13 Family-Owned Firms To List On Kenya’s Stock Exchange

Some 13 largely family-owned firms are seeking to sell shares to the public, the Nairobi Securities Exchange (NSE) said on Monday, offering hope of ending a prolonged listing drought, the Daily Nation reports.

The small- and medium-sized firms will be taken through a 10-month programme, which will see them access consultants and financial advisors to help them prepare for future listing.

The NSE on Monday launched an incubation and acceleration board for such firms, dubbed Ibuka –Swahili for emerging – saying another 10 companies have shown interest in joining the programme.

The incubation and acceleration board targets SMEs with the potential for high growth in the near to medium term. They will be taken through the process of enhancing their financial, technical, operational, commercial and strategic aspects of businesses.

That is meant to help them realise their valuation, boosting their chances of raising capital through debt and equity markets.

The NSE, together with other stakeholders including Capital Markets Authority, launched the business incubator and accelerator programme two years ago targeting SMEs which plan to sell some stake through exchange’s Growth and Enterprise Market Segment (GEMS).

“This programme will enable companies unlock their growth potential through a well-structured incubation programme that places a special focus on enhancing the select companies’ business structure, visibility and ability to attract investment among local and international investors,” NSE chief executive Geoffrey Odundo said in a statement.

Some of the firms which have publicly declared interest to list on the bourse include Kenya’s largest retail by market share Tuskys, investment manager Cytonn and Vehicle and Equipment Leasing Ltd.

“We are honoured and delighted to be part of a programme that will help us fast track our business and future outlook through expert consulting,” Tuskys CEO Dan Githua said.

 

Ciplaquality Chemical Industries Goes Public, Floats 600m Shares To Ugandans

Cipla Quality Chemical Industries Limited (CiplaQCIL),  a pharmaceutical manufacturing company in Uganda has announced its Initial Public Offer (IPO) by floating a total of 657,179,319 shares on to the Uganda Securities Exchange (USE).

 

The total shares floated represent 18% of all the shares owned by the company. Cipla Ltd, the Indian pharmaceutical giant manufacturers will remain as the majority shareholders with 51% having floated 11% of its shares it holds in CiplaQuality Chemicals Industries.

 

Initially, it was owning 62% of the company while Quality Chemicals, who will remain with 31% shares was owning 38%. It means that Quality Chemicals has floated 7% of its 38% shareholding.

 

The Initial Public Offer (IPO) has kicked off with a market stimulating fee of Ush256.5 per offer share. The minimum shares to be sold to each individual are 1000 shares. It means that one needs to pay at least Shs256,500 to become a shareholder with CiplaQuality Chemicals Industries Ltd.

 

Authorized selling agents or vendors are Crested Capital, UAP Financial Services Ltd, African Alliance Uganda, Baroda Capital Markets, Dyer and Blair, Equity Stock Brokers and SBG Securities.

CiplaQuality Chemical Industries Executive Chairman Emmanuel Katongole talking about the IPO at Kampala Serena Hotel.

 

Nevin Bradford, the CiplaQuality Chemical Industries Ltd Chief Executive Officer said they intend to become a center of excellence in the manufacturing of quality, affordable and newer medicines that improve the quantity and quality of life.

 

“Our World Health Organization (WHO) prequalified products are approved by regulatory authorities in 19 countries including Uganda, Kenya, Rwanda, Tanzania, Namibia, Ivory Coast, Zambia, Zimbabwe, Malawi, Namibia, Mozambique, Ghana, Ethiopia, Angola, South Sudan, Cameroon and Ivory Coast among others,” said Bradford.

 

He added the CiplaQCIL is the only pharmaceutical manufacturer in Sub Saharan Africa supplying malaria medicines to the Global Fund.

 

Emmanuel Katongole, the Executive Chairman of CiplaQCIL said the IPO marks a great milestone for them to encourage and enable Ugandan investors to share in their success story after being under private ownership for over 13 years.

 

CiplaQuality Chemical Industries Ltd, that has a total turnover of $60 million, is the only company in Africa that manufactured triple-combination antiretroviral (ARV) drugs, he antimalarial drug Lumartem, containing artemisinin and lumefantrine and the Hepatitis B generic medicines Texavir and Zentair.

 

Katongole said in the last financial year alone, they supplied medicines to approximately 500,000 HIV infected people and malaria drugs capable of treating approximately 45 million malaria infections.

Credit: Busiweek

Bank Of Uganda Changes Pricing Method For Gov’t Securities

The Bank of Uganda (BoU) on Monday announced that the method of pricing treasury bills and bonds in the primary auctions will change to one of a single price from the current multiple prices with effect from July 2, 2018.

In the single price method, the respective securities in the primary auction will be sold at the same price to competitive and non-competitive bidders.

Competitive bidders are the investors with bid amounts that are above UGX200 million, while non-competitive bidders are the investors with bid amounts that are between UGX100,000 and UGX200 million, a statement from BoU reads.

The single price, with respect to each specific security, will be the highest interest rate from the accepted bids in the auction.

Previously, non-competitive bidders’ allocations of securities would be done at the weighted average price (or interest rate) of the successful competitive bids in an auction.

Their allocations will be done at the highest interest rate from the successful bids under the new method. Competitive bidders, whose allocations were done at the prices in their respective bids, previously; will now receive allocations at the highest interest rate from the successful bids in the auction.

“Therefore, both competitive and non-competitive bidders will receive allocations at the same interest rate under the new method, which will be the cut-off price of an auction,” BoU, said, adding: “The new method will encourage secondary market trading because selling may not disadvantage investors as all would have received the same price at the primary auction. The single price auction will also simplify the computation of withholding tax on the interest that is earned from Government securities.”

Stanbic Awarded Best Performing Bank In Gov’t Securities

Stanbic Bank Uganda Ltd has been awarded the best performing bank in Uganda government securities for the Year 2017.

And this makes Stanbic bank the winner for the sixth consecutive year.

Speaking at the Annual Award Event for the Best Performing Commercial Bank of the Year in Government Securities held at Bank of Uganda (BoU) headquarters in Kampala,  Prof. Emmanuel Tumusiime-Mutebile,  Governor, Bank of Uganda   said that total turnover in the secondary market increased by 29 percent to Shs5.1 trillion in 2017, from Shs3.6 trillion in 2016.

In the same vein, the ratio of secondary market turnover to the total outstanding stock of Government Treasury securities increased significantly to 41.0 percent in 2017 from 28.9 percent in 2016.

“I would like to applaud the contribution of all the commercial banks towards this marked improvement in the development of the Government securities market.  And particularly, I wish to acknowledge the role that this year’s award winner has played especially for participating in the primary auctions, market making capabilities, consistent pricing as well as timely market intelligence,” Mutebile said.

This is the 13th time we have held such an event.

Launched in 2005, the Primary Dealer (PD) system aims to promote participation in Uganda Government securities markets, to foster the development of financial markets, to improve the secondary market trading system as well as to ensure efficiency in the operations related to the Government securities market at the central bank.

As part of the Bank of Uganda’s commitment to make investing in Government securities easier and more accessible to the public, the BoU launched Phase I Reforms to the PD System in October 2016 where all licensed commercial banks in Uganda have direct access to the primary market for Government securities. The banks are all eligible to open Central Securities Depository (CSD) accounts at the BOU for their clients through a web interface on any business day. They are all able to accept and process their clients’ bids for Government securities. All banks settle their clients’ successful bids and all banks can buy their clients’ securities if the client wishes to sell in the secondary market.

“These reforms have eased the client registration process on the CSD as evidenced by increased retail participant registrations, enabling faster and more efficient secondary market trading as all banks can complete client sale and purchase orders online without using the old BoU physical instrument for transferring CSD forms,” Mutebile said, before handing over the award to Stanbic CEO Patrick Mweheire.

Three Anonymous Guys Wiped $3 Billion Off South Africa Stocks In Four Days

The name is enough to spread mayhem among South African traders. And all Viceroy Research is willing to disclose is that they’re three people working out of New York to protect investors.

Stocks including Africa’s largest generics drugmaker and biggest real estate investment trusts were sent reeling this week on speculation that they were in Viceroy’s sights. More than $3 billion was wiped off the value of property stocks alone in just four days, prompting South African regulators to scrutinize trades to determine whether a formal probe is warranted, reports Bloomberg.

Viceroy became known overnight in South Africa after releasing a damning report detailing oddities in Steinhoff International Holdings NV’s financials a day after the retailer unexpectedly admitted to accounting irregularities. The group only started publishing reports in December 2016, covering five other companies in Australia, Israel and the U.S., and hasn’t released anything related to the South African market since the Steinhoff analysis.

“There are no faces behind the reports,” said David Shapiro, the deputy chairman of Sasfin Wealth in Johannesburg, who has been trading stocks in the city since 1972. “I’ve been watching markets for ages and have never heard anyone other than South Africa giving credibility to a house that has no face. It’s very sinister. Dark.”

It’s not the first time that Viceroy — which on its website describes itself only as “a group of individuals that see the world differently” — has been caught in the crossfire. Marietta, Georgia-based biotech firm MiMedx Group Inc. filed a lawsuit in October to try identify who was behind negative Twitter comments that drove down its share price, citing Viceroy as one of the defendants. The Viceroy Twitter handle leads you to its website, which is hosted by WordPress.com, a low-price site offering blogs and domains.

Q&A With Viceroy

Viceroy sent an emailed response to Bloomberg from a Gmail account on Friday. Here is a summary of some of their answers:

  Which city do you operate from?

New York.

  Is it correct that there are three staff members?

Yes and we also use consultants where needed.

  What are their names?

We are anonymous.

  Viceroy has said it keeps names under wraps out of security concerns, but activist shareholders and investigative journalists disclose their details publicly, why doesn’t Viceroy do the same?

We prefer to avoid the distraction altogether; our belief is the research should do the talking.

  How much money does Viceroy have in assets under management?

We do not discuss this.

  South African regulators are investigating the role of rumors around Viceroy and subsequent share movements, what’s your comment on this?

We welcome any investigation into impropriety. Viceroy does not speculate or gossip about its research, and thus encourage people not to speculate on the identity of any companies we are researching and advise caution in trading on gossip. Viceroy complies with the laws and has not released research or discussed our focus prior to publication.

  Did Viceroy set up a short position in Aspen Pharmacare Holdings Ltd. and/or the listed property stocks before the rumors began?

We do not set up positions to benefit off rumors, our positions are both long and short and are based on our research.

  To stop the rumors, could Viceroy not just say which company it’s looking into?

That would be unprofessional, as our work is based on thorough analysis and publicly auditable. Naming the company may actually constitute market manipulation as this de-facto opinion would be baseless without our report. The speculation of widespread fraud on the JSE is reflective of a system where regulators are struggling with a lack of funding, allowing bad people to abuse the system, abuse the people and take advantage of underfunding in the government. We are most willing to assist regulators in this regard where we can.

  Is Viceroy a registered company? Is it a hedge fund?

We maintain our structure confidentially.

  If Viceroy is a legitimate business, why does it use WordPress and Gmail?

To preserve our anonymity. We are not a marketing machine — we are a small team of professionals, and we use the most efficient tools possible to convey our message securely. This gives us more time to focus on our core work: investigative research.

  How much money has Viceroy made by shorting Steinhoff?

We will not disclose this figure. Our ethos is protecting consumers, investors and integrity by making sure all the facts are known. We are not only about financial gain — we consulted with analysts in relation to Steinhoff post the release of our report, with all fees paid into South African charities.

Icons Toppled

“There is nothing wrong with making money out of shorting stocks,” said Magda Wierzycka, chief executive officer of Sygnia Ltd., a Cape Town-based asset manager. “However, I am beginning to be concerned that they are now using public relations to generate volatility.”

Revelations that Steinhoff may have cooked its books and the resignation of CEO Markus Jooste and billionaire Chairman Christo Wiese spooked investors, giving Viceroy more significance than they would’ve normally had, she said.

“There was a huge cult built around Christo Wiese and Markus Jooste,” Wierzycka said. “The icons of South African business have been brought down.”

To bolster his finances Wiese has had to sell about 4.2 billion rand ($338 million) of his shares in Shoprite Holdings Ltd., another South African retailer, while Jooste has been auctioning off his racehorses. Wiese’s net worth has plunged from more than $5 billion before December to $2.3 billion, according to the Bloomberg Billionaires Index.

‘Whale Status’

The decline in Wiese’s fortunes mirrors the almost 90 percent collapse of Steinhoff’s share price since Dec. 5. While Viceroy’s report wasn’t the beginning of Steinhoff’s misery, the stock plummeted 63 percent in Johannesburg on the day the research was published, its biggest ever one-day decline.

“I can’t think of a case that has caught the attention of the investment community in the way Viceroy has captured attention following the Steinhoff story,” Adrian Saville, CEO of Cannon Asset Managers in Johannesburg, said Friday, adding that he has been in the market for more than three decades.

“In the same breath, Steinhoff’s price collapse represents one of the largest single-company capital declines in our market history,” he said. “Viceroy has been awarded ‘whale status’ by investors,” Saville said, referencing the trader known as the London Whale, who lost at least $6.2 billion for JPMorgan Chase & Co. in 2012.

Viceroy isn’t the problem, said Jean Pierre Verster, a fund manager at Cape Town-based Fairtree Capital. It’s the way people are responding to rumors, with social media only fanning speculation, he said.

“The attention given to Viceroy is disproportionate and is driven by fear and panic after their Steinhoff expose,” Verster said. “Viceroy’s influence is very dependent on their next report. If it is a damp squib, their influence will be much diminished.”

 

This Businesswoman Made Shs7 Trillion In Just Four Days

A share surge at Country Garden Holdings Co., China’s largest developer by sales, has sent Vice Chairman Yang Huiyan’s wealth up by $2.1 billion (UShs6.7 trillion) — and that’s just in the first four trading days of the year, Bloomberg reports.

Yang, controlling shareholder of Country Garden, saw her fortune soar to $25.6 billion as of Jan. 5 to rank as the fifth-richest person in the nation, according to the Bloomberg Billionaires Index. That’s before Country Garden’s shares rose another 6.9 percent on Monday in Hong Kong trading, taking its year-to-date-gain to more than 16 percent.

Yang Huiyan is one of the richest women in China

The 36-year-old Yang is China’s richest woman and the nation’s youngest billionaire, according to the Bloomberg index.

In 2005, her father transferred his controlling stake to her “due to his intention to train Yang Huiyan as the successor of his family’s interest” in the group, Country Garden said in its 2007 initial public offering prospectus.

Her father Yang Guoqiang, usually known by his Cantonese name Yeung Kwok Keung, co-founded Country Garden in 1992.

Country Garden has been one of the beneficiaries of a boom in China’s property market, which has led to buoyant earnings and booming sales, especially for the nation’s largest developers. The company reported preliminary 2017 contracted sales of 550.8 billion yuan ($85 billion) on Friday, exceeding the 500 billion yuan target it provided in August.

Chinese developers including China Evergrande Group have also soared in Hong Kong trading, boosting the fortunes of their executives. Evergrande’s Hui Ka Yan, whose wealth is estimated at $38.2 billion by the Bloomberg Billionaires Index, is China’s third-richest individual after Alibaba’s Jack Ma and Tencent’s Pony Ma.

Follow us on Twitter: @BusinessFocusug @TaddewoS . Email: staddewo@gmail.com

 

Kwese TV Tycoon’s Company Seeks U.K. Listing With Shs29 Trillion Value

African telecommunications group Econet is considering selling shares on the London Stock Exchange at a valuation of about $8 billion (UShs29.1 Trillion) next year after combining new and existing assets, according to people familiar with the matter, reports Bloomberg.

That valuation would be based on an enlarged company, partly forged through the acquisition of additional African phone businesses, said the people, who asked not to be named because the details are private. The plans have not been finalized and the final valuation may change depending on market conditions.

Econet was founded by Zimbabwean phone tycoon Strive Masiyiwa, who also owns Kwese TV that is operating in many African countries including Uganda.

Econet is in discussions with Millicom International Cellular SA to buy some African assets from the Luxembourg-based carrier, although no final decision has been made, one of the people said.

Millicom, controlled by Sweden’s Stenbeck family, is scaling back in Africa to focus on Latin America. Its holdings in Tanzania, Chad, Ghana and Rwanda serve some 25 million users, which would compliment Econet’s operations in Zimbabwe and South Africa.

Econet plans to sell about $1 billion in new shares in an initial public offering in London and may consider a secondary listing in Johannesburg, according to the people. The group, which is seeking to attract international investors is likely to use new funds for acquisitions, but no final decision has been made, the people said.

Econet declined to comment on the specifics of its plans, saying Masiyiwa has built substantial interests outside Zimbabwe in telecommunications, media, and financial services in the 18 years since he left the country.

“We are working to streamline these into a vehicle which can be listed,” the company said in an emailed response to questions. “At the moment, Econet considers it premature to discuss further, but will provide further clarity should the listing proceed.”

Millicom spokesman Malcolm Fitzwilliams declined to comment, adding that its priority is to profitably and responsibly accelerate organic sales growth. The company’s stock declined 0.9 percent to 532 kronor at 2:24 p.m. in Stockholm.

Closely-held Econet, which has a listing in Zimbabwe of its wireless carrier, has interests in 17 countries, including South Africa, where it owns the largest domestic fiber company through Liquid Telecoms Group. Earlier this year, it raised $700 million in bonds and loan financing that it will use to pay for the planned acquisitions and a purchase of South Africa’s Neotel Pty Ltd. late last year.

 

USE Suspends Kenya Airways Trading

The Uganda Securities Exchange (USE) has suspended the trading of Kenya Airways shares due to the ongoing ownership restructuring.

Paul Bwiso, the Chief Executive Officer at USE says Kenya Airways PLC is currently undergoing equity and debt restructuring and to facilitate the conclusion of the transaction without disrupting the price of the company’s shares and in accordance with a directive of the Capital Markets of Kenya, the USE on Thursday approved an application to immediately suspend the trading of Kenya Airways shares on USE.

“Therefore all trading on Kenya Airways PLC counter is hereby suspended from 16th November 2017 up to 28th November 2017. The public will be informed when the suspension is lifted and when normal trading can resume,” Bwiso said in a statement.

He added: “The issuer is required to continue to comply to all its listing obligations during the suspension period and make progress reports to the Exchange.”

 

Investors Lose Shs388bn As Kenya Political Uncertainty Mounts

Nairobi Securities Exchange (NSE) investors yesterday lost KSh11.44 billion (over UShs388bn) as the cloud of political uncertainty that has persisted since the September 1 nullification of the presidential election intensified with news that electoral agency commissioner Roselyn Akombe had resigned and fled the country, reports the Daily Nation.

Dr Akombe’s decision to jump ship seven days to the October 26 repeat poll raised political anxiety slowing down trading at the Nairobi bourse and turning all the indices red.

Share prices fell in 16 out of the 64 listed securities at the exchange, reflecting subdued investor sentiments that are expected to persist till mid next month.

Market capitalisation stood at Sh2.295 trillion at the close of business, down from Sh2.306 trillion on Tuesday. The market closed 6.23 points lower at 3591.62 points, weighed down by significant losses on blue chip counters, which normally attract heavy foreign investor trading.

The number of shares traded rose by 8.2 million to Sh29.12 million from Tuesday’s Sh20.91 million – meaning there was little movement on share prices.

This came as the Central Bank of Kenya (CBK) reportedly sold dollars to buttress the shilling, which equally took a hit from the political uncertainty.

The NSE All Share Index (NASI) was down by 0.78 points to 156.6 points while the NSE 25 Share Index dropped 13.03 points to stand at 4080.25.

Currency Takes Beating

Investors, mainly foreigners, continued selling shares on blue chip counters that carry heavier weighting on the main indices. The shilling also took a beating from the dramatic political events.

Currency traders told Reuters the central bank had sold dollars in the foreign exchange market after the shilling weakened, on news that she had resigned.

Commercial banks quoted the currency at an average of 103.30/40 units in afternoon trading, compared with Tuesday’s close of 103.20/40.

“We saw a light intervention by the central bank but the pressure is there from all sectors, mainly politically driven purchases as we get closer to the election date,” Reuters quoted a trader saying in a report.

The markets reacted negatively as the election standoff pitting opposing political players deepened, consolidating concerns among business leaders.

Opposition leader Raila Odinga’s Nasa coalition, emboldened by Dr Akombe’s resignation, restated its call for mandatory electoral reforms ahead of any repeat poll even as President Uhuru Kenyatta and his deputy, William Ruto, in two of their political campaign rallies said the repeat presidential poll would go on as planned.

They spoke as IEBC chairman Wafula Chebukati rattled by Dr Akombe’s resignation read the riot act to political players in the repeat election.

Uganda Securities Exchange Becomes A Company Limited By Shares, Eyes Listing

The Uganda Securities Exchange (USE) has received a formal approval from the Capital Markets Authority (CMA) to operate a demutualised stock exchange.

This means that USE will become a company limited by shares with a change in its governance and managerial structure. Previously, USE has been a mutual company limited by guarantee.

Address the press at USE offices in Nakawa in Kampala, Paul Bwiso, the USE Chief Executive Officer said that this development is in accordance with the requirements of the Capital Markets Authority [Amendment] Act 2016 and the Capital Markets Authority [Establishment of Stock Exchange] Amendment Regulations 2016.

Demutualisation means that the ownership of the Exchange has been separated from the trading rights of its members [the stock brokers].

Bwiso revealed that this will allow for an independent, transparent and flexible governance structure that fosters decisive action in response to all the changes in the exchange’s operating business environment.

He added that the efforts to demutualise the Exchange have been underway since 2007.

“The approval of the demutualisation marks a great milestone for the USE and the Uganda capital markets as a whole,” Bwiso said.

“It means growth for the exchange and ability to attract strategic investors to the sector which places us in a better position to facilitate the growth of business and the Ugandan economy as a whole,” he added.

This move brings the local exchange at par with the regional stock markets that already demutualised.

In Kenya, the Nairobi Securities Exchange demutualised in September 2011. The Dar es Salaam Stock Exchange demutualised in June 2015 while the Rwanda Stock Exchange was demutualised from the start as it was registered as a company limited by shares in October 2005 before being officially launched in January 2011.

“As a demutualised entity that is profit-seeking, the USE will capitalize on new income opportunities by being innovative and creative while diversifying away from traditional stocks and bonds into derivatives and EFT’s,” Bwiso added.

The company will have Shs1bn authorized share capital. Businessman Charles Mbire is the Chairman of the company.

Bwiso said that the approval also paves way for the planned self-listing of the USE through an Initial Public Offer (IPO) that is hopped to happen in the next few years.

Robert Baldwin, the Chief Executive Officer at Crested Capital and represented Mbire said Ugandans should embrace buying shares in successful listed companies so that they can have a share of the profits made.

USE has in the past few years been posting profits. In 2016, USE made a net profit of Shs276m, down from Shs300m in 2015. In 2014, it made a net profit of Shs1.7bn.

David Ogong, Director Market Supervision at CMA said USE is expected to fully demutualise in 2018. He added that demutualisation is expected to improve the stock exchange’s governance and deepen the capital markets.

Bwiso said that going forward; the trading participants (stock brokers) will be required to reduce their shareholding to no more than 40% within the next three years while no single member will be allowed to hold more than 10% of the issued shares at the exchange.