Mega business deals bagged in 2015

The essence of any business is to enrich its shareholder’s value. This has never changed in the long history of business, and it was not any different in 2015. This year, mega-deals were cut in what was seen as strategic moves by corporations to maximise their profits and minimise their losses.

The deals which ranged from mergers and acquisitions (M&As) through corporate bonds to private equities cut across various sectors of the economy including real estate, insurance, banking, telecommunications, hospitality and so forth.

And while some corporations moved shop across border, others crossed the border and didn’t look back. They were gone forever. Some came in after a very long period in sojourn. And all in the spirit of enriching shareholder’s value.

1. Norfinance as acquires Helios investment partners’ stake at equity-$248 million (sh25,367,800,000)

Perhaps the most active corporation this year was the London-based private equity firm, Helios Investment Partners (“Helios”). Helios sold, sold and re-sold. Then it bought, bought and bought again. And as you can imagine, Helios’ shareholders must be among the happiest lot this festive season.

After offloading its 12.23 per cent stake to Norfininvest AS, the private equity firm raked in Sh25.4 billion in the transaction. In the seven years that Helios were in Equity Group Holdings, their values had appreciated from the initial Sh11billion they had pumped in Equity Bank to acquire a 24.99 per stake to a high of Sh44.1 billion. And they pocketed all that cash!

2. National Social Security Fund Kenya buys Helios stake in Equity Bank (at sh9,407,870,000)

Helios sold its remaining stake (5.5 percent ) in Equity Bank to Kenya’s provident fund, National Social Security Fund (NSSF). Helios raked in about Sh9.4 billion from the deal. The move saw the provident fund make some significant incursion into the banking sector. NSSF is a significant shareholder in a number of Kenyan banks including National Bank where it has a 48.1 per cent stake, KCB (6.17 per cent) and Housing Finance (2.25 per cent).

3. Old Mutual increases stake at UAP Insurance-sh25.6 billion

As some people would put it, the insurance sector in 2015 has been a hot-bed of mergers and acquisitions (M&A). Experts have attributed this to the lucrativeness of the sector. The industry has since attracted new players with international financial firm Prudential Plc through its insurance wing Prudential Life Assurance making a comeback into the country after a 25-year hiatus. The firm acquired Shield Assurance-the life insurance wing of the defunct BlueShield Insurance.

But the talk of the town has been the merger of UAP Insurance with international investment firm Old Mutual Group. Old Mutual increased its stake at UAP Insurance to 60.66 percent from the initial 23 percent it initially held in the insurance firm after buying a combined 37.3 per cent from private equity (PE) firms Aureos, Africinvest and Swedfund for around Sh14 billion.

The South African based firm also acquired 67 percent stake in Kenya’s second biggest microfinance bank, Faulu Microfinance Bank as part of the firm’s strategy to increase its footprint on the African continent. The investment firm injected Sh2.8 billion of the Sh3.6 billion agreed price as part of Sh43.2 billion set aside by the South-African financier for its African expansion.

4. Chase Bank corporate bond (sh5,061,850,000)

Chase Bank launched a seven-year corporate bond in a bid to raise Sh10 billion. The bond was to be raised in tranches and was supposed to help strengthen the bank’s capital base and finance its expansion. And the first tranche was more than Chase Bank shareholders had asked for. The bond was over-subscribed by 161 percent-over and above their Sh3 billion target. Instead, it raised Sh4.8 billion forcing it to exercise the green-shoe option so as to utilize the extra Sh1.8 billion.

5. Equity Group buys procredit bank Congo (sh6,135,570,000)

Equity Bank dared to dream when it took a road that had not been well-trodden. The company was among the first to get into micro-credit at a time when most banks were of the view that low-income persons were unbankable. Equity succeeded and since then the bank has been scaling higher heights. Last year, Equity, the largest bank in Kenya by customer number, added yet another feather on its cap by acquiring the ProCredit Bank of Congo. The lender bought a 79 percent stake in the SME-focused bank forking out about Sh6 billion to seal the deal. The bank is now expected to cast its eyes further afield.

6. Aviation Industry Corporation of china buys stake in Centum’s Two River Mall (sh15,850,220,000)

Chinese state corporation, Aviation Industry Corporation of China (Avic), bought a stake in Centum’s Two Rivers Development, one of the biggest real estate projects in the country and region. The project had attracted $155 million (about Sh14.3 billion) in new funding, including one of the biggest equity investments in a local company by a Chinese firm.

AVIC injected about $70 million (Sh6.4 billion) in Two Rivers for a 38.9 per cent stake, valuing the project at about Sh16.6 billion. The money went a long way in ensuring that the project would be open in March 2016.

7. Stampede Natural Resources buys Africa oil (sh10,225,950,000)

Helios’ activities in the market did not end with its sale of stake at Equity Holdings, they had just started. Through its fund Stampede Natural Resources, Helios concluded a Sh10 billion placement of a 12.4 per cent stake held by Canadian explorer Africa Oil-the exploration partner of Tullow in Kenya.

8. Housing finance rights issue (sh 3,967,670,000)

Housing Finance Limited raised about Sh3.5 billion through a rights issue this year. The shareholders offered Sh9 billion to the company which represented 2.6 times what it had asked for. Shareholders had applied for a total of 98.2 million shares worth Sh2.9 billion in the original allotment, representing an 84 per cent subscription rate as a section of shareholders failed to take up their rights. The firm plans to use the proceeds to expand its lending capacity in the mortgage finance segment, where it is competing with other top lenders like KCB.

9. Swedfund, Finfund, Ifu & Norfund inject money into Radisson Blu Hotel (sh7,700,140,000)

It seems like the country’s hospitality industry, and specifically that of five star hotels, is up for intense competition with the entry of Radisson Blue. The hotell plans to start operations in May.

And that was not all, Finnfund and Danish investment fund IFU each with a 10 per cent stake in the development, provided part of the €7.85 million (Sh811.8 million) loan advanced to the project through Afrinord, a joint-venture fund backed by four Nordic countries.

The hotel is the first for US-based hotel group Carlson Rezidor Rezidor Group in Nairobi; the chain announced plans to break into the Kenyan market in 2012 and had earlier set a target of starting operations in August 2014.

The luxury hotel, set to open in May, is majority owned by local businessman Michael Kairu, who controls a 58.7 per cent stake.

10. CDC Group and Norfund buys Actis Globeleq Africa (sh23,212,910,000)

UK private equity firm Actis sold its 30 per cent stake in Globeleq Africa to the CDC Group and Norwegian development financier Norfund for $227 million (Sh23.8 billion).

Globeleq Africa is the energy company that owns the 75 megawatt (MW) Tsavo. The CDC Group and Norfund bought the 30 per cent stake for $227 million (Sh23.8 billion).