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The East African : December 16th 2013
60 DECEMBER 14-20,2013 BUSINESS, MARKETS AND FINANCIAL ANALYSIS THE MARKET WHISPERER EQUITY MARKETS (WEEKLY CHANGE IN BENCHMARK INDEX) NSE 20 Share Index Kenya 4,913.55 -1.84% (CUMULATIVE MOVEMENT) DSE All Share Index Tanzania 1,847.02 -1.77% USE All Share Index Uganda 1,510.92 -4.07% JSE All Share Index South Africa 43,513.43 -2.15% NGSE All Share Index 38,902.31 Nigeria - 0.09% EGX Share Index Egypt 6,604.65 4.30% The ≥ace fo≥ Rea Vipingo’s hand, nay land R ea Vipingo is hot. Very hot. Over the past two weeks, the company has been the subject of three takeover bids that must have the shareholders dizzy. The latest came from WW- WBID Investment Company, which last week put in a bid to acquire the company’s shares at Ksh55 apiece, a 96 per cent premium on last week’s closing price of Ksh27. On December 3, Centum made a bid of Ksh50, countering an earlier offer by Rea Trading of Ksh40. Analysts say the draw is the firm’s vast real estate. Rea Vipingo owns nearly 70,000 acres of land. In Dwa Kibwezi, it has 22,205 acres, 10,570 acres in Vipingo Kilifi and 36,645 acres in Tanzania. It is the largest sisal fibre producer in Africa with interests in horticulture and a spinning factory that converts sisal fibre into yarns and twines. The land near Mombasa is thought to be particularly valuable, with a portion potentially usable for property investments. The deal could also poten- tially increase interest in the other six listed agricultural companies at the bourse due A Rea Vipingo sisal farm in Kilifi County, Mombasa. Picture: File to the huge tracts of land that they own and their low current valuation. For example, Eaagads own prime land around Nairobi estimated to be worth billions of shillings, yet the firm’s valuation is less than Ksh1 billion. If the Rea Vipingo deal goes through, it will be the third acquisition of an NSE-listed company this year, following the takeover of Access Kenya by South African firm Dimension Data. Al-Futtaim Group, a Du- bai-based conglomerate, has announced that it intends to purchase regional motor dealer CMC Holdings for Ksh7.5 bil- The land near Mombasa is thought to be particularly valuable lion ($86.67 million), signalling a season of increased acquisition activity on the bourse. Rea Trading is the second largest shareholder in Rea Vipingo with a 20.57 per cent stake. It is also a beneficial owner of another 36.47 per cent held by Rea Holdings, which is to be transferred to Rea Trading after the transaction. The minimum threshold tar- geted in WWWBID’s offer, like Centum, is to gain at least 25 per cent of the company (required to force a special resolution). An offer document by WW- WBID will be produced within 60 days after CMA approval. It is not clear how the firm will finance the offer, but analysts at Standard Investment Bank say it is most likely to be a leveraged transaction. Like the offer by Rea Trad- ing, WWWBID’s offer appears geared towards delisting the firm, unlike Centum, which intends to keep the sisal maker listed. RVP is the largest sisal producer in Africa with plantations in Kenya and Tanzania. The sisal grower and manu- facturer also has a horticulture project and plans to establish a wind power generation facility in Mombasa. Uganda’s space tou≥ist looking fo≥ souveni≥ banks ASHISH THAKKAR, the Ugandan billionaire, is at it again. The man who will become the continent’s second astronaut, having already booked himself onto Virgin Galactic’s first mission into space, has teamed up with Bob Diamond, the disgraced former chief executive of Barclays Bank in the UK, to form an investment company geared at acquiring stakes in African banks. Information on the proposed $250 million flo- tation on the London Stock Exchange has come from unnamed third parties who are understood to be close to Mr Diamond and Mr Thakkar; the two men have not so far spoken publicly on the issue. The two financiers are understood to have ap- proached investors hoping to raise $250 million to set up the company on the London Stock Exchange before the end of the year. What is being termed a “cash shell” vehicle, known as Atlas Mara, will then buy a stake in an existing African bank. African banks are the fastest growing world- wide, their expansion driven by a rising middle class and liberalisation of markets across the continent. For example, over the past six years, Standard Chartered Bank’s East African franchises have been among the fastest growing within the group globally, with Kenya posting income growth of 34 per cent in 2012. Mr Diamond, who left Barclays last year after the bank was fined for manipulating the Libor interbank lending rate, has made no secret of his desire to focus his investment strategy on Africa, already the location for much of his family foundation’s work. 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 Yet mo≥e gas finds in Tanzania JUST HOW big are Tanzania’s hydrocarbon deposits? No one is certain, but there is at least 20 trillion cubic feet of gas, following a new find by Statoil and ExxonMobil. The two firms found 2-3 trillion cubic feet (tcf) of gas in place, or 360-540 million barrels of oil equivalent (boe). That brings their total gas resources in place in the licence to 17-20 tcf or 3.06-3.6 billion boe, said Statoil, the block’s operator. Britain’s BG and Ophir En- ergy have also made big discoveries in Tanzania and a source told Reuters that the four have submitted proposals to build an onshore liquefied natural gas plant in the southern region of Lindi. No new LNG project has won a final investment decision anywhere in the world outside the US for almost two years because of huge cost increases across the industry, a glut of LNG from places such as Australia and a shale boom that has made the US self-sufficient in natural gas.
December 9th 2013
December 23rd 2013