Top 40 Investment Highlights in Africa 2012

mergers

VENTURES AFRICA – Africa has been regarded as the next investment hub in the world. As global economies struggle to keep afloat, Africa has become the new location for business. A continent looked at for its resources and image of hunger and poverty has suddenly become the new destination for business sustainability. While several investments were made in the continent this year, Ventures Africa has selected 40 notable investment deals for the year 2012. These investments were chosen based on the effect it has on the African economy and potential profit to be derived thereof. The investments range from initial forays into the African market to opening shop, mergers and acquisitions as well as investment plans that will sprout to significance in 2013. In no respective order, the investments include:

OPIC’s Amethis Africa Finance Ltd: Board of Directors of the Overseas Private Investment Corporation (OPIC) recently approved $150 million for a new company (Amethis Africa Finance Ltd) which is designed to support their growth in Africa’s lucrative sector – Agribusiness, energy & infrastructure and financial services. The new investment will help fill a financial gap that has prevented investors from taking advantage of sound investment opportunities in Africa.

Emfuleni’s $115 million Port Elizabeth Hotel: Emfuleni Resorts launched a new $115m five-star hotel and convention centre in Port Elizabeth. The project is part of the Broadwalk Casino and Entertainment World, which was opened in 2001. According to Bongi Siwisa, Chairperson of Emfuleni Resorts, “This is the largest single entertainment and tourism investment in the Nelson Mandela Bay Metro, and is a vote of confidence in the region.”

Nigeria/ Sinohydro-Cneec Power Project: The $1 billion deal signed by the Federal Government of Nigeria and Chinese synergy corporation, Sinohydro-Cneec, is an investment that will see to the stability of power supply in Nigeria. The project – a 700 mega watt Hydro Power station on the Northern Zungeru River, Niger state and a 3,050-Megawatt Hydro Power Plant on eastern Mambila Plateau – is expected to be completed by 2014.

Emirates NBD/BNP Paribas’ Deal: Dubai’s largest bank, Emirates NBD agreed to buy BNP Paribas’ Egyptian banking unit for $500 million – a deal which will help the Dubai bank expand its regional footprint. “This deal represents an excellent opportunity for Emirates NBD to enter the promising Egyptian market and achieve our strategic aspiration of expanding regionally,” Emirates NBD’s chairman Shaikh Ahmad Bin Saeed Al Maktoum said.

Barclays, Absa Deal: South Africa’s biggest retail bank, Absa, acquired African assets of Barclays, its parent company, for R18.3 billion ($2.1 billion) – 20 percent of its present market value- in December. This deal brings to a conclusion a longstanding Absa plan to combine its parent company’s African operations with expected growth from the continent.

Shanduka’s MTN Nigeria Stake: South African Black Economic Empowerment investment holding company, Shanduka Group acquired a $335 million minority stake in MTN’s Nigerian business from three private investors via its wholly owned subsidiary Shanduka Telecommunication Mauritius. “This is Shanduka’s most significant investment in another African country. It is a business that is well established within a market that has great potential for further growth,” Shanduka Group CEO, Phuti Mahanyele said.

RLG $100 million Technology Centre: Africa’s leading mobile phone and computer assembler, RLG Communications, plans to build a $100 million technology centre in Ghana by 2014 with expansion plans to spread out to six other West Africa countries and three Southern African countries by first half of 2013. The company also signed a deal with the world’s biggest software and program developer, Microsoft in August as a “partnership for the future”; granting RLG an Original Equipment Manufacturing (OEM) status. The partnership involves allowing Microsoft’s software and programmes including the just-released Windows 8 to run on RLG branded laptops and phones.

Alcatel-Lucent Investments: In December 2012, Alcatel-Lucent and Tunisia signed a four-year agreement to build a new superfast wire-line broadband high capacity access network across Tunisia. The company also helped extends Ghana’s e-government services to rural regions for NITA Ghana’s National Information Technology Agency in September, 2012.

Dupont African investment: With the opening of its maiden office in Nigeria this year, the global science and innovation company also have plans to invest $150 million on the continent. The Dupont Nigeria office which serves as the company’s hub for the West African region is currently assessing Nigeria’s energy sector, agriculture, infrastructure and other capabilities.

Anglo/ Mozambique Coal Project: Anglo American Plc acquired a 59 percent stake worth $540 million investment in a Mozambican metallurgical project – Minas de Revuboe project. The investment is part of Anglo’s move to secure a strong foothold in Mozambique – a nation that has become a major coal producer.

Tiger Brand/Dangote Flour Mills Takeover: South Africa’s foods company Tiger Brands, acquired a 63.3 percent stake acquisition of the $150 million-valued Dangote Flour Mills Plc (DFM) with plans to acquire more. While Tiger brand gets the largest shunk, the remaining stakes belong to Dangote and the shareholders with each owning 10 percent and 26.7 percent of the shares respectively.

PIC’s Ecobank Investment: Africa’s largest pension fund manager, Public Investment Corp. (PIC) invested $250 million in Africa’s most geographically diverse bank, Ecobank Transnational Inc this year. The $250 million share purchase will be affected by the issuance of 3,125,000,000 shares in Ecobank, representing 19.58 percent of the total outstanding number of shares.

Elcrest’s Shell 30 percent stake: Elcrest Exploration and Production Nigeria Limited, a majorly Nigerian-owned company acquired 30 percent stake in Shell Petroleum Development Company (SPDC) Oil Mining Lease (OML 40). Elcrest also bought a 10 percent stake in the field from Total and another 5 per cent from Nigeria Agip Oil Company. The OML 40 covers an area of some 498 square kilometres and includes the Opuama, Abiala and Adagbassa Creek fields and related facilities.

NNPC/ND Western Deal: The Nigerian National Petroleum Corporation (NNPC) and ND Western, a local company purchased an onshore oil block that was formerly operated by Royal Dutch Shell. The deal has been described as “a major milestone in the [Nigerian] oil and gas sector.”

SoleRebels Asia Expansion: Young African business leader and CEO of Ethiopian Footwear Company, SoleRebels, Bethlehem Tilahun Alemu, opened her company’s first stand alone store in Kaohsiung, Taiwan’s second largest city. She has since opened other stores in Taichung and Pingtung city, Taiwan. With three more outlets expected to be opened at the end of 2012, SoleRebels plans to open about 30 outlets in Taiwan as Asia is considered a booming retail footwear market. “We are extremely excited by this store opening. Taiwan is an incredible market and the stores we are opening here give us a fantastic platform to showcase our incredible products and our innovative brand in an equally dynamic and fantastic market. This is the perfect place for soleRebels to anchor our Asia wide roll-out of soleRebels stores – truly historic strides for soleRebels,” Alemu said.

Africa’s low cost airline, Fastjet: With its first flight launched at Dar-es-Salaam, the new pan-african low-cost airline, fastjet offers flights at the lowest rate of $20 and aims to undercut long-distance bus prices, and shift the main mode of travel in Africa’s airspace.

Oando ConocoPhillips $1.79 Billion deal: Nigeria’s leading indigenous energy group, Oando PLC announced that its affiliate Oando Energy Resources (OER) entered into agreements with ConocoPhillips (COP) to acquire its entire business interests in Nigeria for an estimated cash of $1.79 billion including customary adjustments. Earlier in the year, Oando Plc made a landmark move as it completed its reverse takeover (RTO) of Oando Energy Resources Inc. (OER), previously known as Exile Resources Inc., with the pioneer listing of the company’s shares on Toronto Stock Exchange (TSX). Thus, becoming the only Nigerian company with three trans-border listings – Nigerian Stock Exchange (NSE), the Johannesburg Stock Exchange (JSE) and the TSX.

Ventyx’s $7 million deal with Eskom: Africa’s largest electricity provider, Ventyx signed two software license agreements worth more than $7 million with South African utility company, Eskom. The deal involves Eskom undertaking Ventyx’s largest implementation on supervisory control and data acquisition/distribution management system (SCADA/DMS) for real-time network monitoring and control of electric power operations.

Nigeria’s $1 Billion Sovereign Wealth Fund: Africa’s largest crude producer, Nigeria launched a $1 billion sovereign wealth fund (SWF) in August. Nigeria’s SWF has three main aims: saving money for future generations, funding infrastructure and defending the economy against commodity price shock. However, the country’s finance minister, Ngozi Okonjo-Iweala did not mention when investments would start, although a management team has been announced.

Angola’s $5 Billion Sovereign Wealth Fund: Africa’s second largest oil producing nation also followed suit launching a $5 billion Angolan Sovereign Fund (ASF) in October. The oil rich nation will be investing in domestic and overseas assets like agriculture, water, power generation and transport, with an early focus on the hotel industry in sub-Saharan Africa while channeling vast oil wealth into infrastructure, hotels, financial securities and other high-growth projects.

SABMiller’s Africa Expansion Investment: SABMiller opened its first Greenfield brewery in Onitsha, south-eastern Nigeria in August. Work began on the Onitsha site in 2011 following an investment of over $100 million, making it the largest single investment in Anambra State for almost 20 years. Over the past five years, the company has invested over $1 billion in Africa. The company also invested about $16-million over the last 18 months to increase the product penetration of Chibuku across new markets in Africa. The world’s No. 2 brewer after Anheuser-Busch InBev (BUD) spent about $260 million across Africa this year, partly to expand production of Chibuku as a commercial alternative to a corn-and-sorghum-based drink called Brukutu that’s traditionally brewed and enjoyed at home.

Morocco’s $40m Marrakech Healthcare City: Abu Dhabi firm Tasweek Real Estate Development and Marketing launched a $40 million Moroccan healthcare project, the Marrakech Healthcare City with the prospect of gaining a 30 percent return on investment (ROI). The new complex – which will take two years to construct – will be 21,000 square metres in size, providing space for a 160-bed private hospital, as well as a 40-room hotel and 56 residential apartments.Tasweek expects to recoup its entire investment by the completion of the project, with Tasweek CEO Masood Al Awar telling Arabian Business that ROI would be around 30 percent, adding to the firm’s entire $250 million portfolio’s annual yield of between 5 and 7 per cent.

CoAL’s Chinese Investment: Haohua Energy International (HEI) – a unit of the Shanghai listed Beijing Haohua Energy Resources – made a $100 millon the equity offer to Coal of Africa (CoAL) to acquire a 23.6 percent stake in the South African mining outfit. The investment is HEI’s first investment outside of China.

Renault’s Algeria Plant: French automaker, Renault, signed a three year deal with Algeria government to build a 75,000 unit per year plant in the city of Oran, Algeria. The plant which will be co-owned by Algeria (51 percent) and Renault (49 percent) will begin operation in 2014 with an initial production capacity of 25,000 vehicles and the possibility of growing to 75,000 annually. Renault had opened a major new plant in Tangier, Morocco in February 2012, to assemble the no-frills Lodgy people-mover and Dokker delivery truck for export markets around the Mediterranean.

Geely’s Egypt Facility: Middle East and North Africa biggest car importer and distributor, Ghabbour Auto (GB Auto) motors launched a new facility to assemble Hong Kong-based Geely Automobile Holding cars in October. The facility will give the Egypt’s leading automotive assembler the range of assembling up to 70,000 cars from 30,000 cars a year. The Egyptian automobile company had signed an agreement in February with Geely Automobile to begin distributing Geely cars in North Africa. The agreement also include giving the automobile company the power to assemble cars using complete knock Down (CKD) kits supplied by Geely. GA Autos controls a third of the Egyptian car market and it is the only listed automobile company on the Egyptian Exchange.

Zimplants’ Refinery: Zimbabwe’s largest platinum producer, Zimplats invested $30 million to employ the services of international experts in carrying out a feasibility study ahead of the construction of the mega project- a pioneer platinum group of metals refinery – which is expected to create jobs and more revenue in the country.

Emaar Property’s African Investment: Dubai’s Emaar Property, one of the world’s most valuable companies, sealed an agreement to build its five star premium hotel brand, “The Address Hotels + Resorts brand” near the world famous national park, Masai Mara (Africa’s greatest wildlife reserve) in Kenya. A similar contract was sealed to build The Address Marassi Golf Resort & Spa in Egypt. “Emaar group has thrived in Dubai and our country will benefit tremendously from the expertise, international standards and practices that they bring. Emaar Hospitality Group has responded favourably to our country’s call for more investment in tourism and the Masai Mara venture is a timely boost to the sector,” Kenya’s Tourism Minister, Danson Mwazo, remarked on the investment.

CocaCola’s Aujan Acquisition: The Coca-Cola Co. purchased 50 percent stake of the Saudi Arabia’s beverage company Aujan Industries, as well as 49 percent ownership of its bottling and distribution operations for a sum of $980 million in September. Coca Cola’s move to acquire stakes in Aujan industries was first announced December 2011. The investment is part of the world’s largest beverage company’s $5 billion investment strategy in the Middle East and North Africa (MENA) region over the next one decade.“Today begins the next era of growth for our system across the Middle East and North Africa,” Coca-Cola Eurasia and Africa president Ahmet Bozer said.

Mara’s Oyster Bay Investment: Billionaire Ugandan Ashish Thakkar’s Mara Capital Group, invested $270 million in Tanzania’s Oyster Bay (an area of Tanzanian capital city Dar-es-Salaam that is currently home to one of the city’s biggest police stations and barracks) to finance the construction of East Africa’s largest retail chain and other important infrastructural projects. The project will include the construction of the biggest shopping mall in East Africa to date, construction of two hotels, a conference centre and a business park; alongside other vital infrastructural developments such as the building of a new hospital, a police centre and plentiful residential properties for those staffing the various proposed institutions. “Because of the huge demand of housing within the Police Force, which is estimated at 34,710 units, the Ministry of Home Affairs realised that this 24-hectare Oyster Bay plot of land is ideal for investment in the quest to increase housing units. The venture will also provide a sustainable source of revenue for the force,” Spokesman for the police force, Isaac Nantanga said on the investment.

LINK Healthcare Merger With Equity Pharma: Australian-based pharmaceutical and medical technologies business, LINK Healthcare, expands into the African market via a complete merger with South Africa’s Equity Pharma Group, a strong brand in Southern Africa with focus on specialty medicines, specific generic medicines (such as HIV medicines) and specialist medical technology products. Executive Chairman of LINK Healthcare, John Bacon said, “This acquisition is particularly pleasing because South Africa’s pharmaceutical sector is increasingly being supported by government with strong growth anticipated for the foreseeable future.”

GlaxoSmithKline $1Billion Investment: In November, Britian’s largest drugmaker, GlaxoSmithKline Plc (GSK) disclosed plans to invest $1 billion in its Nigerian and Indian units, in order to reduce reliance on pharmaceutical products and western markets and increase shares in the fast growing emerging markets. The Pharmaceutical giant will spend $98 million to acquire an additional 33.7 percent share in its GlaxoSmithKline Consumer Nigeria Plc, shooting its total holdings to 80 percent from 46.4 percent, leaving the minimum 20 percent public shareholding required for a company to remain listed on the Nigerian Stock Exchange (NSE). David Redfern, Chief Strategy Officer, GSK said: “This Proposal to increase GSK’s ownership of GlaxoSmithKline Consumer Nigeria reiterates our long term support of the Company’s strategy and our confidence in the continuing growth prospects of the business.”

Tunis Report on African Health Investment: African government were advised to invest more in their Health sector. “The gap in health investment between industrialised and developing countries is currently too wide. Average percentage allocation of budget to health in Africa region is only 9.6 percent – but a much higher 16.9 percent in America; 14.6 percent in Europe; and 14.4 percent in Western Pacific,” Coordinator of the Africa Public Health Alliance 15 percent Plus Campaign, Rotimi Sankore said.

BEML First Regional Office In Africa: Indian State-owned diversified manufacturing and engineering company, BEML, made a move to maximize the viable investment opportunities in Africa by opening its first regional office in Johannesburg in June. The company plans to use South Africa as a springboard into the rest of African countries in order to provide products for regional mining, construction, defense, as well as rail and metro markets. “Johannesburg will be the hub of activities. The reason we chose Johannesburg is (its) connectivity.” BEML’s General Manager, International business division, Narayana Bhat said.

South Africa, Saudi Arabia’s SASAH: South Africa and Saudi Arabia strengthened their political and economic ties by creating a new company – Saudi Arabia-South Africa Holdings (SASAH). The company was launched during the fourth Saudi Arabian African Joint Committee held in Riyadh. The new company is entitled to free 5 percent equity in any joint venture initiated by SASAH. The partnership will help the two countries to invest in profitable business ventures and facilitate joint ventures.

LeapFrog’s Investment In Express Life Insurance: World’s largest investor in inclusive insurance and related financial services, LeapFrog Investments, injected $5.5 million into Express Life Insurance Company – making it the largest foreign investment in the history of Ghana’s Insurance Industry. The investment with LeapFrog positions Express Life Insurance Company to benefit from LeapFrog’s capital distinctive operational expertise to become the market leader in serving the large untapped market of low-income consumers in Ghana with products often costing less than US$10 per month.

Franklin Templeton’s African Fund: Global investment manager, Franklin Templeton initiated an African Fund. The fund which will be managed by the executive chairman of Templeton Asset Management Emerging Markets Group, Mark Mobius, will be used for long-term capital growth in African-listed equities or companies based elsewhere but with principal business activities in Africa. Mobius says: “We believe that Africa’s markets present significant opportunities for development due to a combination of strong economic growth, rising demand for the region’s vast natural resources and a growing consumer market.”

Bujagali Hydropower Plant Investment: Blackstone Group LP invested about $120 million, with other partners in the $900 million Bujagali hydroelectric dam in Uganda, a project that helped alleviate the East African nation’s chronic energy shortages. The250MW Bujagali Hydropower Plant was jointly funded by Industrial Promotion Services (IPS), the infrastructure and industrial development arm of the Aga Khan Fund for Economic Development, Sithe Global Power LLC (USA), a company majority owned by Blackstone Capital Partners IV, L.P., a fund managed by Blackstone on behalf of its investors, and the Government of Uganda.

Terra Mauricia Sugar Investment Bid: With some African governments, like Nigeria, keen on developing the sugar production, Mauritius largest sugar producer Terra Mauricia Ltd., plans to invest $200 million in a new sugar production plant in Africa, as it expands its successful agricultural unit. The investment company may have to buy an existing mill or start from the scratch.

Ecobank Beijing Office: Pan African bank, Ecobank Transnational Incorporated, opened a representative office in Beijing, China after it received an approval from the China Banking Regulatory Commission in July and a business registration certificate from Beijing’s Administration for Industry & Commerce in October. The new office is expected to strengthen the cooperation between Ecobank and the Chinese financial authorities, as well as facilitate bilateral trade and investment for the continent.

WEMPCO Cold Steel Mill: Western Metal Products Company Limited (WEMPCO) test- ran its new multi-billion naira integrated cold roll steel mill at Magboro, Ogun State, Nigeria. The steel plant is expected to fill in the vacuum that has riddled the Nigerian steel industry after the failure recorded at the Ajaokuta Steel Company.