PwC to advise KenGen on new public share sale

The government has picked consultancy firm PricewaterhouseCoopers (PwC) to guide the sale of the main electricity generator KenGen, giving impetus to a process that had attracted 14 consortia.

“PwC now has the mandate to provide advisory services on the KenGen sale and we expect them to carry out a review of the timing and needs of the process,” Privatisation Commission of Kenya CEO Solomon Kitungu said.

Fourteen consortia had expressed interest in the KenGen sale advisory job, but only nine made it to the pre-qualification round with PwC emerging the final choice after a lengthy evaluation process that began on July 15.

A preview of the expressions of interest (EOIs) and the subsequent bids submitted to the commission to advise on the sale of KenGen had pointed to a repeat of the perennial battles for deals between investment banks led by Dyer and Blair and Standard Investment Bank (SIB), on one hand, and audit firms such as KPMG and PricewaterhouseCoopers (PwC) on the other.

“PwC had a good run throughout the evaluation process and beat others to the job,” Mr Kitungu said.

By landing the lucrative KenGen deal, PwC now has four privatisation assignments in its in-tray, translating into good fortunes in terms of transaction fees.

Besides generating professional fees, such transactions also provide firms with an opportunity to improve their CVs and publicity.

The consultancy firm is also advising on the planned sale of three State firms including Kenya Pipeline Company (KPC), National Bank of Kenya (NBK), and Consolidated Bank.

The government currently owns 70 per cent of KenGen.

Attracted interest

“We shall set things rolling once we sign the contracts,” Vishal Agarwal, a partner at PwC told Business Daily.

PwC was the transaction advisor on KenGen’s successful initial public offer (IPO) barely four years ago.

In the 2006 offer, KenGen had sought Sh7.8 billion but landed Sh26.5 billion, an equivalent of 340 per cent oversubscription.

“We will be delighted to work with KenGen once again on the sale process,” Mr Agarwal said.

The KenGen issue attracted plenty of interest from retail investors with analysts attributing the trend to a guaranteed yield and repayment of capital upon maturity.

Retail investors took up Sh4.4 billion with local and foreign institutional investors taking the rest.

Mr Kitungu said an evaluation process to pick the advisor on the planned sale of cement maker East African Portland Cement Company (EAPCC) was ongoing.

“We hope to come up with an advisor on the sale of EAPCC once we are done with the evaluation,” he said.

Twelve consortia had expressed interest in offering transaction advisory services on the planned sale of EAPCC.

The Government has a 52.3 per cent interest in the Athi River based cement-making firm, which includes a 25.3 per cent direct shareholding and 27 per cent stake held by the State-controlled National Social Security Fund (NSSF).

EAPCC and KenGen were marked as the first two parastatals to be offloaded by the Government in the ended financial year, even as the State worked on another plan that would see 24 others also placed in private hands.

Ended evenly

But even as PwC bagged the KenGen deal, a review of recently concluded advisory jobs on the planned sale of key public institutions showed that the battle between investment bankers and audit firms ended evenly.

For instance, records showed that Standard Investment Bank bagged deals to advise on the planned sale of New Kenya Co-operative Creameries and Kenya Wine Agency Limited (Kwal).

Another investment bank, Dyer and Blair, won a contract to advise on the planned sale of State hotels such as Kabarnet, Golf and Sunset Hotels, Mt Elgon Lodge, Kenya Safari Lodge, and those under Kenya Tourism Development Corporation (KTDC) such as International Hotels, Kenya Hotels, and Mountain Lodge.

Audit firm, Ernst and Young, bagged a deal to advise on the planned sale of five public millers including Nzoia, Sony, Chemelil, Miwani and Muhoroni.

Though the government in February unveiled strategies to exit from the five sugar firms by ceding some stakes to strategic investors, it’s yet to invite bids.