report by Reuters says that there is a confidential list issued by regulator Conseil de Marche Financier, which is trying to investigate the extensive holdings of President Zine Al-Abidine Ben Ali’s extended family.
The list is mostly privately held Tunisian companies. It includes the parent companies of 2 listed Tunisian firms, BINA Corporation, majority shareholder of Carthage Cement as well as Princesse Holding which holds stakes in Ennakl Auto and Bank Ziytouna, as well as Dubai’s Shuaa Capital. Another holding company on the list is Tunisia’s Investec which is controlled by Marwan Ben Mabrouk, son-in-law of Ben Ali, and owns a stake in mobile operator Orange Tunisie. On 31 March the interim government seized Ben Mabrouk’s 51% stake.
A stockbroker told Reuters: “We were told not to let these companies invest or withdraw money from their trading accounts. Their accounts are frozen.”
A spokersperson for Shuaa Capital, an investment bank listed in Dubai, said: “Shuaa Capital has no past or current dealings with the former president of Tunisia.”
The interim government recently said it would freeze assets of 112 people close to the ousted president pending the completion of investigations into corruption.
Egypt is also seeking to investigate businesspeople who benefitted from links to Mubarak’s regime, and many people’s assets have been frozen there too.

Listing of Tunisie Telecom cancelled

Tunisie Telecom (www.tunisietelecom.tn) has cancelled plans for a joint initial public offering on the Paris and Tunis stock exchanges after consultations with trade unions following several changes of Government in recent weeks and the resignation of the former president, Zine al-Abidine Ben Ali.

Tunisie Telecom is the incumbent telecommunication network and service provider and offers fixed, mobile and satellite telephony services and ADSL services to residential and business subscribers through five Internet Service Providers.

Tunisia’s official TAP news agency on 10 Feb quoted a company statement: “Following discussions with trade unions, Tunisie Telecom and the union have reached agreement … to cancel all procedures for listing Tunisie Telecom on the stock exchange and to halt all the privatisation programmes of Tunisie Telecom.”

Earlier in February Secretary of State for Communication Technologies Sami Zaoui said plans for the offer were suspended pending consultations. Workers at the company had been threatening industrial action, but this was dropped after the news that the listing had been cancelled.

The Tunisian Government holds 65% of the shares, with the rest held by Dubai’s TECOM Investments and Dubai Investment Group. It had aimed to be the first Tunisian company to list on NYSE Euronext Paris and on Bourse de Tunis (www.bvmt.com.tn).

In mid-December Tunisie Telecom had filed a 555-page reference document with regulators Conseil du Marché Financier in Tunis and Autorité des Marches Financiers in France.