VENTURES AFRICA – Business is open in Africa. The former “hopeless” continent is thriving with trade and investment opportunities; Africa has seen increased Foreign Direct Investment (FDI) and its major companies are also divesting business operations overseas. African companies going global have reached unprecedented heights in recent years. These companies ‘overseas expansion’ is characterised by their diversity in terms of industries and geography. And the phenomenon is set to continue this year and beyond. African companies that have been successful in their expansion strategy include: SABMiller, MTN, Naspers, BHP Billiton, Richemont, Sasol, Shoprite, Airtel Africa, Dangote Group, Oando and Capitec amongst others. In this article, we take a look at a couple of African businesses going global in 2013 and how successful it has been.
For more than a decade World No.2 brewer SABMiller, which was launched in Johannesburg, South Africa, more than 150 years ago, has been on a drive to become a global player through making multi-billion rand acquisitions throughout the world. It has since become the world’s second biggest brewer after the US’s Anhauser Busch.
Last year, SABMiller and Anadolu Efes completed the transaction to form a strategic alliance for Turkey, Russia, the CIS, Central Asia and the Middle East. The deal was originally announced on 19 October 2011. SABMiller now has a 24 percent equity interest in Anadolu Efes, which is listed on the Istanbul Stock Exchange. SABMiller also reached an agreement to buy the Australian brewer Foster’s for $10.15 billion, ending a four-month hostile takeover battle.
Oando is a Pan-African multinational energy company. Headquartered in Lagos, Nigeria and active in various African countries, it is engaged in every aspect of the energy value chain, including petroleum marketing, exploration and production; refining, and power generation.
Oando is Nigeria’s largest non-government owned company in the energy industry. It is the first Nigerian company to achieve a dual listing on both the Nigerian and Johannesburg Stock Exchanges, and Nigeria’s largest oil company. From its beginnings as a fuels marketer, the company has grown to become a Sub-saharan most integrated energy company. In the Upstream sector, Oando Exploration & Production (OEPL) is the operator of two oil blocks in Nigeria’s Niger Delta region – OPL 278 and OPL 236. The company is also a Nigerian Content Partner with AGIP Oil on OPL 282 and has a 45 percent interest in a marginal field, OML 56.
The oil company has concluded plans to raise 54.5 billion naira ($348 million) from the Nigerian capital market through a Rights Issue exercise. The company is quoted in the oil and gas sector of the Nigerian Stock Exchange, as well as the Johannesburg Stock Exchange of South Africa. The proceeds from the Rights issue will be used for the part-repayment of 60 billon naira ($384 million) syndicated loan used to fund the acquisition of upstream assets and swamp drilling rigs. Also, it will be used for the part-financing of acquisition of upstream and midstream assets by Oando’s Upstream subsidiary, Oando Energy Resources as well as investment in working capital to support increased level of business.
In December 2012, Nigeria’s leading indigenous energy group 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 $1.79 billion including customary adjustments. The company also,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.
The MTN Group is a South Africa-based multinational mobile telecommunications company operating in many African and Middle Eastern countries. Its head office is in Johannesburg. Its acquisition of Investcom expanded its operations to 10 more countries. As of early 2007, MTN was already active in Cyprus, Afghanistan, Botswana, Cameroon and many more other countries. The MTN Group is Africa’s leading telecommunications provider, operating in 21 countries across the region.
The Dangote Group is currently the largest industrial conglomerate in West Africa and one of the largest in Africa. It has generated revenue in excess of $1.25 billion since 2005. The group is one of the leading diversified business conglomerates in Africa. It employs in excess of 11.000 people.
Owned by the richest man in Africa, Aliko Dangote, the Dangote Group is a diversified conglomerate, headquartered in Lagos, Nigeria, with interests across a range of sectors in Africa. Current interests include cement, sugar, flour, salt, pasta, beverages and real estate, with new projects in development in the oil and Natural gas, telecommunications, fertilizer and steel. The group focuses on provision of local, value-added products and services that meet the needs of the African population.
Dangote Cement is also the largest cement production company in Africa, with a market capitalization of almost $14 billion on the Nigeria Stock Exchange, has subsidiaries in Benin, Cameroon, Ghana, Nigeria, South Africa and Zambia. In December 2010, the group signed an agreement with the Government of Zambia to construct a $400 million cement plant in Zambia. Once completed in June 2013, as anticipated, the new plant is expected to have an annual output of 1.5 million metric tonnes of cement.
Last year, CEO Dangote Group Aliko Dangote revealed in an interview with the Financial Times hopes to see construction begin on cement plants in Iraq and Myanmar by next year, as the company continues a strategy of globalisation.
Naspers is a South Africa-based multinational mass media company with principal operations in electronic media (including pay-television, internet and instant-messaging subscriber platforms and the provision of related technologies) and print media (including the publishing, distribution and printing of magazines, newspapers and books, and the provision of private education services).
In May 2001, Naspers acquired a 46.5 percent interest in Tencent Holdings, the operator of an instant messaging platform in China called QQ, which subsequently developed into the leading business of its kind in China. In a quest to further expand its business in China, the company acquired a 9.9 percent interest in the Beijing Media Corporation (BMC) in December 2004. BMC is a media company mainly engaged in the sale of advertising space for the Beijing Youth Daily as well as the production of newspapers and the trading of print-related materials.
In May 2006, Naspers acquired, for $422 million, a 30 percent interest in the Brazilian media group Editora Abril, publishers of dozens of titles, the most important of which being Revista Veja. Also in January 2007, Naspers acquired a 30 percent interest in Mail.ru, Russian operator of Mail.ru Agent, an instant messaging service for desktop PCs and mobiles.
In October 2007, Naspers acquired Gadu-Gadu, a listed Polish instant messaging business with c.8 million registered accounts (of a population of 38 million). It also acquired a further 2.6 percent of Mail.ru in November, 2007. In March 2008, Naspers acquired Tradus (formerly QXL and listed on the London Stock Exchange), which provides an online auction platform and internet portals in Central and Eastern Europe. The company owns Allegro.pl, which is the leading online auction site in Poland for £946 million.
The company acquired a 25 percent stake in BuzzCity through MIH, its investment arm in August, 2008. BuzzCity is a mobile media company providing access to a global advertising network on the mobile internet for brand owners and agencies. The network is made up of publishers worldwide and BuzzCity’s own mobile media properties, including the myGamma social networking platform which is aimed at regions with low fixed-line internet penetration. In July 2012, Naspers acquired eMAG, one of the biggest ecommerce sites in Romania. In Romania, Naspers also owns PayU Romania, online platforms autovit.ro, mercador.ro, compari.ro.
BHP Billiton is an Anglo–South African-Australian multinational mining and petroleum company. It is the world’s largest mining company in terms of revenues. BHP Billiton was created in 2001 through the merger of the Australian Broken Hill Proprietary Company Limited (BHP) and the Anglo-Dutch Billiton plc.
On 22 February 2011 BHP announced that it paid $4.75 billion in cash to Chesapeake Energy Corp. for all of the company’s Fayetteville shale assets which include 487.000 acres (1.970 km2) of mineral rights leases and 420 miles (680 km) of pipeline located in north central Arkansas in the United States. The wells on the mineral leases are currently producing about 415 million cubic feet of natural gas per day. BHP plans to spend $800 million to $1 billion a year over 10 years to develop the field and triple production.
In July 2011, BHP Billiton said it would acquire Petrohawk Energy of the United States for approximately $12.1 billion in cash, considerably expanding its shale natural gas resources. BHP Billiton also announced that it was shelving its $20 billion (£12 billion) Olympic Dam copper and uranium mine expansion project in South Australia, as a result of falling commodity prices and slowing global economic growth in August 2012. The company simultaneously announced a freeze on approving any major new expansion projects.
Compagnie Financière Richemont SA is a Swiss-based luxury goods holding company founded in 1988 by South African businessman Johann Rupert. Through its various subsidiaries, Richemont designs, manufactures, distributes and sells premium jewelery, watches, leather goods, writing instruments, clothing and accessories. Richemont is a publicly traded company listed on the SIX Swiss Exchanges and the JSE.
As of November 2012, Compagnie Financière Richemont SA was the sixth largest corporation by market capitalization in the Swiss Market Index. In March 2007, Richemont and Polo Ralph Lauren Inc. announced the formation of a 50/50 joint venture, the Polo Ralph Lauren Watch and Jewelery Company SÀRL.
Sasol is an integrated energy and chemical company that began in Sasolburg, South Africa in 1950. It develops and commercialises technologies and builds and operates world-scale facilities to produce a range of product streams including liquid fuels, chemicals and electricity. Sasol produces petrol and diesel profitably from coal and natural gas using the Fischer-Tropsch process.
Sasol has exploration, development, production, marketing and sales operations in 38 countries across the world, including Southern Africa, the rest of Africa, the Americas, United Kingdom, Europe, Middle East, Northern Asia, Southeast Asia, Far East, and Australasia. The international energy cluster is the driver of Sasol’s international growth aspirations.
Last year, Sasol annouced plans to invest $14 billion in the construction of the world’s second largest gas-to-liquids plant in Louisiana, USA. Sasol Synfuels International also supports the group’s existing and future international gas to liquids (GTL) and coals to liquids (CTL) facilities. Sasol Petroleum International explores and produces upstream resources to secure feedstocks for Sasol’s downstream technologies.
Shoprite, listed on the Johannesburg, Namibian and Zambian Stock Exchanges is a South African-based retail and fast food company. It operates over 1200 corporate and 270 franchise outlets in 16 countries across Africa and the Indian Ocean Islands. 2005 saw Africa’s largest food retailer acquiring both Foodworld, with 13 stores, and South African ticket seller, Computicket, as well as opening the first Shoprite Liquor Shop. The company also opened its first Nigerian store in the Victoria Island area of Lagos.
In 2008, the Shoprite Group was added to the JSE Top-40 Index of blue-chips. Also in March 2011, the Shoprite Group entered into an agreement with Metcash Trading Africa to acquire the franchise division of Metcash. The Metcash franchise division includes franchise arrangements with franchisees operating retail stores under registered trademark names such as Friendly, Seven Eleven and Price Club Discount Supermarket.
The Markinor Top Brands Survey 2011 found the Shoprite brand to be the No 1 Supermarket for the 5th year running, while in the Top Retail Brands Section of the same survey Shoprite claimed first place in all five grocery categories. The Markinor Survey also identified Shorite as the 6th overall favourite brand, with a 3rd most valued brand in terms of community upliftment in South Africa.
The management of Capitec Bank plans “to internationalise” South Africa’s fastest-growing low cost bank in the long term and India is one of the markets it could enter, CEO Riaan Stassen confirmed this recently. This means the company would look at making acquisitions overseas or be involved in leveraged buyouts in countries outside the African continent. The company will clarify its international strategy in the next 12 months.
In preparation for its international expansion the company appointed Markus Jooste, CEO of Steinhoff International, as a non-executive director last year because he has an international retail “mindset.” The appointment would help the company when it starts searching for international opportunities. In September 2012, South Africa’s fastest growing low cost bank announced it would be offering a banking app in 2013. This is in addition to its grand plans “to internationalise” the bank in the long term with India as one of the markets it could enter. Capitec’s Chief executive of marketing and corporate affairs, Carl Fischer said the market could “definitely” expect an app from Capitec in 2013. “We see it as part of expanding cellphone transacting,” he said.