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The East African : February 17th 2014
MONEY AND EQUITY MARKETS FEBRUARY 15-21,2014 SUB-SAHARAN AFRICA Energy and natural resources sectors attract $833m in PE fund capital East Af≥ica led the ≥est of subSaha≥an Af≥ica last yea≥ in the numbe≥ and value of deals by p≥ivate equity funds By ISAAC KHISA The EastAfrican off on a high note this year, with several new commitments by funds, setting the bloc up for more financing inflows in the coming months. Fund managers said this asset P class is increasingly offering investors growing exposure to the EAC economies outside the stockmarkets. East Africa led the rest of sub-Saharan Africa last year in the number and value of deals by private equity funds, according to a survey done by Emerging Markets Private Equity Association (EMPEA). This highlights the shifting attention by private equity investors into the region. Of the $1.6 billion invested in sub-Saharan Africa by private equity funds, about $769 million — nearly half of the total — was invested in East Africa. The amount was double the investment in the previous year. The region also accounted for 33 per cent of all private equity deals in sub-Saharan Africa. The trend is likely to continue for the rest of the year with Pearl Capital Partners announcing commitment of $13.5 million for investing in agribusiness in the next two years in East Africa. Standard Chartered Private Equity announced that it will invest between $150 million and $250 million in sub-Saharan Africa this year with special focus on East Africa and Nigeria. Agri-Vie, the private equity fund focused on food and agribusiness investments in sub-Saharan Africa has announced a $5 million investment in Kariki Group, a specialist Kenyan flower exporting company. Private equity players are also optimistic that the region will continue to offer new investment opportunities as more businesses open up for deals. “Private equity has matured, and A titanium factory under construction in Kwale, Kenya. The mining sector in sub-Saharan Africa benefited from private equity funds. Picture: File there has been an increased level of activity, with more companies that may have been unwilling to do deals now open to the idea of having financial investors on board,” said Ayisi Makatiani, the managing partner of Fanisi Capital. “We anticipate 2014 to be an active year for fundraising in the region,” said Robert van Zwieten, EMPEA’s chief executive. Mike Kinuthia, the investment manager at Pearl Capital Partners in Uganda, told The EastAfrican that the firm is ready to invest into five to six more agri-businesses seeking $1 million to $3 million capital for expansion. The money is to be invested through the firm’s African Agricultural Capital Fund established three years ago. “We are actively looking for businesses to invest in across the region and we will be making further announcements soon,” said Mr Kinuthia. However, Mr Kinuthia declined to mention the companies lined up for the funds, citing non-disclosure agreements with the businesses with which they are in discussions with. So far, the firm has invested 46 per cent of the $25 million African-American Community Fund (AACF) in Ugandan and Kenyan firms. KK Fresh Produce Exporters Ltd in Uganda is the latest beneficiary of the Fund, having received $1.5 million to expand its cold chain facilities and support growth in exports. KK exports fresh fruits and CAPITAL INVESTMENT IN THE REGION Of the $1.6 billion invested in sub-Saharan Africa by private equity funds, about $769 million — nearly half of the total — was invested in East Africa. The amount of capital invested by private equity funds in sub-Saharan Africa in 2013 represented a 43 per cent increase from the previous year, according to an Emerging Markets Private Equity vegetables such as egg plant, hot pepper, bananas and groundnuts to the European market. “With Pearl Capital’s injection, we expect to double the supply of our fresh fruits and vegetables exports and continue sourcing produce from Ugandan small holder farmers,” said KK Foods founder and CEO James Kanyije. Currently, the firm exports 55 tonnes of fresh fruits and vegetables a week, translating into 11,440 tonnes per year. In October 2013, Pearl Capital Partners and Voxtra, an impact investor, jointly invested $4 million in Biyinzika Enterprises Ltd, a Uganda-based poultry feeds processor. The money was invested through the two firms’ respective funds, the AACF and the Voxtra East Africa Agribusiness Fund to help the poultry enterprise build storage facilities. The equity firm also plans to in- Association survey, compared with a seven per cent year-onyear decline in capital flow to $24 billion in emerging markets. The sectors in sub-Saharan Africa that attracted the most capital were energy and natural resources, attracting $833 million in investments while banking and financial services attracted $256 million. vest $8 million financing package to Pearl Dairy Farms Ltd, a Ugandan milk processor. The financing package is expected to support Pearl Dairy in establishing a greenfield powdered milk processing plant in the Mbarara District, Southwest of Kampala, with a handling capacity of 240,000 litres of milk per day. Peter Baird, the head of Stand- ard Chartered Private Equity’s Africa team said the fund’s target is to invest $150 million-$250 million in sub-Saharan Africa this year. The Fund is eyeing the oil and gas, power and consumer goods sectors. According to Mr Makatiani, the discovery of key natural resources has led to sectors such as oil, gas and mining receiving much more attention from fund managers. Additional reporting by Steve Mbogo rivate equity activity in the East African region has kicked Business watch Tullow Oil suffers $79m loss after expiration of licence British company Tullow Oil suffered a Ksh6.8 billion ($79 million) loss from the surrender of northern Kenya’s Block 10A to the government. The London Stock Exchange-listed firm revealed this loss in its annual 2013 report released last week. Tullow jointly held Block 10A with Africa Oil, after expiration of its prospecting licence. According to the report, the group has written off Ksh21 billion ($280 million) in relation to prior years’ expenditure and fair value adjustments as a result of licence relinquishment and changes to future work programmes. Tanzania Postal Bank posts increase in net income Tanzania Postal Bank’s net income for the quarter ending December last year increased to Tsh606 million ($364,599), up from Tsh579 million ($348,354), riding on its increasing loan portfolio. The worth of the portfolio rose to Tsh120.4 billion ($72.4 million) compared with Tsh112 billion ($67.4 million) in the previous quarter. The bank had last year announced plans to list on the bourse through an Initial Public Offer as it plans to increase the bank’s capital in the next five years. Bad savings culture keeps interest rates high in Rwanda Rwanda’s lending interest rates will remain high given the country’s bad saving culture, governor of the National Bank of Rwanda (BNR) has said. According to John Rwangombwa (BNR) even after lowering the key repo rate to 7 per cent from 7.5 per cent in June 2013 to boost lending to the private sector, interest rates on commercial loans had not reduced significantly because customers deposits — the main source of cheaper funds for commercial banks — remain low. Lending rates fell marginally to 16.9 per cent from 17.2 per cent. Wrangles at EA Portland Cement Company affect its share price 57 The firm’s facility in Athi River, Nairobi. The appointment of a new chairman was revoked by the High Court. Picture: File The share price of East Africa Portland Cement Company tilted by one per cent compared with the closing price in the week ending February 10, as the wrangles facing the company’s board reemerged last week. The share price fell from Ksh73 ($0.83) to Ksh72 ($0.84) after two weeks of steady performance from Ksh70.5 ($0.81) in the week ending February 3. In a single day, the company saw the appointment of William Lay as the firm’s new chairman, which was later revoked after the High Court reinstated Mark ole Karbolo.
February 10th 2014
February 24th 2014