Kenyan Tea Prices on a steady rise...

Kenyan tea prices have hit record highs at the past few week’s auctions in Mombasa on drought fears ahead of Ramadan, when trading in Islamic countries falls sharply and consumption rises but improved quality and overall tight world supply also contributed.

Full post at ribacapital.com

KenolKobil and Engen in Zimbabwe Joint Venture

KenolKobil and Engen in Zimbabwe... they have jointly acquired all the shares in Shell Zimbabwe and BP Zimbabwe.
Complete post at ribacapital.com

Zain sells 46% to Indian/Malaysian consortium for $13.7Bn

Kuwait based Zain which operates in 24 countries and has nearly 70M mobile subscribers has signed a $13.7Bn deal, transferring a 46 per cent ownership of the company (Zain Group) to an Indian/Malaysian telecoms consortium.
Complete post at ribacapital.com

KenGen Bond Information Memorandum

Download the KenGen 10 year public infrastructure bond offer Information Memorandum.
At ribacapital.com

Unbundling of CFC Stanbic Holdings…

Plans are to be underway to unbundle CFC Stanbic holdings and potentially create more value for investors.
CFCStanbic is the holding company of: CFC Stanbic Bank Limited, CFC Stanbic Financial Services Limited, CFC Life Assurance Limited and The Heritage Insurance Company Limited.
The plans are to split up the Insurance companies Heritage and CFC Life into separate entities..

Full post at ribacapital.com

National Insurance Corporation Ltd (NIC) Uganda IPO...

The Govt of Uganda to divest its 40% interest in NIC Uganda through an IPO at the USE.
Though these efforts have been derailed by numerous postponements.

Full post at ribacapital.com

:::KenolKobil Acquires in Burundi:::

KenolKobil has signed a Sales and Purchase Agreement to buy the entire shareholding of Oil Burundi S.A.

Complete article at Riba Capital.com

Big Mac Index: Purchasing Power

The Big Mac(Mac Donald's flagship Burger) Index is used by enthusiastic and of course burger loving economists to measure how many minutes you need to work for you to earn enough to buy a big mac.
Full post at: ribacapital.com

::: Finally the eagle has landed:::

Finally ribacapital.com is here, yes after years of procrastination and a few drawbacks here and there, I have finally completed the move.
Of course I will keep posting and hopefully with more frequency and deeper research.
I will gradually be moving this blog to ribacapital.com as well as changing a few things.
We are also taking a plunge into venture capital, be it in a small way.
The idea is to make equity investments in start-ups and existing small & medium enterprises of amounts between USD10,000 to USD25,000 per qualifying business.
More will be available at ribacapital.com
Please update your bookmarks and links, as I gradually move this blog to ribacapital.com.

::: Kenya Data Networks is a South African firm:::

Technology group Altech said it has acquired an 8.5% stake in the East Africa Marine System (Teams) data cable via its subsidiary Kenya Data Networks (KDN).
The 5 000km, $130m undersea fibre-optic cable project is being spearheaded by the Kenyan government and stretches from Mombasa to Fujairah in the United Arab Emirates.

The $11m investment by Altech KDN bought it a 10% voting right along with the effective 8.5% equity stake in Teams. Altech said it will fund its portion of the purchase price from cash reserves.

Said Altech CEO Craig Venter: "Africa is in the infancy stages of a sustained growth trajectory in broadband across multiple technologies, services and geographies. The acquisition of a stake in Teams complements KDN's strategy of being a cross-border, Pan African network operator.

"Shareholders in Teams will be allocated cable capacity proportionate to shareholding. KDN's stake will thus grant us access to additional bandwidth, provision for redundancy of broadband connectivity and significantly increase KDN's service quality, all the while unlocking a wide range of additional services for the group as a whole," he said.

KDN is 60.8% held by Altech. (Merali seems to have sold down his stake considerably.)

Altech said that, with terrestrial fibre laid in Kenya, Uganda and soon Rwanda, the acquisition of a stake in Teams is a perfect fit for KDN's plans.

In August 2008, KDN became the first ICT company to construct a termination point at the Kenyan coast in anticipation of the landing of East Africa's three international undersea cables.

KDN said its fibre-optic cable will connect the undersea cables that land in Mombasa to the rest of East Africa, creating a five-country, fibre-optic terrestrial network linking Kenya, Tanzania, Uganda, Rwanda and the DRC.
Altech also predicted cost savings from the investment.
It said the price for satellite connectivity is $1 900 per Mbps per month in Africa, whereas the expected price for submarine cable connectivity drops dramatically to $90 per Mbps per month. This cost is anticipated to decline even further to $27 per Mbps per month by 2020.

-Courtesy of Fin24.com

Is Merali selling off most of his investments, he is now only holding a 5% stake in Zain.
Who says South African firms are not taking over and being successful in a few industries in Kenya.

:::Complaints Handling Unit by the NSE:::

The new Complaints Handling Unit by the NSE was set up today.
The promise is that they will solve our problems and fast at that.

Investors now have a one stop point of reference to have their problems received and resolved quickly and efficiently. The Complaints Handling Unit (CHU) is centralised and automated system that ensures issues are handled fast. he Nairobi Stock Exchange(NSE) in collaboration with the Capital Markets Authority (CMA) and the Central Depository and Settlement Corporation (CDSC) have come together to make your stock market experience positive and problem free.

Log onto: http://complaints.nse.co.ke
Call: 020 2831000 Fax: 020 2224200
Here is the speech by the NSE chairman Eddy Njoroge during the Launch of Complaints Handling Unit (CHU).

Lets hope this initiative is for real and does not die out as investors start trickling back to the NSE.
All in all its a good step if all departments actually action the queries as people log them.

::: Central Bank of Nigeria fires 5 bank CEO's:::

The Central Bank of Nigeria has moved to inject N400 billion(about $2.5Bn) into five banks in the country following the decision to remove the CEOs and executive directors of the affected banks. The affected institutions are Intercontinental Bank Plc, Union Bank of Nigeria Plc, OceanicInternational Bank Plc, Finbank Plc and Afribank Plc.

The CEOs that have been sacked by the CBN are Erastus Akingbola(Intercontinental Bank); Okey Nwosu (Finbank); Sebastian Adigwe(Afribank); Mrs Cecelia Ibru (Oceanic Bank); and Bartholomew Ebong(Union Bank). The CBN governor, Sanusi Lamido Sanusi, who made this decision known this morning at the Emergency Bankers' Committee convened by the CBN in Lagos, explained exclusively to THISDAY that the decision was being taken to safeguard the financial sector from systemic collapse.He said following the audit exercise conducted by CBN's examiners it was discovered that five of the banks had accumulated margin loans of N500billion, among other loans, that had gone bad and eroded their shareholders' funds.

"Some of these banks are quite large institutions and they have been mismanaged, so we had to move in to send a strong signal that such recklessness on the part of bank executives will no longer be tolerated."He said the CBN had obtained the approval of the President to inject N400 billion into the affected banks to shore up their tier 2 capital to minimum acceptable levels.
Sanusi added that the funds being injected by the CBN was just temporary and does not translate to the government taking a stake in the five banks, as the interim management will be given a period to recapitalise the affected institutions, following which the N400 billion will be paid back to the CBN.
On how the CBN will prevent a run on the banks and create panic in the economy, Sanusi said the CBN intends to make it clear that the money being injected by the reserve bank as well as the decision to guarantee interbank placement should allay depositors' concerns.The CBN, he stated, stands ready to ensure that no bank collapses in the country, but will encourage them to seek for funds to raise fresh capital and merge with stronger banks.He said an interim management and board for the affected banks will be put in place to run the institutions until they are taken over by new management teams and owners.

The Riba Take:
Margin Loans: Are loans given to investors to buy shares in the stock market, the shares act as collateral for the money borrowed. What went wrong in Nigeria is that the market which 2 years(or about that) back was among the best performing globally in terms of returns collapsed and at some point the govt even had to intervene by putting interim measure preventing shares from depreciating by a certain percentage within a day, almost similar to the margins we have in Kenya, but these were more stringent due to the nature of the collapse and the fact a very huge number of Nigerians were investing heavily in the market especially after the famous bank mergers and reorganization.

When the banks called on these loans people started defaulting and this downward spiral has taken its toll on these five institutions, but rest assured this is just the first group of banks, more will be disclosed.

A weird step the Nigerian govt had taken was to prevent banks from disclosing how much of margin loans they had on their books, thus further putting away investors especially in bank stocks and thus further depressing their prices downwards, and in turn more margin loans being defaulted on.

This step will definitely lead to a run on some of these banks, and a further downward spiral of banking stocks in particular which were the star performers in the boom times.

Lets wait as this story develops further.........

::: Kenya 2.0 (Update):::

Zain have reviewed their pricing and also their strategy.

No data limit monthly fee has come down by 25% to Kes2,500 per month.

KDN has slashed their internet connectivity rates too, by 90% and are also providing a free trial period for their Wifi network; butterfly. More details here.

No changes yet in South Africa.

Initial post here.

::: Hillary Effect:::

Kenya ranks number 2 on the Yahoo search engine soon to be powered by Microsoft's Bing.

Its the H. Clinton effect, they watch on CNN, have no clue which country that is, and they search...

::: Enter the Indians :::

Essar Energy has completed acquiring a 50% stake from Shell, BP & Chevron in Kenya Petroleum Refineries Ltd, this is a subsidiary of Essar Group the parent of Essar telecommunications which has a majority stake in Yu.

The Govt of Kenya holds the remaining 50% stake in KPRL which processes about 4M metric tonne per annum.

Essar Oil is currently operating a 280000 bpd refinery in India. The Mombasa refinery is the only refinery in Eastern Africa and currently produces LPG, gasoline, diesel, kerosene and fuel oil. The refinery is planned to be upgraded by adding secondary units at a project cost of USD 450M.

KPRL’s products are sold into the Kenyan market and exported to neighbouring countries including Tanzania, Uganda, Burundi and Rwanda. Demand for petroleum products in these markets is estimated at 5M tonnes per annum.

Essar also operates “yu”. It launched the GSM service in Oct 2008 and already has approx. 400,000 subscribers on its network mostly in Nairobi and Mombasa

About Essar Energy

Essar Energy is a fully integrated oil & gas company of international scale with strong presence across the value chain — from exploration & production to oil retail. It has a portfolio of onshore and offshore oil & gas blocks worldwide, with about 70,000 sq km available for exploration. It also has over 310,000 bpd (barrels per day) of crude refining capacity together with operating over 1,240 Essar branded oil retail outlets in various parts of India.

About KPRL

The highly ineffecient KPRL serves the East African region with lpg, petrol, diesel, fuel oil and bitumen and grease. It has two refinery complexes with distillation, hydrotreating, catalytic reforming and bitumen production units. Crude oil from the Middle East is transported by sea to Kipevu Oil Jetty in Kilindini Harbour (3km from the complex at Changamwe) and then carried by pipeline to the refinery. The finished products are also mostly transferred to customers by pipeline.

::: Kenya 2.0 :::

And The Net is live.... now lets wait for those prices to come down.. soon hopefully.... other bloggers

Status Quo Today(As Seacom goes live):

South Africa - 1GB = ZAR 289($35) = Valid for 60 days = Both Vodacom and MTN

Kenya - 1GB = KES 2,499($32) = Valid for 30 days = Safaricom

Kenya - 1GB = KES 8,000($100) = Valid for 30 days = Zain

share with me other countries where Seacom has landed... and we will track the changes together..

Status Quo 2 months later:

??? lets wait for trickle down, already there is talk in South Africa that only corporate users will benefit and not retail because of cartel behaviour...

:::KenolKobil Profit Warning:::

KenolKobil, the renamed entity from Kenya Oil Company Ltd.

Sales volumes are projected to be up compared to 2008, but net income to be down over the same period, which the company blames on volatility of oil prices(KQ also attributed their losses to this however the difference here was that KQ messed up on their hedging strategies,interesting enough KQ has one of the best treasuries in corporate Kenya, but seems this gamble was not very well calculated, I would recommend them to go for options, so that they are hedged against price increases by having the option but NOT the obligation to buy oil at a predetermined price, and if the price is below this level, then they just buy from the market, the only challenge here being the fixed fee for this is high, however should be better than the reported losses.)

Back to KenolKobil, they also blamed the inefficiency of both the Kenya Pipeline and the Oil Refinery (this is blamed by all oil companies not performing well, so they should have already prepared for this.. not good enough) , and of course the erratic exchange rates (again a hedging strategy would suffice on this, since they know their estimated needs for the next few months, if not years.)

Here comes the good part ''bad debts provision made for one specific Commercial customer'', does this sound like Triton or is it another specific customer??

All in all, i hope this company recovers, since I think its still one of the success stories of Kenya that we have.

::: Investing: The Last Frontiers .. Iraqi Stock Exchange :::

In this 2 part series.. We will venture into the last frontiers. Developed world treasuries are yielding close to nothing; US, UK, Japan etc are all yielding sub 1% returns.. but the emerging markets and the more riskier ones at that, are returning some high yields, of course, this will be pricing in the risk appetite for the investor.

In Part 1, I will look at Iraq then in part 2 we visit our brothers and sisters in Zimbabwe where the economy is now dollarised. i.e. the US dollar is also acceptable as legal tender.

In Iraq, there is a new $10 Million hedge fund; called Babylon Fund which is investing exclusively in Iraqi quoted companies or Iraqi exposed companies(i.e. companies which earn most of their income from Iraq reliant activities) The Iraqi Stock Market has a market capitalisation of around $2 Billion , with 75% of this being financial services industry.

The Market has around 80 listed securities, and yes these are more than in Kenya. If you are wondering what about the Oil companies, there are no listed Oil companies because the government owns the oil companies and they are not publicly traded. The Iraqi Stock Exchange trades for only two-and-a-half hours a day, twice a week, on Mondays and Wednesdays. During these sessions, Only about a quarter of the roughly 80 companies listed on the exchange trade, with a total turnover of between US$2 million and US$4 million.

For more information click on below links: Hedge Week and Final Alternatives

Dollars and Change: Africa the final Investing Frontier

Here is a presentation by CNBC on Africa..The Final Investing Frontier

In Kenya, the image is still pretty tainted by the anarchy after the mess we called 'elections'.
Anyway, was just listening to CNN and comparisons are now being drawn on whats happening in Iran to be the 'Kenyan Thing'... similar to the other 'kenyan thing' that took place in Zim.

May be we should patent powersharing and tribal warfare...

Ok.. back to business.. This coverage gives a good overview of whats happening in Africa.

:::A new DVD which can store 1 TB or about 100 DVD's:::

GE has developed a new disc which can store upto the equivalent of 100 DVD's, or about 1,000GB i.e. 1 Terabyte; Yep, that's a lot of movies in 1 disc, another difference is that this Disc will store the data within it not on the surface like the current discs, which I hope will sort out the problem of scratches.. this has taken its toll on my music collection, use it in the car for a day, or a friend borrows and the disc is gone..

For more info, click here.

:::Vodacom SA Lisiting today on JSE:::

After the first day of trading today on JSE(Johannesburg Stock Exchange), it closed at R58.80(about Kes:524.00) per share.
Currently Vodacom is owned 50% by Telkom and 50% by Vodafone.

The listing of the company forms part of a number of interconditional transactions including the sale by Telkom of a 15% stake in Vodacom to Vodafone for a net sum of R20.95bn, increasing Vodafone's interest in the company to 65% and, following the listing, the unbundling by Telkom to its s hareholders of its remaining 35% in Vodacom.

Vodacom was formed in 1993 and has developed into the leading SA mobile company and related services with some 38 million customers as at 31 December 2008. Its also the largest provider of mobile broadband services in South Africa with more than 600,000 customers. The recent opening of a data centre in Johannesburg, a client services operation centre and recent acquisition of Storage Technologies Services ("StorTech") and Gateway Communications ("Gateway") affords Vodacom a solid platform to further develop its ICT business.

Vodacom also promises to selectively evaluate further license and acquisition opportunities within the sub-Saharan African region, where shareholder value can be created. The recent acquisition of Gateway provides Vodacom with an established platform into Africa on which to benefit from the further growth in demand for carrier connectivity and high quality corporate telecommunications services. Being majority owned by Vodafone(65%), Vodacom will benefit from access to Vodafone's expertise, product innovation, marketing and centralised procurement. Vodafone has agreed that Vodacom will be its exclusive expansion vehicle in sub-Saharan Africa. Vodacom anticipates a dividend payout ratio of about 40% of headline earnings for the year ended 31 March 2010. Dividends will be paid semi-annually with the first dividend payable for the first half of 2010.

The listing of Vodacom Group will not have any impact on the BEE shareholding interests in Vodacom SA. The Black Public interest held in YeboYethu will remain at 3.44% in Vodacom SA, as part of the 6.25% overall BEE stake. This is a key requirement of doing business in South Africa with the Black Economic Empowerment(BEE) requirements.

The listing almost never took place with a last minute application was brought by the Congress of South African Trade Unions (Cosatu) supported by the Independent Communications Authority of SA (Icasa). The application for an urgent interdict to halt the listing and to prevent Telkom selling the 15% to Vodafone provoked widespread concern that the new government's left-wing leanings would harm SA's business credibility.
However this application was overthrown and the listing goes ahead today. Analysts believe Vodacom is worth R70bn-R80bn. Vodacom's shares will be distributed to the thousands of ordinary people who already own Telkom shares, meaning that many citizens will also now gain a direct stake in the lucrative cellular network.
More on the Vodacom Listing here.

:::Africa in Numbers:::

The numbers do speak for themselves....

Financial Crisis explained in a paragraph...

Linda is the proprietor of a bar. In order to increase sales, she decides to allow her loyal customers - most of whom are unemployed alcoholics - to drink now but pay later. She keeps track of the drinks consumed on a ledger (thereby granting the customers loans). Word gets around and as a result increasing numbers of customers flood into Linda's bar.

Taking advantage of her customers' freedom from immediate payment constraints, Linda increases her prices for wine and beer, the most-consumed beverages. Her sales volume increases massively. A young and dynamic customer service consultant at the local bank recognizes these customer debts as valuable future assets and increases Linda's borrowing limit. He sees no reason for undue concern since he has the debts of the alcoholics as collateral... At the bank's corporate headquarters, expert bankers transform these customer assets into DRINKBONDS, ALKBONDS and PUKEBONDS.

These securities are then traded on markets worldwide. No one really understands what these abbreviations mean and how the securities are guaranteed. Nevertheless, as their prices continuously climb, the securities become top-selling items. One day, although the prices are still climbing, a risk manager (subsequently of course fired due to his negativity) of the bank decides that slowly the time has come to demand payment of the debts incurred by the drinkers at Linda's bar. However they cannot pay back the debts. Linda cannot fulfil her loan obligations and claims bankruptcy. DRINKBOND and ALKBOND drop in price by 95 %. PUKEBOND performs better, stabilizing in price after dropping by 80 %.

The suppliers of Linda's bar, having granted her generous payment due dates and having invested in the securities are faced with a new situation. Her wine supplier claims bankruptcy, her beer supplier is taken over by a competitor. The bank is saved by the Government following dramatic round-the-clock consultations by leaders from the governing political parties (and vested interests). The funds required for this purpose are obtained by a tax levied on the non-drinkers.

This is the story of the global banks today...

:::BLUE Financial Services plans secondary listing in Kenya:::

Blue Financial Services is a micro-finance institution (MFI) listed on the JSE AltX and Botswana Stock Exchange.
The Group offers innovative and ethical credit solutions to formally employed but under-banked and underserved employees.
Blue currently operates in 12 African countries including Kenya through 281 branches, staffed by more than 3,000 employees.

Blue has identified its market as being the salaried i.e. teachers, soldiers, nurses, policemen, civil servants, and employees of enlisted companies etc. who are lower income earners and normally do not have access to loans due to the size of loans they require, as well as the lack of security, especially in other African Markets and South Africa in particular, however in Kenya, this segment is served by the likes of Equity, Krep, Faulu etc.
This explains why Blue is a small operation in Kenya.

Blue’s success can be attributed to providing employees with a range of products that include salary advances, term loans, home improvement finance, mortgages, small business finance and micro-insurance.
They collect by getting into agreements with employers to make deductions before these staff are paid their salaries, therefore ensuring that they collect early and in a more sustained manner, the same way that PAYE is deducted.

Blue’s goal is to take advantage of the significant opportunities offered by Africa’s largely ignored frontier markets.The company has plans on expanding its operations in Mozambique, Angola, Cameroon and Ghana.

Blue plans to move its listing from AltX to the JSE’s main board and may consider listing on the new Africa board, which launched on the 19th Feb on the JSE South Africa.

The group is also looking at taking additional listings on the Namibian, Kenyan and Zambian stock exchanges as it grows its presence in these countries.
However, this decision will be finalized once the group releases it financial results for last year in April.

Blue has a market capitalisation of about R2bn (Kes:16Bn) and ranks as the 122nd largest listed company in SA.

Last month, Absa became Blue’s second largest shareholder after it bought a 16% stake in Blue, after clients of Absa Capital defaulted on their single stock futures contracts.

KEY TRADING DATA (ZAR)
Share price (31 December 2008) R4.40 per share
52 week high R7.00
52 week low R3.30
Number of shares in issue(net of treasury shares) (million) 584,589,765
Market capitalisation R2.4 billion
3 month average daily volume 414, 765 shares per day
3 month average daily value R2 ,401,990.57
Currency conversion
1$ = R9.89
1£ = R14.66
1R = Kes 8.00

MAJOR INVESTORS
ABSA Bank (A member of the Barclays Group)
American International Group (AIG USA)
International Finance Corporation (IFC USA)
Public Investment Corporation (South Africa)
Stanlib (South Africa).. A member of Standard Bank (Stanbic)

Download the Blue Pre-Listing information memorandum.

::: Bonus Season :::

City Trust ltd announced a bonus of 1:10 on 14-Oct-2008. Books Closure 02-March-2009.Posting 18-March-2009.Trading of new shares 23-March-2009.

Eaagads ltd announced a bonus of 1:1 on 26-Nov-2008. Books Closure Subject to approval.

Limuru Tea ltd announced a bonus of 1:1 on 18-Dec-2008. Books Closure Subject to approval.

Equity Bank ltd announced a share split of 1:10 on 12-Feb-2009. Record date 25-March-2009. [not exactly a bonus, but I just listed it anyway.]

NIC Bank ltd announced a bonus 1:10 on 19-Feb-2009. Books Closure 19-March-2009. Posting/Crediting date 29-April-2009

Well, this sure is the season. But in this current environment, its pleasing to see companies, reduce their cash payouts as the days ahead look gloomy, but still maintain a balance by rewarding shareholders with non – cash incentives, in the form of bonus shares.

What’s more, dividends are taxed, but the gains enjoyed by disposing off the bonus shares are not taxed, so it’s a win-win for both the company and the shareholders.