Stockbrokers are set for a windfall from commissions from the acquisition of Sh22.8 billion worth of Bamburi Cement shares by Tanzanian conglomerate Amsons Group, boosting their revenue at a time when their earnings have been hit by reduced trading at the stock market.
Bamburi shareholders sold Amsons 350.41 million shares for Sh65 per unit in the offer, which was equivalent to 96.54 percent of the company’s 362.95 million issued shares.
The Tanzanian firm took up the shares via a series of block trades executed on December 18 and 19, boosting turnover at the market on both days.
Amsons had appointed KCB Investment Bank as the transaction adviser, sponsoring stockbroker, and lead acceptance agent, while KCB Bank Kenya was the paying bank. Other firms advising on the deal included Anjarwalla & Khanna LLP as the legal adviser and Custody & Registrars Limited as the share registrar and processing agent.
Firms participating in arranging a takeover deal usually earn millions in direct fees. Stockbrokers also earn additional revenue through commissions for handling trades when sellers are transferring their stock to the buying company.
Last week, a market trader told the Business Daily that the Bamburi block trades originated from several stockbrokers and investment banks acting on behalf of clients who agreed to sell their shares to Amsons.
The intermediaries included Dyer & Blair Investment Bank, Faida Investment Bank, SBG Securities, Equity Investment Bank, EFG Hermes Kenya, and Sterling Capital.
These trades terminated at KCB Investment Bank as the lead acceptance agent, which means that the subsidiary of KCB Group is in line to bank the largest share of commissions, while KCB Bank Kenya is also set for an earnings boost for acting as the paying bank.
Equities trades at the NSE normally attract a commission of up to 2.1 percent for transactions below Sh100,000, and a maximum of 1.7 percent for those above this threshold, inclusive of regulator, custodial, and bourse levies.
On paper, therefore, Amsons’ total spend of Sh22.8 billion would generate commissions worth between Sh386 million and Sh477 million for the market intermediaries, although there is room for negotiations, especially on large ticket transactions.
A similarly sized transaction in March 2023 involving the acquisition of additional shares in EABL by its British parent Diageo yielded nearly Sh1 billion in fees and revenue for Stanbic Bank Kenya and its subsidiary SBG Securities.
Diageo spent Sh22.7 billion to buy 118.39 million EABL shares at a unit price of Sh192, raising its stake in the brewer from 50.03 percent to 65 percent.
Similar to the KCB arrangement with Amsons, Stanbic was the paying bank while SBG Securities was the sponsoring broker and lead acceptance agent in the Diageo transaction.
This transaction helped lift SBG’s brokerage commissions by 22 percent to Sh118.16 million in the year ended December 2023, while its advisory and consultancy fees jumped fivefold to Sh183.62 million.
As a result, the company’s net earnings for the year rose to Sh149.72 million, compared to a net loss of Sh1.88 million in 2022.
In the Diageo transaction, market players disclosed that the British multinational was responsible for paying all the commissions on the transfers of shares from minority investors—with the deal described as a one-way transaction since it was a tender offer.
It was not clear whether the same arrangement for payment of commissions to participating stockbrokers was utilised for the transfer of Bamburi shares to Amsons.
Amsons, which is majority controlled by Tanzanian businessman Edhah Abdallah Munif, last week said that it achieved a 96.54 percent success rate (350.4 million Bamburi shares) in its offer, which is priced at Sh65 per share.
The offer closed on December 5, with Amsons left as the sole bidder following the late withdrawal of rival bidder Savannah Clinker a day before the offer closure date.
Savannah pulled out its offer days after its chairman Benson Ndeta was arrested and later released over alleged fraud. He later accused the Capital Markets Authority (CMA) and unnamed detractors from the government of contributing to his exit from the Bamburi bid.
Mr Ndeta claimed that his arrest spooked his financial backer—US-based infrastructure financier Global Infrastructure Finance & Development Authority (Gifda)— to seek additional due diligence on Savannah, but the CMA declined a request to extend the offer period by 60 days to accommodate the Gifda request.
Following Amsons’ announcement of its bid on July 10, Savannah Clinker put up a counteroffer of Sh70 per share on August 27, before raising it to Sh76.55 in October and valuing its bid at Sh27.8 billion.
Investors who had pledged their shares to Savannah before it withdrew its bid were allowed to tender them afresh in favour of Amsons.
