The disclosed value of corporate deals in East Africa crossed $1 billion (Sh102 billion) in the nine months to September, largely driven by merger, acquisition and private equity deals in Kenya.
Data compiled by advisory firm I&M Burbidge Capital shows that the number of deals in the period stood at 58, equal to last year’s over the same period. Out of these deals, private equity dominates with 29 followed by mergers and acquisitions at 23.
The financial services and ICT sectors accounted for nearly half of all deals, a combined 47 per cent, while energy (nine per cent), transport and logistics (seven per cent) and manufacturing (seven per cent) also had a good showing.
“Private equity investments and exits compose the majority of deals recorded thus far with 29 deals valued at $491.65 million (Sh50.4 billion). M&A deals follow closely behind with 23 deals but at a higher value of $572.38 million (Sh58.7 billion),” said I&M Burbidge in their East Africa Financial review report for September.
“This is indicative of East Africa’s profile as a key investment destination, particularly for private equity investors backed by foreign capital, a stark divergence with foreign investor participation in the public capital markets.”
In September, the report says, the largest deal was Vivo Energy’s acquisition of Engen’s operations in eight African countries, including Kenya for Sh20 billion. Other significant deals so far this year include mobile lending firm Tala’s Sh6.5 billion capital raise in April for expansion and insurer Allianz Group’s Sh8.1 billion agreement to acquire an eight per cent stake in reinsurer Africa Re in May.
Most investments into the region are thus taking place outside of the capital markets, where companies have reduced their capital raising efforts though corporate bonds or listings significantly the last few years.
The Kenyan stock market—the most vibrant in the region—has not had an IPO since 2015’s Stanlib Fahari I-Reit sale, and there has only been one corporate bond issued (EABL’s Sh6 billion second tranche offering) since 2015.
When exiting an investment, private equity firms are also failing to make use of the stock market as an option, preferring instead to sell their stakes directly to the PE firms or strategic investors.
World Bank pushes G-20 to extend debt relief to 2021
World Bank Group President David Malpass has urged the Group of 20 rich countries to extend the time frame of the Debt Service Suspension Initiative(DSSI) through the end of 2021, calling it one of the key factors in strengthening global recovery.
“I urge you to extend the time frame of the DSSI through the end of 2021 and commit to giving the initiative as broad a scope as possible,” said Malpass.
He made these remarks at last week’s virtual G20 Finance Ministers and Central Bank Governors Meeting.
The World Bank Chief said the COVID-19 pandemic has triggered the deepest global recession in decades and what may turn out to be one of the most unequal in terms of impact.
People in developing countries are particularly hard hit by capital outflows, declines in remittances, the collapse of informal labor markets, and social safety nets that are much less robust than in the advanced economies.
For the poorest countries, poverty is rising rapidly, median incomes are falling and growth is deeply negative.
Debt burdens, already unsustainable for many countries, are rising to crisis levels.
“The situation in developing countries is increasingly desperate. Time is short. We need to take action quickly on debt suspension, debt reduction, debt resolution mechanisms and debt transparency,” said Malpass.
Kenya’s Central Bank Drafts New Laws to Regulate Non-Bank Digital Loans
The Central Bank of Kenya (CBK) will regulate interest rates charged on mobile loans by digital lending platforms if amendments on the Central bank of Kenya Act pass to law. The amendments will require digital lenders to seek approval from CBK before launching new products or changing interest rates on loans among other charges, just like commercial banks.
“The principal objective of this bill is to amend the Central bank of Kenya Act to regulate the conduct of providers of digital financial products and services,” reads a notice on the bill. “CBK will have an obligation of ensuring that there is fair and non-discriminatory marketplace access to credit.”
According to Business Daily, the legislation will also enable the Central Bank to monitor non-performing loans, capping the limit at not twice the amount of the defaulted loan while protecting consumers from predatory lending by digital loan platforms.
Tighter Reins on Platforms for Mobile Loans
The legislation will boost efforts to protect customers, building upon a previous gazette notice that blocked lenders from blacklisting non-performing loans below Ksh 1000. The CBK also withdrew submissions of unregulated mobile loan platforms into Credit Reference Bureau. The withdrawal came after complaints of misuse over data in the Credit Information Sharing (CIS) System available for lenders.
Last year, Kenya had over 49 platforms providing mobile loans, taking advantage of regulation gaps to charge obscene rates as high as 150% a year. While most platforms allow borrowers to prepay within a month, creditors still pay the full amount plus interest.
Amendments in the CBK Act will help shield consumers from high-interest rates as well as offer transparency on terms of digital loans.
Scope Markets Kenya customers to have instant access to global financial markets
NAIROBI, Kenya, Jul 20 – Clients trading through the Scope Markets Kenya trading platform will get instant access to global financial markets and wider investment options.
This follows the launch of a new Scope Markets app, available on both the Google PlayStore and IOS Apple Store.
The Scope Markets app offers clients over 500 investment opportunities across global financial markets.
The Scope Markets app has a brand new user interface that is very user friendly, following feedback from customers.
The application offers real-time quotes; newsfeeds; research facilities, and a chat feature which enables a customer to make direct contact with the Customer Service Team during trading days (Monday to Friday).
The platform also offers an enhanced client interface including catering for those who trade at night.
The client will get instant access to several asset classes in the global financial markets including; Single Stocks CFDs (US, UK, EU) such as Facebook, Amazon, Apple, Netflix and Google, BP, Carrefour; Indices (Nasdaq, FTSE UK), Metals (Gold, Silver); Currencies (60+ Pairs), Commodities (Oil, Natural Gas).
The launch is part of Scope Markets Kenya strategy of enriching the customer experience while offering clients access to global trading opportunities.
Scope Markets Kenya CEO, Kevin Ng’ang’a observed, “the Sope Markets app is very easy to use especially when executing trades. Customers are at the heart of everything we do. We designed the Scope Markets app with the customer experience in mind as we seek to respond to feedback from our customers.”
He added that enhancing the client experience builds upon the robust trading platform, Meta Trader 5, unveiled in 2019, enabling Scope Markets Kenya to broaden the asset classes available on the trading platform.