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The East African : Dec 22nd 2014
56 DECEMBER 20-26,2014 BUSINESS, MARKETS AND FINANCIAL ANALYSIS THE MARKET WHISPERER EQUITY MARKETS (WEEKLY CHANGE IN BENCHMARK INDEX) NSE 20 Share Index Kenya 4,910.10 -4.19% (CUMULATIVE MOVEMENT) DSE All Share Index Tanzania 2406.71 -6.10% USE All Share Index Uganda 1,921.00 0.00% RSE All Share Index Rwanda 134.13 0.83% JSE All Share Index South Africa 49368.5 3.16% NGSE All Share Index Nigeria 30250.6 0.03% Vantage Capital gives Simba Properties $10m S imba Properties of Uganda has secured $10 million funding from Vantage Capital Group’s Fund II. The transaction is intend- ed to maximise uptake of the latter’s investment monies before the end of year as it prepares a new $250 million fund while exploiting huge growth potential in the real estate sector. This funding package is a mixture of debt and equity financing features commonly referred to as mezzanine debt — a proposition that offers access to the long-term capital needed to execute big projects without eroding shareholders’ control of a business, sources said. Vantage Capital Group is a South African debt financier that also specialises in managing technology. The deal marks Vantage’s first commercial venture in Uganda and increases the number of investments under its second mezzanine fund to 12. Completion of the transaction also raised the to clinch big deals given the fierce competition among private equity funds, experts said. “Vantage’s second Fund has been under pressure to seal that deal before Christmas or else refund investors’ money,” said Patrick Mweheire, executive director at Stanbic Uganda. “Inability to utilise such cash tends to discourage investors from contributing to future investment vehicles. “Uganda’s real estate sec- tor still needs significant long-term capital to exploit the housing shortage.” The funds will be invest- A road in Kampala is recarpeted. The mezzanine debt is suitable for executing big projects. Picture: File Group’s Fund II absorption rate to more than 85 per cent, a performance outcome considered remarkable among investors and vital in attracting new cash for its $250 million third mezzanine fund. The new fund is sched- uled to conclude fundraising activities before the end of March 2015. Van- tage Group’s investor list includes the Public Investment Corporation of South Africa and the Norwegian Fund for Development (Norfund). Failure to absorb invest- ment funds adequately leads to reduced interest among targeted investors, limited resources available for investment and inability This funding package is a mixture of debt and equity financing features commonly referred to as mezzanine debt — which offers access to long-term capital ed in five strategic ventures owned by Simba Properties — Protea Hotel Kampala, Simba Towers Building, Elizabeth Royal Apartments, Hotel Naguru and Moyo Close Apartments. “Simba Group is pleased to have found a strong mezzanine financing partner who provides medium-term growth capital but does not want to take our hard earned equity,” said Patrick Bitature, Simba Group’s chairman. Eu≥obond issue won’t change Ethiopian funding THE $1 BILLION Eurobond that Ethiopia secured last week will not change the government’s strategy of financing mega projects, Minister of Finance and Economic Development Sufian Ahmed has said. “Concessional loans, such as those we have been receiving from institutions like the World Bank, the International Monetary Fund, the African Development Bank and the like will remain our primary financing source for government projects,” Mr Sufian said. Briefing reporters in his office in Addis Ababa Tuesday evening, the minister said that in the next five to 10 years, the government will continue focusing on concessional loans because of the longer grace period and lower interest rates. Ethiopia was able to attract in- stitutional investors last week following the rating of its economy as B and B+ by international companies — Fitch and Moody’s respectively, six weeks ago. Although the institutional investors have offered the country $2.6 billion’s worth of bonds, Addis took up only $1 billion with 6.625 per cent interest rate and a 10-year grace period. “These institutional investors from various countries have demonstrated their confidence in our economy, voting with their money,” the minister said. “When we compare the interest rate we are offered with other African countries that recently joined the global capital market, such as Kenya, Ghana and Nigeria, ours is lower.” The investors made the decision to buy Ethiopia’s bond for the first time after analysing the risks associated with the future trend of the overall social, economic and political climate of the country, ac- cording to the minister, adding that Ethiopia’s total debt at the moment, at 12.6 per cent of GDP, is far well below the 40 per cent ceiling recommended by the IMF. The $1 billion obtained from the Eurobond will be used to boost the export performance of the country through development of industrial zones close to ports, construction of two new sugar factories and an electric power transmission line. “We know the money is not enough for all these projects, but we also use other financing mechanisms,” said Mr Sufian. Published at Nation Centre, Kimathi Street, and Printed at Mombasa Road, Nairobi by Nation Media Group, Box 49010, GPO Nairobi, 00100. Registered at the GPO as a newspaper. Nairobi Office, Tel: 3288000, 211448, 337710, Fax 214531, 213936. Dar es Salaam Office. Tel: 2119657/8. Kampala Office, Tel: 232771, 232772. Fax 232781 Download free QR Readers from the web and scan this QR (Quick Response) code with your smart phone for pictures, videos and more stories Fou≥ banks to list on Da≥ bou≥se by mid 2015 FOUR banks have applied for listing on the Dar es Salaam Stock Exchange by mid next year. According to DSE pro- grammes and projects manager Magabe Maasa, the bourse is looking at applications by Mbinga Bank, Yetu Microfinance Bank, Mufindi Community Bank and Mwanza Community Bank. The listing will bring to nine the number of banks trading on the DSE. Data from the DSE shows that the banking sector contributed 30 per cent of the total turnover and 89 per cent of the market activity recorded over the past few weeks. DSE analyst Brenda Mas- say said in the second week of December, the market experienced a significant increase in turnover and activities. This, however, should slow down in the coming week as the money markets are expected to be less liquid as the year ends.
Dec 15th 2014
Dec 29th 2014