How firms lit mergers, acquisitions last year
By John Otini, January 3, 2022The year 2021 was characterised by a surge in mergers and acquisitions as the Covid-19 pandemic slashed valuations while driving the need for consolidation in a race for survival.
Major consolidations were driven by the financial sector, mainly in insurance and banking sectors.
The main one was Allianz Insurance acquisition of a majority stake in Jubilee Insurance worth Sh10 billion.
The deal initiated in 2020 was completed during the year as the German insurer sought to drive its presence in the East African market.
In the banking sector, there were multiple developments with the major one being the acquisition of a Rwandese bank by KCB.
The lender completed the purchase of the Banque Populaire Du Rwanda (BPR) in August, acquiring a 76 per cent stake in BPR from London-listed financial services firm, Atlas Mara Ltd (62 per cent) and private equity firm Arise (14 per cent).
It plans to acquire the remaining 24 per cent stake owned by other minority investors.
Completed the acquisition
While in April I&M Holdings said it had completed the acquisition of a 90 per cent stake in Uganda’s Orient Bank Ltd in a deal worth Sh3.6 billion.
I&M said in a statement that the transaction was completed on April 30 after receipt of the necessary approvals from the Central Bank of Kenya, Bank of Uganda, Capital Markets Authority of Kenya and the Comesa Competition Authority.
In the loss-making hospitality sector where valuations were even more depressed as hotels suffered low numbers in 2020 and tourism numbers refused to grow in 2021, British private equity firm Actis bought Fairview Hotel for just Sh1 billion.
The South African owners of the Nairobi-based Fairview Hotel, Town Lodge and City Lodge Two Rivers, are selling the three hotels to private equity fund Actis for Sh1 billion.
City Lodge Hotel Group put up the three Kenyan hotels and Tanzania’s City Lodge Hotel in Dar es Salaam up for sale in plans to exit East Africa after barely seven years of operation.
Unga Group, one of the major food manufacturers in Kenya, has announced the planned sale of Ennsvalley’s assets to BigCold Kenya.
According to the Nairobi Securities Exchange (NSE) listed firm, Ennsvalley Bakery Ltd entered into an agreement to sell all its assets to BigCold Kenya on July 26, 2021. The deal is subject to satisfaction of certain conditions.
However, the acquisition of Mumias Sugar closed a controversial chapter after several failed bids by various local bidders in perhaps the only buyout ever that involved bidders, politicians and farmers at the same time.
The battle for the revival of the most influential sugar miller in the country has seen the Steel magnet Raval Narendar and the Rai Family engage in a battle in which western politicians have played a major role.
Latest bidding results shows that Devki, which is owned by Raval bid 10 times higher than a Ugandan firm associated with Rai family which makes sugar in Uganda and still won the bid.
The Sarrai Group, associated with Kenyan businessman Sarbi Singh Rai, won the deal with a bid of Sh11.5 billion.
Other firms that bid higher than the winner include West Kenya, KE International and Krunan Finances.
The war might not be over after one of the bidders billionaire entrepreneur Julius Mwale said he will challenge the results in court.
Sugar production
The choice of Rai could be due to the experience the company has in sugar production in Uganda which makes cheaper sugar than Kenya.
Other small ticket acquisitions were also witnessed across various sectors including venture capital and private equity investments in Kenyan businesses.