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Meeting the challenges of the timesUAC of Nigeria Plc
UAC of Nigeria Plc RC 341
UACN SHAREHOLDERS FORUM
JANUARY 26, 2005
Meeting the challenges of the timesUAC of Nigeria Plc
UAC of Nigeria Plc RC 341
Who is the Foreign Shareholder?
4
- A Leading Emerging Markets Private Equity Firm
55 years experience investing in emerging markets companies as Actis or CDC and before that as the Commonwealth Development Corporation
Management buyout from CDC Group plc in 2004: 60% owned by management, 40% UK Government
96 professionals in 19 offices in Asia, Africa and Latin America
26 partners with 6 years average experience at Actis
Over US$2bn funds under management
5
is the Leading Private Equity Investor in Africa
Over 55 years of investment experience
23 investment professionals in eight offices
Average team private equity experience of seven years
Track record of successful investment (US$75-100m per year)
Cairo
NairobiLagos
Jo’burg
Abidjan
Casablanca
Dar es SalaamLusaka
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Sector Focus
Telecoms Mining, oil & gas Financial institutions Manufacturing Food retail Property Privatisations / infrastructure
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How does
Identifies Management when needed
Attracts Further Capital
El Rashidi El Mizan, Egypt
Flamingo Holdings, Kenya
Strengthens Corporate
Governance
Protea, South Africa
Celtel, pan Africa
Uses Network to assist Expansion
DFCU, Uganda
Medscheme, South Africa
Platmin, South Africa
TRAC, South Africa
add Value
8
Recent African success stories
REALISED
REALISED
Company
Year Invested
Country
Business
Deal size
2003
Kenya
Integrated flower and vegetable
business
US$17m
2002
Egypt
El Rashidi, a sesame
seed food producer
(MBO)
US$9m
2001
Zimbabwe
Manufacturer and retailer of glass
US$2m
2000
Mozambique
Aluminium smelter
US$53m
Company
Year Invested
Country
Business
Deal size
1999
Ghana
Commercial bank
US$4m
1999
South Africa and
involved in 11 other
countries
Hotel management
company
US$8m
1998
13 Countries
Sub-Saharan Cellular network service
US$62m
1998
South Africa/ Mozambique
N4 Toll Road linking Maputo to Pretoria
US$24m
9
in Nigeria
West Africa Region run from Nigeria
Office re-established in 2000 in response to return to democracy
Focused initially on understanding the market and identifying possible opportunities
10
in Nigeria – recent investments
Recent Investments in the Past 12 months are:
The Palms Shopping Centre – Nigeria’s first international standard retail centre – US$40million commitment
Starcomms – Actis capital will provide US$20million plus to help fund growth
*UAC of Nigeria Plc – Actis Capital proposes up to US$25million to help fund growth *** (Proposed)
Meeting the challenges of the timesUAC of Nigeria Plc
UAC of Nigeria Plc RC 341
How will Actis Investment Add Value to UACN?
12
in UACN
Actis as an international company will help to reinforce the company’s reputation for good corporate governance and business principles.
Actis will give us access to their network – allowing UACN to forge necessary and relevant technical alliances for our various businesses (access to technology, systems and world class processes).
Additional Actis capital will allow us to actualise our growth potentials, confer critical mass, provide influence and leverage to define competitive agenda in key markets.
13
in UACN Ungear our business through substantial reduction in
our borrowing thus freeing up earnings for distribution to shareholders and retention to finance further growth.
Actis Board representation will help in:
i. Setting out and supporting the implementation of appropriate business strategies
ii. Providing international and industry best practice insights to board debates
iii. Managing the risks facing the business
Meeting the challenges of the timesUAC of Nigeria Plc
UAC of Nigeria Plc RC 341
Why Did We Not Disclose Information on the Proposed Investment Earlier?
15
Disclosure
At the time of Rights Offer via Rights Circular dated 2nd September 2004, we had discussions but no deal.
Disclosure of an unfinalised discussion had significant reputation risk for the company if a deal did not materialise.
16
Disclosure Rights Offer of 1 (one) new ordinary share for every
4 (four) existing ordinary shares held still left a wide gap in our capital requirement of N5billion to implement our 2004 – 2006 plans. The additional capital requirement was stated in the Chairman’s letter of 2nd September, 2004 contained in the Rights Circular.
At that time the conservative nature of the Offer was viewed by the Board as both realistic and appropriate given the high clutter in the IPO/Capital Market in the last six months.
17
Disclosure
Clearly there was a need to mitigate the risk of high under subscription and possible outright offer cancellation given the circumstances.
Confirmation of Actis firm offer was received during the offer with payment made to issuing house - FCMB CAPITAL MARKETS.
Meeting the challenges of the timesUAC of Nigeria Plc
UAC of Nigeria Plc RC 341
What will UACN Do With Additional Funds?
19
Use of Additional Funds
As indicated earlier our estimated funding requirement for effective execution of our plans 2004 – 2006 is N5billion
Estimated net proceeds from Right Offer is N2.7billion, to be used 60% for expansion and 40% for debt reduction.
We are still short by N2.3billion of our funding requirement.
If the proposed investment is approved, we will realise N1.7bn, still leaving a shortfall of N0.6bn, which will be generated internally from operations.
20
Use of Additional Funds Management intends to use the additional proceeds of
N1.7bn as follows: Further reduction of borrowing N0.8bn Further development of Innscor Franchised Brands
N0.3bn Capacity improvements in existing businesses N0.3bn IT and upgrade of financial systems and controls
N0.3bn
We are confident that significant opportunities exist for us to enjoy first mover advantage in our food offerings in key cities where we are not currently present and in some, where critical mass will ensure scale and scope of economies.
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The Future UACN is a GOOD company but it can become a
GREAT one.
For the reasons stated earlier, we need this additional investment.
In the 80’s and early 90’s UACN was the most capitalised stock. Today, it is not even in the top ten. Our near-term strategy is to get there.
UACN needs to secure a strategic partner/investor which can engage its international network and people to add value to the business and assist in development of its management team.
23
The Future
The Board and Management are driving to deliver improved shareholder returns through a combination of dividends and share price growth.
Actis investment represents a laudable foreign direct investment in Nigeria. A clear vote of confidence in our business and its future.
The investment is a financing window which will be instrumental in creating value for our stakeholders (customers, shareholders, employees etc.)
24
The Future
We ask you to share our confidence, optimism and passion for the business as we drive to achieve our goals and deliver value.
Let’s place UACN on a sound strategic and financial pedestal as it enters a new stage of its development.
Let’s take UACN to the Next Level: A Great Company.