Capital Markets

Safaricom stake sale pushes local deals to Sh300 billion

A past meeting of Safaricom shareholders. PHOTO | SALATON NJAU | NMG
A past meeting of Safaricom shareholders. PHOTO | SALATON NJAU | NMG 

Kenyan firms accounted for deals worth Sh300 billion in the first eight months of the year led by the sale of a stake in Safaricom #ticker:SCOM by UK firm Vodafone to its South African subsidiary Vodacom, a new report shows.

An analysis of the African deals landscape by risk and research firm Stratlink Africa in the September market update shows that only South Africa has accounted for a higher value of deals than Kenya this year, at $4.5 billion or Sh464 billion.

Egypt and Congo follow with deals valued at $2.2 billion (Sh227 billion) each.

“The value of deals taking place in Kenya has been particularly high year-to-date buoyed by Vodafone Group’s sale of a 35 per cent stake in Vodacom Group for $2.7 billion (Sh274 billion). As such, about 93 per cent of the value of deals in Kenya has been concentrated in the communications sector,” said Stratlink senior research analyst Julians Amboko.

The sale was concluded last month after receiving all the required regulatory approvals, having been made public for the first time in June.

The report shows that across Africa, the dominant deal type has been private sector secondary transactions at 50.3 per cent, followed by mergers and acquisitions at 11.1 per cent.

Deals data compiled by I&M Burbidge Capital covering the first seven months of the year showed that there have been other large transactions in the country this year, including debt conversions and takeovers.

In June, Kenya Airways #ticker:KQ announced an agreement that would see the government and 11 banks convert debt valued at Sh25 billion and Sh23 billion respectively to equity.

In July, Washington-based Emerging Capital Partners (ECP) agreed to sell its 90 per cent stake in Java Coffee House to Dubai-based private equity fund Abraaj Group in a deal valued at Sh13 billion, which also saw Java founder Kevin Ashley part with his 10 per cent stake in the firm.

While the merger and acquisition space has thrived recently, there has been a shortage of capital market deals such as IPOs and corporate bond issues.

This year, only East Africa Breweries Limited #ticker:EABL has issued a corporate bond in Kenya — the Sh6 billion second tranche of its Sh11 billion medium term paper — while I&M Bank Rwanda and Vodacom Tanzania are the only firms to issue IPOs in the region.