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EAST AFRICA FINACIAL REVIEWJUNE 2016
CONTACTS OF THE EDITORIAL TEAM
Edward Burbidge, CFA
Chief Executive Officer
[email protected]
Vimal Parmar, CFA
Head of Equities and Debt
[email protected]
Gerald Njugi
Senior Analyst - Corporate Finance
[email protected]
Lello Halake
Research Analyst
[email protected]
Nicholas Kiprotich
Head of IT & Social Media
[email protected]
Burbidge Capital LimitedHead Office:4th Flr, Nivina Towers, Westlands Road,Nairobi, KenyaTel: +254 (0) 20 2100 102
Uganda Office: Suite FC61st Floor, Crown House4a Kampala Road,P.O . BOX 3331Kampala, Uganda.TEL: + 256 (0) 794 476 967www.burbidgecapital.com
London Office:i4 Albany, PiccadillyLondon, W1J 0AXTel: +44 (0) 207 099 [email protected]
A corporate finance firm licensed by the Capital Markets Authority and a licensed Nominated Advisor by the Nairobi Securities Exchange creating long term advisory relationships & solutions across Eastern Africa.
ADVISORY SERVICES:Originating and structuring Equity and Debt capital raising, IPOs, M & A transactions, Strategic Options advisory, PE advisory and Independent Research services.
NAIROBI KAMPALA DAR ES SALAAM ADDIS ABABA KIGALI LONDON
Key Africa & Global Currency Performance
PART I: KEY MARKET INDICATORS
Key Africa & Global Equity Indices Performance
Key Events & Press East Africa
I&M 1Q16 net income up by 15.8% Dar bourse IPO five times oversubscribed in scramble for shares Barclays, CBA provisions for bad loans significantly increases EAC countries increase national budgets to address infrastructure Mining Companies in Kenya to continue paying the old mineral royalties Australias Base Resources gets more acreage for its mining activity Otto Energy farms out Kilosa - Kilombero Licence, onshore Tanzania Garden City developer Actis raises KES 50.0bn for African projects
NSE 20 (KE) 4,040.75 4,009.26 3,827.80 -4.5% -5.3%
FTSE NSE Kenya 25 186.30 187.81 182.67 -2.7% -1.9%
DSEI (TZ) 2,334.00 2,559.31 2,457.03 -4.0% 5.3%
ALSIUG 1,764.00 1,785.00 1,768.00 -1.0% 0.2%
NGSEINDEX 28,642.25 25,062.41 27,671.08 10.4% -3.4%
EGX 30 7,006.01 7,773.23 7,483.65 -3.7% 6.8%
JALSH (SA) 50,693.76 46,913.00 53,905.21 14.9% 6.3%
S&P 500 2,043.94 2,065.30 2,096.96 1.5% 2.6%
FTSE 100 6,242.32 6,241.89 6,230.79 -0.2% -0.2%
Equity Index 2-Jan-16 1-May-16 31-May-16 % Ch. m/m % Ch. YTD
KES / USD 102.20 100.92 100.85 0.07% 1.32%
TZS / USD 2,155.00 2,184.56 2,189.50 -0.23% -1.60%
UGX / USD 3,367.00 3,319.94 3,360.00 -1.21% 0.21%
ETB / USD 21.01 21.55 22.00 -2.11% -4.71%
ZAR / USD 15.46 14.24 15.73 -10.43% -1.73%
NGN / USD 199.00 199.05 198.97 0.04% 0.01%
EGP / USD 7.83 8.88 8.88 0.09% -13.36%
GBP/USD 0.68 0.68 0.69 -0.67% -1.20%
EUR / USD 0.92 0.87 0.90 -2.80% 2.37%
Currency 2-Jan-16 1-May-16 31-May-16 % Ch. m/m % Ch. YTD
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7.5 billion (USD 3.4 million) for the 15 million shares it offered to the public. After the self-listing slated for 12 July 2016, DSE will join theJohannesburg Stock Exchange (2006) and Nairobi Securities Exchange (2014) as the third exchange in Africa to demutualize and list itself. (seeDeals on page 5).
In the oil and gas sector, Otto Energy reached an agreement with MV Upstream Tanzania, a joint venture between Vegas Oil & Gas and MotorOil Hellas ('MOH') in respect of the assignment of a 25.0% participating interest in the Kilosa-Kilombero License, onshore Tanzania.
In the mining sector, Australian mining company Base Resources was granted another exploratory drilling license by the Kenyan ministry ofmining covering an expanded area of 177 square kilometers in Kwale County and the company expects to commence a drilling program duringthe third quarter of this year. In other reports, mining companies in Kenya will continue paying the old mineral royalties until Deloitte conductsa study on the new royalty percentages for different minerals found in the country is completed, despite the recent enforcement of a newmining law.
The month of May witnessed the NASI shed a further 2.3% to 143.61 points, while trading remained subdued at USD 96.53m (previous monthUSD 99.16m) as the large caps observed significant foreign outflows. Consequently, the top movers marked losses with the exception ofKenolKobil (+2.4% m/m, +12.5% YTD), as Co-op Bank (-12.5% m/m), Barclays (-8.7%m/m), KCB (-6.6%m/m) posted declines. The bourse recordednet foreign inflows (USD 2.99m, previous month USD 3.85m) with Equity (USD 6.1m), KenolKobil (0.8m) and KCB (0.7m) observing the highest
Edward Burbidge, CFAChief Executive Officer, & BC EA Review Team
BC EA REVIEW APRIL 2016 | 2
PART II: MONTHLY COMMENTARY
As we forecast in last month's review, there was a good pick up in deals in June. There was a major pick-up in public marketdeals in particular and we have good visibility on a significant amount more public market deals in H2.
If past history was all there was to the game, the richest people would be librarians" Warren Buffett
OTHER KEY MARKET INDICATORS
Interest Rates Inflation and GDP growth
Source: IMF, World Economic Outlook
Country/Region Current Base Rate Previous Base Rate
Central Bank of Kenya (Kenya) 10.50% 10.50%
Bank of Uganda (Uganda) 15.00% 16.00%
Bank of Tanzania (Tanzania) 7.58% 7.58%
South African Reserve Bank (RSA) 7.00% 7.00%
Central Bank of Nigeria (Nigeria) 12.00% 12.00%
Central Bank of Egypt (Egypt) 11.75% 10.75%
Bank of England (UK) 0.50% 0.50%
Federal Reserve Bank (USA) 0.25%-0.50% 0.25% - 0.5%
European Central Bank (EU) 0.00% 0.00%
Country / Region
2016 2017 2016 2017
Kenya 6.0% 6.1% 5.8% 5.5%
Uganda 5.3% 5.7% 6.8% 5.1%
Tanzania 6.9% 6.8% 5.4% 5.0%
Nigeria 2.3% 3.5% 12.0% 12.5%
South Africa 0.6% 1.2% 6.9% 5.8%
Sub-Saharan Africa 3.0% 4.0% 9.2% 7.8%
UK 1.9% 2.2% 1.3% 1.9%
USA 2.4% 2.5% 0.8% 2.2%
Euro Area 1.5% 1.6% 0.9% 1.2%
GDP Inflation
In private equity 2 investment deals (23 deals YTD) were announced in the insurance sector in Kenya. In M&A we witnessed 3deals (20 deals YTD) in the insurance, publishing and media & entertainment sectors in Kenya. BCs deal of the month was Dares Salaam Stock Exchange's IPO which was oversubscribed by nearly five times after receiving bids worth TZS 35.77 billion(USD 16.3 million) from more than 3,000 investors (70% of which were foreign investors) against their target amount of TZS
foreign investor demand.
EFG - music stage - 190.5x254mm - bleed 3 mm - quadri - back cover - publication: Burbidge Capital, June 2015 issue (23.06.2015)
The private bank for classical music and jazz
EFG is the marketing name for EFG International and its subsidiaries. EFG Internationals global private banking network includes offices in Zurich, Geneva, London, Channel Islands, Luxembourg, Monaco, Madrid, Hong Kong, Singapore, Shanghai, Taipei, Miami, Nassau, Grand Cayman, Bogot and Montevideo. www.efginternational.com
Practitioners of the craft of private banking
facebook.com/EFGInternational
Photos (clockwise from top left): Andy Sheppard; www.operaomnia.co.uk;
Belinda Lawley; Varian Monteiro.
EFG London Jazz Festival Benjamin Grosvenor
Jeremy Monteiro Southbank Sinfonia
16; 43%
8; 22%
3; 8%
5; 14%
3; 8%2; 5%
No. of deals per sector - 2016 YTD2
Financial services Manufacturing Real estate
Hospitality and F&B ICT Agribusiness
1Based on deals as calculated by Burbidge Capital2The top sectors which recorded the highest number of deals3Based on deal values disclosed to the public or as estimated by Burbidge Capital
Source: Burbidge Capital Research
PART III: DEAL STATISTICS
BC EA REVIEW APRIL 2016 | 4
23
20
3 2 2 1
0
5
10
15
20
25
PE deals M&A deals IPOs Share privateplacements
Joint ventures Corporate bonds
No
. o
f d
ea
ls
Investment type
Total number of deals in East Africa - 2016 YTD1
9
7
9
14
5
9
0 2 4 6 8 10 12 14 16 18 20
Jan
Feb
Mar
Apr
May
Jun
Mo
nth
Number of deals
Total number of deals per month in East Africa - 2016 YTD
233
342
10 7
69
5 5
-
50
100
150
200
250
300
350
400
M&A PE Corporatebond
Shareprivate
placement
Jointventures
Rightsissue
IPOs
Deal values (USD mn) in East Africa - 2016 YTD3
PART IV: SELECTED DEALS
BC EA REVIEW APRIL 2016 | 5
Date Buyer Seller Investment size Sector
Investment
type Country Synopsis
8th June 2016 Mucoba Bank TZS 2 billion
(USD 925 million)
Banking Pre-IPO Tanzania Tanzania's lender Mucoba Bank became the first upcountry bank to
be listed on the Dar es Salaam Stock Exchange ("DSE")
