Mo Ibrahim fund in Sh2bn buyout of Nairobi IT firm

Satya Capital, a London-based investment firm that is associated with billionaire entrepreneur Mo Ibrahim, has bought into Spanco BPO Africa, a continental information technology firm that is headquartered in Nairobi.

Satya acquired a 25 per cent stake in Ison Growth Markets, the holding company that owns Spanco BPO Africa, in a deal valued at between $20 million (Sh1.75 billion) and $30 million (Sh2.63 billion).

The acquisition values Ison Growth Markets at between $80 million (Sh7 billion) and $120 million (Sh10.5 billion).

Ison’s Nairobi office employs 250 staff out of 4,000 employees spread in Nigeria, Niger, Chad, Sierra Leone, Burkina Faso, Tanzania, Uganda, Rwanda and Madagascar.

“The entire management will stay in place, only the ownership has changed,” the Ison founder and chairman Ramesh Awtaney told Business Daily in an interview.

Mr Awtaney said that non-disclosure agreements bar him from giving the exact transaction price.

The transaction saw the exit of one of the joint owners of Spanco BPO, Spanco India, to make way for Satya’s entry. Spanco BPO has now been rebranded to Ison BPO.

Mo Ibrahim is the founder of Celtel, which at some point owned Kenya’s second largest mobile telecommunications firm, now called Airtel. The company has a target of growing its Africa workforce to 40,000 within the next four years.

Mr Awtaney said growth of the firm has been largely driven by the increase in internet access in a continent that is underserved by poor infrastructure network.

Ison BPO has already signed a deal with Nakumatt, the largest retailer in the region, where the tech firm will build IT infrastructure that will allow shoppers to buy goods either through their smartphones or by phoning a call center.

Mr Awtaney says the online shopping proposal is hinged on giving shoppers an alternative to physically going to stores, which is not preferred when it involves getting stuck in traffic and navigating car parks in search of space.

Internet access in Kenya and most of Africa is mainly through mobile phones. The potential that more Kenyans will shop via their phones is already attracting other international investors.

Ringier, a Swiss-based media company, has invested in Kenya through Ringier Kenya Ltd which runs the rupu.co.ke, pigiame.co.ke, and rupushops.co.ke platforms.

“In future, Ringier intends to achieve growth not only through digital media but in new markets as well. That is why the Group now operates no fewer than 15 digital platforms in Kenya, Nigeria and Ghana.

These pilot initiatives are providing Ringier Africa with a valuable opportunity to explore the potential which the large African market represents,” says the Ringier’s 2012 annual report.

Data from the industry regulator, the Communications Commission of Kenya (CCK), indicates that there were 16.4 million internet users by the end of the first quarter of this year translating to a 41.6 penetration rate. Of this number, 9.5 million subscriptions were through mobile phones.

Analysts said that they expect more BPO firms to set up locally as more Kenyan companies outsource non-core functions and begin to automate operations.

BPOs are also offering value-added services such as telemarketing, credit collection and user support, encouraging outsourcing of more roles.

Eric Musau, a research analyst at Standard Investment Bank, said the government’s investment in projects such as Konza Techno City and rising costs of outsourcing in other markets will make Kenya a favourite choice for investors.

“India is becoming more expensive which should see more opportunities for markets like Kenya,” said Mr Musau. Industry players said that high quality of skilled labour, favourable policy and clear English accents make Kenya a choice market.

“Kenyans are known to have good UK-accents and can easily switch to US accents,” said the Telecommunications Service Providers Association chief executive Fiona Asonga.