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The East African : July 7th 2014
52 JULY 5-11,2014 BUSINESS, MARKETS AND FINANCIAL ANALYSIS THE MARKET WHISPERER EQUITY MARKETS (WEEKLY CHANGE IN BENCHMARK INDEX) NSE 20 Share Index Kenya 4,885.71 1.07% (CUMULATIVE MOVEMENT) 2300 2200 2100 2000 1900 1800 1700 1600 1500 1750 1700 1650 1600 1550 1500 1450 1400 1350 152 147 142 137 132 127 54,000 52,000 50,000 48,000 46,000 44,000 42,000 40,000 38,000 43,000 42,000 41,000 40,000 39,000 38,000 37,000 36,000 35,000 DSE All Share Index Tanzania 2,238.31 2.97% USE All Share Index Uganda 1,735.00 2.78% RSE All Share Index Rwanda 146.12 -0.28% JSE All Share Index South Africa 51,998.04 2.77% NGSE All Share Index 43,025.71 Nigeria 1.99% HF acquisition by B≥itam win-win fo≥ all B enson Wairegi, the Britam CEO, is arguable Nairo- bi’s acquisition king. The soft spoken 60-year-old has over the past nine months been on a buying spree, completing a hat-trick of deals with the announcements that his company will buy Equity Bank’s 24.78 per cent stake in NSE-listed Housing Finance. The acquisition will take Britam’s total shareholding in HF to 46.08 per cent. The deal, announced on June 30, the same date that Britam had said it planned to close its acquisition of a 99 per cent stake in Real Insurance, is projected to cost Ksh2 billion ($23 million). Last November, the invest- ment firm acquired a 25 per cent stake in property development firm Acorn for an undisclosed amount. Britam is also said to be interested in acquiring at least a 30 per cent stake in Continental Re, with sources saying the company has already conducted a due diligence on the reinsurance company. Mr Wairegi could be even busier in coming months. Last week, Britam announced that it would raise Ksh5 billion ($57 million) through a five-year bond to be listed at the NSE, with the company inserting green shoe option into the issue that could raise the total The share prices of Equity Bank, Housing Finance and Britam on the Nairobi Securities Exchange have gone up since the deal was announced. Picture: File amount to be raised to Ksh6 billion ($68 million) should the bond be oversubscribed. The money would help the com- The latest move has also been good for Housing Finance, Equity and Britam share prices pany increase its acquisition muscle. The sale of the HF stake is al- so good news for Equity Bank. Equity had taken the stake to use the lender to grow its exposure to the mortgage market. Equity’s exit could mean that it is ready to make an entry into the mortgage market. It is estimated that the country has fewer than 20,000 active mortgage accounts, with most being on houses that are at the top end of the real estate market. The mid to lower end of the market offers immense potential. For example, an entry level two-bedroom house in Nairobi costs an average of Ksh5.5 million ($0.06 million) an amount that locks out the majority of the population, since the annual per capita income in the county is $1,000; about 45 per cent of the population live on less than $2 a day. The estimated Ksh2.5 bil- lion ($28.7 million) that Equity is expected to rake in from the transaction could also provide back-up for the bank’s foray into the telecommunication business through its planned mobile virtual network launch. The latest deal has also been good news for HF, Equity and Britam’s share prices. The shares have all risen since the announcement, to hit new 12months highs, sustaining the price rally since the beginning of the year. Equity Bank’s shares have ris- en by 52 per cent since January to Ksh47 ($0.54) from Ksh34 ($0.39); HF has seen its share price soar by 47 per cent to Ksh46.25 ($0.53) from Ksh31.50 ($0.36). Britam gained 42 per cent to Ksh21.75 ($0.25) from Ksh15.35 ($0.17). IMF says p≥ivate secto≥ c≥edit still tight in Uganda THE INTERNATIONAL Monetary Fund has said the private sector credit in Uganda is still constrained despite policy actions by the government. This means that commercial banks’ lending to the private sector to support business activity is not enough to help Uganda economy to grow at its potential level of 7 per cent per annum. The conclusion was reached after the IMF executive board com- pleted its second review of Uganda’s economic performance under a programme supported by the Policy Support Instrument (PSI) in Washington DC. In its assessment the board said Uganda’s recent economic performance has been largely satisfactory with robust growth, low inflation and strong international reserves. However, David Lipton, the deputy managing director of the IMF, said government spending has expanded beyond the programme ceiling, while private sector credit growth has remained limited. In the short term, the govern- ment’s monetary policy is expected to focus on offsetting the recent tax revenue shortfall by significantly strengthening collection. “Resisting spending pressures, limiting domestic borrowing to programmed levels, and curbing the use of supplementary budgets will allow implementation of important infrastructure projects and social programmes,” Mr Lipton said. The IMF executive board ap- proved the PSI for Uganda on June 28, 2013. The IMF’s framework for PSIs is designed for low-income countries that may not need, or want IMF financial assistance, but still seek IMF advice. PSIs are voluntary and demand driven. 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 Tanzania, Mozambique sign MoU TANZANIA HAS signed a memorandum of understanding with Mozambique for co-operation in development of its oil and gas industry. The MoU was signed by the Tanzania Petroleum Development Corporation and Mozambique’s National Petroleum Institute. It covers exchange of technical data, reports and other relevant information on exploration and production of hydrocarbons as well as the management and organisation of data collection. It also paves the way for co-operation in joint projects, training courses and evaluation of resources. BG Group, with other industry players, has discovered about 45 trillion cubic feet (TCF) of gas offshore of Tanzania. ENI of Italy and Anadarko from the US have discovered more than 150 TCF of gas in Mozambique. A liquefied natural gas plant is to be built at Palma in northern Mozambique, close to the border with Tanzania.
June 30th 2014
July 14th 2014