African Investor Relations

Shareholders can force listed companies in Kenya to publish their shareholder concerns over the audit, or cessation of an auditors services on a website. The threshold at which this can be mandatorily implemented is 5% of the issued share capital or 100 shareholders. Given the high number of shareholders in Kenya and the high number of Facebook users getting the 100 shareholders in line could be easy to line up some rather disruptive PR for a listed company. What’s the purpose of this, really?

458 Members’ power to require website publication of audit concerns

(1)        The members of a quoted company may require the company to publish on a website a statement setting out any matter relating to—

(a)        the audit of the company’s financial statements (including the auditor’s report and the conduct of the audit) that are to be laid before the next financial statements meeting, or

(b)        any circumstances connected with an auditor of the company ceasing to hold office since the previous financial statements meeting, that the members propose to raise at the next financial statements meeting of the company.

(2)        A company is required to do so once it has received requests to that effect from—

(a)        members representing at least 5% of the total voting rights of all the members who have a relevant right to vote, or

(b)        at least 100 members who have a relevant right to vote and hold shares in the company on which there has been paid up an average sum, per member, of at least 1,000 shillings.

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First Merchant Bank are the asset managers of NITL Malawi, a closed end investment fund investing in a diverse array of listed and unlisted Malawian equities. They do a good job. FMB’s market commentary is always insightful and almost always right. They suggest that prospects bode well for the Malawi Stock Exchange (no link provided as a visit is unlikely to add value) on the back of changing pension legislation.

BUT, as usual with Malawi, the shaky macro-economic policies are enough to keep investors away and depress this trend. For the brave foreigners however, and for those that get their timing right, the rewards as we have seen in the past, can be stellar. I hereby bring you the NITL market commentary for the Malawi Stock Exchange (no link provided as a visit is unlikely to add value):-

“Investor appetite for Malawi equities remained subdued throughout the year and, unlike its African peers, the market has yet to stage a recovery from the prolonged bear run of 2009. Even the impressive results published by a good number of listed companies received a muted or non-existent response from the market.

Foreign investment capital has yet to return to Malawi to any significant extent as concerns persist over the country’s foreign exchange position and a perceived concomitant risk of currency re-alignment to address the structural imbalance. Domestic institutional investor interest has also remained lukewarm and, by and large, was confined to bargain hunting to remove historic market overhangs in a number of counters.

Our overall fund value grew by a modest 2.5% over the year with fair value increases, particularly in Press Corporation and Standard Bank, being largely cancelled out as NBS Bank Limited, the contrarian star performer in the portfolio last year, gave up a considerable percentage of its exceptional 2009 gains. The performance of the fund does, however compare favourably with the Malawi domestic share index which declined by 1% over the corresponding period.

Almost all our investee companies matched or exceeded expectations both in terms of profits and dividends. In the financial sector, our three bank investments; National Bank of Malawi, NBS Bank Limited and Standard Bank Limited posted good results. Composite insurer, Nico, recovered well from the adverse impact of the 2009 downturn in the equity market buoyed also by good results from its majority holding in NBS Bank Limited. Strong regional sugar prices more than compensated for a weather related drop in Illovo’s sugar production and record profits were once again achieved by this company. Diversified conglomerate Press Corporation Limited maintained profits at historic levels which was commendable against a background of erratic fuel supplies and persistent foreign exchange shortages which negatively impacted its food and beverages, telecommunications and fuel distribution businesses.

Property investments, MPICO and Kang’ombe Investments, continued to achieve capital growth through fair value gains on valuation of their respective property portfolios. Both also returned increased distributable profits reflecting the buoyant property rental market, particularly in the capital city, Lilongwe. In the manufacturing sector, Packaging Industries Limited, despite facing serious constraints in importing raw materials for production, managed to achieve some growth in profits through productivity improvements and cost saving initiatives. Dairibord Malawi Limited, however, disappointed with a break even position as it continues to incur significant losses on its non core fruit canning operations. With a reduction in average selling prices of tobacco outweighing the benefit of an increase in national tobacco production to record levels, commission earned by Auction Holdings Limited fell below that of the prior year.

Increased rejection rates on the floors also led to increased overheads. Nevertheless, this group remains very profitable with an enviable asset base. The carrying value of our investment in Auction Holdings is derived from a share transfer price fixed by its directors which is extremely conservative, translating to a dividend yield of 36% and a price to book ratio of a mere 15%. It is hoped that the company’s board will consider addressing this anomaly in the near future.

A relatively modest shareholding was acquired in the 2008 IPO of mobile telephone operator TNM. Returns to date are low as the company invests heavily in network roll out and subsidization of handsets to increase market penetration.

In line with the overall upward trend in profitability of the companies in our portfolio, total dividend income grew by 29% and, at K149million, equates to a dividend yield of 5.87% on the 30 September 2010 closing investment portfolio valuation. This is comfortably above the MSE domestic weighted average dividend yield of 4.58% at 30 September 2010. Interest earned exceeded the prior year level by K2.4million and, as a result of reduced management fees, the increase in overall expenditure was contained below inflation at 6.2%. Overall distributable profits continued,therefore, to trend upwards, increasing by 36% and permitting your board of directors to recommend a very healthy increase in the total dividend to be declared for the year.

In the near term, despite the country’s very positive GDP growth story, for as long as other macro economic uncertainties persist, foreign investor interest in the Malawi equity market is likely to remain subdued. The market should, however, receive a major positive impetus when the proposed new pension legislation is enacted. The requirement that virtually all employed persons be members of pension schemes will greatly increase the domestic savings base and, almost inevitably, lead to greater domestic institutional investor demand for equity investments.

Prices of Malawi listed equities have now become, in the main, undemanding relative to their emerging market peers. Furthermore, dividend yields thereon now compare very favourably with yields available from alternative domestic investment opportunities in the property and money markets. It might, therefore, be expected that, some time over the course of the coming year, the Malawi market could see some firming of equity prices. Irrespective of investor sentiment, our diversified portfolio of investments across a range of leading Malawi corporates should continue to generate strong dividend flows into the future.

First Merchant Bank Limited

11 November 2010

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Imara Holdings, a pan-African securities and investment banking group predicts a prosperous 2011 for investors in African markets if current trends are anything to go by:-

Sub-Saharan markets open strongly

Sub-Saharan „frontier markets‟ showed sharp equity price gains in the first week of trading in 2011, according to Imara, the Pan-African financial services group. The Botswana-registered company has highlighted an Africa comeback following strong buying by offshore investors in the final quarter of 2010. Imara market-watchers told international clients they were confident that offshore buying would continue into 2011 and confirm Africa‟s position as an investment destination of growing significance.

Alun Thomas of Imara Africa Securities noted: “Leading the pack was the Ugandan market whose composite index rocketed up 8.8% in just three trading days. This was driven by regional listings such as East African Breweries, Equity Bank, KCB Group and Jubilee Holdings.” Despite post-election political issues in Cote d‟Ivoire, its BRVM composite index rose 6.2%. Thomas said this was primarily a result of the heavyweight Telecomms counter, Sonatel, whose price rose 12.4% “much to the surprise of many portfolio managers, some of whom had lightened their holdings last year, given the increase in political risk”. The largest sub-Saharan market excluding South Africa‟s JSE showed no sign of a holiday hangover, as Nigeria‟s all share index leapt 5.7%. Last year this market grew by almost 17% in US dollar terms. Over in East Africa, the Kenyan market also began 2011 on a positive note. Kenya‟s diverse stock market put in a stellar performance last year, with the Nairobi exchange recording growth of 28% in US dollar terms by year-end. A further 4.3% was added in the first week of trading in the new year.

Further south, equities also looked upbeat. Thomas pointed out: “Zimbabwe started proceedings on the right note, given a flat 2010. Its Industrial index, comprising over 70 companies with a combined market capitalisation of US$4.3 billion, surged 2.8%, led by the blue-chip beverage company, Delta Corporation, which put on 7.7%.” The markets of Botswana, Mauritius, Namibia and Malawi were all in positive territory as the new year kicked off. Only Ghana, down 0.67%, and Zambia, which dropped 0.45%, disappointed investors in the first week of this year. “With such an encouraging start to the year,” said Thomas, “there is early promise that the African frontier markets are living up to the expectations of those investors who showed renewed interest last year.”

SSUED ON BEHALF OF: IMARA

BY: CLEAR DISTINCTION COMMUNICATIONS

IMARA CONTACT: Alun Thomas

Tel: +267 319-1768

alun.thomas@imara.co

CONSULTANCY CONTACT: Carol Dundas

Tel: +27 11 444-0650

Mobile: +27 83 447 6648

carol@cleardistinction.co.za

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Kenya’s stockbrokers and investment banks are moving fast to automated systems. They say that the future of stock trading is going to be via the Internet and mobile phone applications, according to a report in the Business Daily newspaper(www.businessdailyafrica.com). Kenyans are fast with technology and moved en masse to leapfrog the rest of the world and adopt new technology for mobile money transfers.
Recently CFC Stanbic Financial Services (www.stanbicbank.co.ke) and Suntra Investment Bank (www.suntra.co.ke) launched automated trading systems (ATSs). African Alliance Securities, Faida Investment Bank and Drummond Investment Bank said they plan to launch online trading platforms early in 2011.
The report quotes Faida Investment Bank Chief Executive Bob Karina: “Market players will have no choice but to create systems that allow clients to operate from home and offices.” He added that online trading will save brokers the costs of opening new branches and other costs of reaching clients. He said Faida had contracted information technology company Tangaza to design an online trading system similar to Suntra’s.
King’ori Githinji, Executive Director at Drummond Investment Bank, reportedly said improved Internet speeds and reduced Internet connection costs have catalysed the growth. He said Drummond already offers some online services, including client orders through e-mails linked to their accounts.

According to African Alliance Securities managing director Lucas Otieno, an important milestone will be when there is connectivity between the stockbrokers’ back-office systems and the Nairobi Stock Exchange (www.nse.co.ke). The NSE is upgrading its back-office system estimated to be complete by the end of the first quarter of 2011 for KSh100 million cost. He said: “Once brokers get access to the NSE back office system then we’ll move to the next level.” He forecast that it could reduce settlement time. According to the report, it takes up to 7 days to complete a transaction including transfer of ownership and receipt of funds.
The paper also quotes Michael Gichohi, Chief Executive of Suntra Investment Bank and Chairman of the Kenya Association of Stockbrokers and Investment Banks that online trading could bring a revolution to share trading: “No one imagined M-Pesa (a mobile money system) would be as big when it was started.”
The move could also open up the stockmarket to a much wider range of participants than the 1.8 million accountholders listed at the Central Depository and Settlement Corporation. The automated trading systems (ATSs) should permit online trading via mobile phones and could attract some of the 19 million mobile phone subscribers in Kenya, of whom 13.5 million use Safaricom’s M-Pesa money mobile transfer service.
Treasury Permanent secretary Joseph Kinyua reportedly warned: “Companies that intend to remain competitive and in business must embrace technology in their processes,” at Suntra’s ATS launch last week.
CFC Stanbic Financial Services managing director Nkoregamba Mwebesa was reported saying the new systems have attracted interest from Kenyans living abroad: “Investors both in the country and those in the diaspora have lauded the launch of the online share trading platform since it provides a convenient and innovative solution to shares trading.” He predicted that online trading will eliminate investor queues in future and all trading will be done without the need to go to brokerage offices.

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Proshare Nigeria – a good portal on Nigerian equities and related issues highlighted the extent to which Nigerian regulators are uninformed in their communications to the market. A good colleague of mine once said that the first step to wisdom is acknowledging one’s ignorance and this applies to the article below, which illustrates the extent to which the Nigerian Stock Exchange needs help or more educated staff in communicating with the market:- an open invite to all of those PR firms chomping at the bit to get some Nigerian action?

Proshare shared the ‘advertorial’  on the search for a PR firm which was published on the SEC website for members of the public:

Appointment of a Rapid Response Public Relations Consultancy

“The Securities & Exchange Commission wishes to engage the services of a resourceful Public Relations Consultancy to undertake on behalf of the Commission media interventions in the next one month. Public Relations Consulting Firms wishing to be considered for engagement are invited to submit proposals taking cognizance of the requirements listed hereunder.

We must commend this open display of transparency at SEC especially in its open declaration of purpose and engagement of the public – using its website much more than before.

Prior to now, most interventions from SEC had come through selected press briefings and exposes on the front pages of newspapers – a move that has gained at least a bit of credibility since, as you’ll recall, formed the public communication strategy through which the initial story that set the ‘NSEGate’ in motion broke. They could have continued to deploy this model as effectively as it has done to date; but it appears a change in approach and objective has necessitated a change in tactic.

Most of the media interventions had sourced from “anonymous sources.” Indeed, so many stories and commentaries have come out in the media citing such fabled sources that the market must be wondering who and what to believe again; which means you should feel free to completely disregard any more of such communications as the SEC has now decided to take a hands-on approach to its communication requirements.

Yet, reading this SEC advertorial, it would take something deeper than insight to configure the purpose, motivation and intent here.

What are they responding to? Why the advertisement now when evidence abounds that the media unit had been involved in such – in furtherance of its legitimate role – to engage and ensure that the media represents the regulator fairly?

The best response they can give is efficiency and diligence in the discharge of its responsibility and core mandate – not whitewashing of image. So what is it about this advertorial that should interest vanguards of the market?

First is the choice of language deployed to communicate what could otherwise have been a routine engagement of a third party consultant for an issues based advisory service (including an information management capacity support).

Why bid for a 1-month engagement that makes it appear as a campaign pitch? Further, describing the invitation for bids as “rapid response public relations consultancy” for the Commission was, to say the least, unbecoming of a regulatory institution like the SEC, as it was uncouth and ‘smacks of propaganda rather than enlightenment’. Worse still, the statement betrayed a lack of understanding of the subject matter of public relations – as a concept and practice – in the discharge of the Commission’s responsibilities.

The announcement said that the ‘Consultancy’ would make media interventions on behalf of the Commission. This is a dubious proposition. For one, there is something like “offensive PR intervention“, as was manifest in the Commission’s recent response to media reports of its operations and sense of accountability.

Given the choice of language of the SEC announcement, the proposed scheme suggests an impending action by the Commission or a desire by the Commission to do something that might be unpopular or in the extreme, inimical to public interest, through the manipulationof the media, using a “resourceful public relations consultancy”.

Reflecting deeply, what deed or proposed policy of the Commission would require a “Rapid Response Service” PR consultancy?

We may learn from this engagement a new world-class practice on how regulators should relate with the general public and its markets. And to think that the announcement was made by the Media Department of the Commission! What does this department exist for, in the first place, to warrant the proposed engagement? Given that the Corporate Affairs function itself was one of the advertised offices in its recent vacancy advertorial by KPMG, it is possible therefore that their exists capacity and competence issues with the media aspect of its functions – and this surely would not be resolved by a one-month engagement.

It is important that we understand why they are trying to hire a PR firm therefore. Is it to clean up the image of the SEC and the stock exchange to international investors since they are requesting for a firm that has international affiliations?

In any case, from a professional public relations perspective, the kind of brief proposed by SEC could have had a more positive outlook if the PR Consultant’s brief was described in a way that encourages one to believe that the consultant would be looking to engage the media (on behalf of the Commission) in manners that respect the independence of the media as a professional practice.

One hopes that the Nigerian media have taken note of this proposal by the Commission to ‘intervene’ in their editorial judgment and management.

Curiously, there was no closing date for submission of bids.

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We expect to launch AICO’s new website soon but in the interim have posted some quick facts herein as AICO continues to draw the attention of investors prior to its planned capital raise. Click here to register on our website and receive an alert of the launch of the new AICO investor relations website.

Some brief big picture stats appear below:-

The latest analyst presentation, a good source of up to date information, appears below. Thereafter followed by charts, the share quote, annual reports and more:-

AICO Africa analyst briefing – 2010

AICO Africa Limited, incorporated in Zimbabwe on 23 July 2008 was formed and subsequently listed on the Zimbabwe Stock Exchange when the shareholders of The Cotton Company of Zimbabwe Limited Group exchanged their shareholding in Cottco for a shareholding in AICO. This merger also involved transferring the assets of Cottco AICO and AICO replacing Cottco’s listing on the Zimbabwe Stock Exchange on 1 September 2008.

Click on the image below to go to the latest share chart on AICO:-

AICO owns businesses with compelling long-term potential:-

Seedco, 51% owned by AICO,   is the largest grower and pan-African distributor of hybrid maize and other broad acre crop seeds in Zimbabwe, Zambia and Malawi and is also resident in Botswana and East Africa. As at March 31 2010, the Company had 182 hectares under seed production and estimated to produce 1,565 tonnes of seed. Click here to register for the launch of Seedco’s new investor relations website.

Quton Seed Company, specializes in producing cotton seed and is Zimbabwe’s sole cotton seed planting company. Maintaining strong breeding programmes, Quton enjoys (the sole) rights to commercialise varieties produced by the Cotton Research Institute. Quton has a strong breeding programme and enjoys exclusive rights to commercialise varieties produced by the Cotton Research Institute.

Cottco is the biggest cotton processor and marketer in sub-Saharan Africa.  Cottco is involved in every facet of cotton production and sales, including but not limited to the provision of agronomic advisory services, production and merchandising of planting seed, supply of chemicals and fertiliser, ginning, warehousing as well as marketing lint and cotton seed in global and local markets.

Olivine is a dominant manufacturer and marketer of household goods and fast moving consumer goods (“FMCGs”) including, but not limited to, edible oils and fats, canned vegetables, soaps, cotton and soya meal. AICO acquired 49% of Olivine Holdings as part of its on-going diversification strategy during Zimbabwe’s hyper-inflation. The Industrial Development Corporation of Zimbabwe (IDC) holds the remaining 51%.

Click on the Share Quote below:-

To access and read AICO’s annual reports online click on the links below. To download the annual reports click here and view the bottom left of the page:

>> AICO 2010 annual report

>> AICO 2009 annual report

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Is there any greater evidence of potential growth in Internet in Zimbabwe, than this update from Econet Wireless?

Zimbabwe´s largest telecoms firm, Econet Wireless, now has over 5 million subscribers, and now accounts for the largest number of lines sold in the country.

In a market update, CEO Mr Douglas Mboweni said the total number of subscribers stood at 5,012 million as at November 30. He said demand for new lines remained strong, but the company was currently managing to sell all the lines being released onto the market.

“Econet continues to account for the majority of all lines sold in the market,” Mr Mboweni said. “The increase in the subscriber base has been made possible by the ongoing network expansion.”

He also announced that Econet now has over 400 000 customers who have connected to the three products being offered under Econet Broadband, the national broadband service which was launched in October. The total number of customers now connected stands at 432 312.

“Work on the fibre optic network has been completed, and the network has a direct connection to the SEACOM cable in Durban, South Africa,” Mr Mboweni said. Through its parent company, Econet Wireless Group, Econet Wireless Zimbabwe also has dedicated capacity on SEACOM cable, ensuring its customers do not have to go through the networks of third parties.

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FUTURE PROSPECTS FOR THE COMPANY

Overall growth in the luxury branded goods market is predicted to more than double over the next decade according to Armando Branchini of the luxury goods association Altagamma, with growth led by demand from the emerging markets. Continued demand for quality crocodile skins is therefore assured. Padenga, by virtue of its concentration on size and quality of the skins have ensured that they will remain a part of the supply chain that will benefit from that growth.

As a primary producer, the Company loses a significant amount of value by virtue of the sale of an unfinished commodity product with limited value addition. A priority therefore is to add value to the skins produced where possible in a manner that will not compete with existing customers. The Company is investigating opportunities to achieve this goal through improved trading arrangements with key customers in a way that meets the common objectives of all parties in creating enhanced security of market, value and financial return.

In keeping with the vertical integration strategies being followed by certain luxury brands, Padenga intends to pursue potential joint venture projects with suitable partners in an effort to access technology, increase value creation in Zimbabwe, secure market access and enhance returns to shareholders.

Considerable opportunity exists to extend into the production of alligators and saltwater crocodiles in the United States and Australia respectively. Although perceived as competitors to the Nile crocodile, the skins of these two species are predominantly used in the production of different luxury accessories. The limited overlap in end-product utilisation makes this an attractive proposition. Padenga has developed significant Intellectual Property in livestock husbandry, capable of competing against the systems used in these continents.

Crocodile oils and related by-products are perceived to have significant value in the pharmaceutical and cosmetics industries. This is the result of a long history of Chinese and other Asian cultures using crocodile extracts to cure a number of health problems and ailments. A constraint to the pursuit of this interest has been the necessity to achieve volume production, in order to confer a degree of stability in production volumes and supply. Padenga has achieved the numbers and consistency of supply to pursue this with interested business partners with the objective of supplying by-products of the highest quality for use in appropriate products.

Padenga’s location on Lake Kariba and its operations as primarily a livestock production and husbandry operation confers significant opportunity to expand into additional forms of farming. Commercial fish production is an enterprise under consideration, employing production principles not dissimilar to those in operation at present. The additional advantage conferred from this enterprise is the ability to generate by-products for use as food ingredients for crocodiles. The commonality in terms of operational and production systems, raw feed ingredients, abattoir and processing plant technology, export markets and end customers makes this a very exciting prospect.

The Niloticus Division has historically made profits in the past. However due to the global financial crises this has affected current profits. Management are confident that the Company will make profits in the future.

In conclusion, Padenga will look to establish itself as a diversified agro-business involved in the primary production of crocodilians and their derivatives, freshwater fish and related animal proteins. It is the intention of Padenga to pursue value-added processing of these products for maximum financial advantage. The Company seeks to become a dominant force in the production and marketing of crocodilian skins, meats and by-products to discerning customers worldwide.

As noted in Paragraph 1.4 above, overall growth in the luxury branded goods market is predicted to more than double over thenext decade according to Armando Branchini of the luxury goods association Altagamma, with growth led by demand from the emerging markets. Continued demand for quality crocodile skins is therefore assured. Padenga, by virtue of its concentration onsize and quality of the skins have ensured that they will remain a part of the supply chain that will benefit from that growth.As a primary producer, the Company loses a significant amount of value by virtue of the sale of an unfinished commodity productwith limited value addition. A priority therefore is to add value to the skins produced where possible in a manner that will notcompete with existing customers. The Company is investigating opportunities to achieve this goal through improved trading arrangements with key customers in a way that meets the common objectives of all parties in creating enhanced security of market, value and financial return.In keeping with the vertical integration strategies being followed by certain luxury brands, Padenga intends to pursue potential joint venture projects with suitable partners in an effort to access technology, increase value creation in Zimbabwe, secure marketaccess and enhance returns to shareholders. Considerable opportunity exists to extend into the production of alligators and saltwater crocodiles in the United States andAustralia respectively. Although perceived as competitors to the Nile crocodile, the skins of these two species are predominantly used in the production of different luxury accessories. The limited overlap in end-product utilisation makes this an attractive proposition. Padenga has developed significant Intellectual Property in livestock husbandry, capable of competing against the systems used in these continents.Crocodile oils and related by-products are perceived to have significant value in the pharmaceutical and cosmetics industries. This is the result of a long history of Chinese and other Asian cultures using crocodile extracts to cure a number of health problems and ailments. A constraint to the pursuit of this interest has been the necessity to achieve volume production, in order to confer adegree of stability in production volumes and supply. Padenga has achieved the numbers and consistency of supply to pursue thiswith interested business partners with the objective of supplying by-products of the highest quality for use in appropriate products. Padenga’s location on Lake Kariba and its operations as primarily a livestock production and husbandry operation conferssignificant opportunity to expand into additional forms of farming. Commercial fish production is an enterprise underconsideration, employing production principles not dissimilar to those in operation at present. The additional advantage conferred from this enterprise is the ability to generate by-products for use as food ingredients for crocodiles. The commonality interms of operational and production systems, raw feed ingredients, abattoir and processing plant technology, export markets andend customers makes this a very exciting prospect.The Niloticus Division has historically made profits in the past. However due to the global financial crises this has affected currentprofits. Management are confident that the Company will make profits in the future.In conclusion, Padenga will look to establish itself as a diversified agro-business involved in the primary production of crocodilians and their derivatives, freshwater fish and related animal proteins. It is the intention of Padenga to pursue value-added processing of these products for maximum financial advantage. The Company seeks to become a dominant force in the production andmarketing of crocodilian skins, meats and by-products to discerning customers worldwide.

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The 2010 Company of the Year Awards in Kenya sponsored by the Kenya Institute of Management failed to recognise investor relations in its award criteria. This is at a time when there is no firm legislative environment and the Companies Bill 2008 has yet to be promulgated because Kenya’s legislators are very busy.

Companies have set their own standards of shareholder communications. This is not good because none of them are doing a good job in the regulatory vacuum. Kenyan companies are missing out on an opportunity to shine.

The winners of the Kenyan Companies of the Year Awards are:-

The criteria for the COYA awards are everything except investor relations. That’s all you need to know.

As you are aware the standards of corporate governance have regressed in Kenya because of the obligation of shareholders to locate their shareholder proxy materials rather than have their company obligated to provide them. It all started when Safaricom sought exemption from sending out annual reports to its shareholders and the regulators did not put in place a quid pro quo. That started a trend. An unnecessary one.

Companies are able to determine their own standards of shareholder communications and this means that the majority shareholder (the one with the votes) determines what this should be. Director ignorance and apathy and an uninformed public and some sleepy regulators means that listed companies in Kenya have a unique opportunity to shine in this area of governance.

It’s an opportunity lost.

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Tom Minney’s blog announced that the Bralirwa IPO was opening on 22 November 2010. US$37m proceeds is nothing to sneeze at for a first IPO in a small African market and the controlling shareholder (Heineken) is buying more in the process (good signs) so I am looking for the prospectus. It’s not on the website. Let me know if you see one online.

There’s a few things to like about this IPO – a discount, tax incentives for investors and the size of the offer. I hope that a broad allocation policy is adopted to ensure post market liquidity. There’s still too many brokers in my opinion.

The Rwandan Government said today (22 November) that it aims to raise RwFr 22.1 billion (US$37.3 million) from the sale of its 30% stake in brewer Brasseries et Limonaderies du Rwanda BRALIRWA (www.bralirwa.com), according to a report on Reuters.
It will be the first initial public offering and the share is intended to be traded on Rwanda’s Over The Counter market. The share offer will run from 23 November to 17 December.
According to Reuters, Finance Minister John Rwangombwa told a news conference that the Government would sell 128.6 million shares, or 25% of the company, at RwFR 136 francs (22.9 US cents) per share. He said this is a discount to the valuation of RwFr 170 each share, in order to encourage buyers.
Government will sell the remaining 5% of its shareholding to Heineken Group, which earlier bought 70% of the brewer from the Government. BRALIRWA sells beers such as Amstel, Guinness, Mutzig and local brand Primus and has an estimated 95% market share and also bottles Coca Cola products.
Rwanda’s Capital Markets Authority (www.cmac.org.rw) launched the Rwanda Over-The-Counter market in January 2008 and is working with Government to build the capital markets. The exchange has so far mainly attracted Treasury and corporate bonds and 2 cross-listed Kenyan companies — Kenya Commercial Bank and Nation Media Group. Kenya’s Central Depository and Settlement Corporation (www.cdsckenya.com) said recently it will provide registrar services.
Reuters reports that earlier this month, the market authority said taxes had been cut in line with recommendations in East African common market proposals to attract investors and issuers. Withholding tax on dividends on listed companies is now 5% (down from 15%), tax on interest from listed bonds with a maturity of three years is now 5% percent from 15% and corporate income taxes were reduced to the lower rates ranging from 28% to 20%.
Future privatizations are set to be the sale of Government’s 10% shareholding in mobile telephone operator MTN Rwanda (South Africa’s MTN Group has 55% stake) and its 20% stake in the country’s biggest insurer, Societe Nouvelle d’Assurance du Rwanda (Sonarwa), where Nigeria’s IGI owns 35% of the shares.

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