On 5 January, the Lagos Stock Exchange welcomed BUA Foods PLC (ISIN: NGBUAFOODS04), which went public that day. In the IPO, 18 billion ordinary shares were offered for NGN 40.00 (EUR 0.0842) apiece. The listing added NGN 720 billion (EUR 1.5 billion) worth of market cap to the Nigerian stock market. BUA Foods’ first days on the exchange were promising; between 7 and 12 January, the stock gained 32.44%.
The BUA group was established in 1988 by Abdul Samad Rabiu for the purpose of commodities trading. Rabiu soon diversified into other activities, including steel, flour mills, oil processing, cement, pasta, ports, sugar refinery and real estate. Last year, Rabiu consolidated his food business under the name BUA Foods. This includes flour and pasta, sugar, edible oils and rice. Meanwhile, BUA Cement (ISIN: NGBUACEMENT3) has been listed on the Lagos Stock Exchange since 2020.
Abdul Samad Rabiu (60) was born in Kano in northwestern Nigeria. His father, Khalifah Isyaku Rabiu, was already one of Nigeria’s foremost industrialists in the 1970s and 1980s. With an estimated fortune totalling USD 3.2 billion, Abdul Samad Rabiu is likely the second richest man in Nigeria after Aliko Dangote.
As the new year begins, we’d like to mention the current rally on the Zimbabwean stock market. Normally, we would ignore the exchange in Harare, for only the most experienced stock investors can avoid the many pitfalls associated with it, e.g. a lack of liquidity in the stock trading and difficulties to repatriate capital gains. But because the rally there is so pronounced, we’d like to report the action – especially as it pertains to investors in US dollars. Since the beginning of 2021, Harare’s exchange has gained 153% in USD terms. It was followed by Zambia’s stock exchange (+97%) and that of the Seychelles (+44%).
Among the top gainers in Harare are NMBZ Holdings (ISIN: ZW0009011389), the parent company of NMB Bank, as well as Get Bucks Microfinance Bank (ISIN: ZW0009012320). NMBZ’s share price is up by an impressive 235% since the beginning of 2021. However - and this is one reason why we are cautious about Zimbabwe – the stock is rarely traded. As a result, it may be difficult for a shareholder to profit from any further price gains in NMBZ’s share when selling. Shares in Get Bucks are up by a staggering 3230% since January 2021. But again, investors should not assume that they can cash in their gains if and when they sell shares in this company.
It is perhaps not the most sensational share price development on African stock exchanges. But something is happening with the stock that we believe investors can’t ignore. Cleopatra Hospital Group (ISIN: EGS729J1C018), listed on the Egyptian Stock Exchange, has gained more than 7% since the beginning of 2021 and is currently trading at EGP 5.14 (EUR 0.29) a share. That Cleopatra’s stock would do well wasn’t apparent in the first half of 2021. From 1 January to 1 June, the stock declined 22% to trade at EGP 3.73 (EUR 0.21) a share. But then the share price recovered, gaining 38% since its low for 2021.
Cleopatra is Egypt’s largest private hospital group operating six hospitals in that country. Cleopatra’s biggest shareholder is still private equity investor Abraaj Capital, which was founded by the Pakistani businessman Arif Naqvi. Abraaj still owns 38% of the hospital group. However, Abraaj is currently being liquidated in part due to Naqvi’s legal troubles. He is accused of having defrauded international investors to the tune of USD 1 billion. These investors include such well-known names as the Bill & Melinda Gates Foundation; the International Finance Corporation (IFC); DEG Invest, a German state-owned fund; and the Overseas Private Investment Corporation (Opic), a US government agency.
Obviously, investors started to take a position in Cleopatra when, in the second half of 2021, it became clear that the Abraaj stake would be put up for sale. According to a news release from S&P Capital IQ dated 5 January 2022, an unknown buyer acquired an 8.78% stake in Cleopatra from Care Healthcare for EGP 709.84 million (EUR 39.6 million). As part of the deal, Care Healthcare sold 141.96 million shares in Cleopatra for EGP 5.00 apiece.
These events lead us to believe that it will be worth keeping an eye on Cleopatra. Investors should be prepared that Cleopatra will soon find a new majority shareholder who will then also take over the shares from Abraaj's legacy.
The list of corporate bond issuers in Africa has a new member: Kenya Mortgage Refinance Company (KMRC). Last week, KMRC announced that it would seek to raise KES 1.4 billion (EUR 10.8 million) with its first bond. KMRC did not announce the date of the issuance, saying only that it still must decide on who will advise on the transaction.
According to CEO Johnstone Oltetia, KMRC aims to become a regular issuer of bonds in the Kenyan capital market. Nairobi newspaper Business Daily quoted him as saying: “We work to raise more long-term capital, thereby refinancing more home loans and making them affordable and accessible to Kenyans.” In August 2021, KMRC was assigned a credit rating of “AA-” from South African rating agency GCR.
We cheer KMRC’s announcement, as it will give the African corporate bond market another big boost. In the recent past, East African Breweries (EABL), Family Bank, Centum and real estate developer Acorn Holding have all issued corporate bonds in Kenya.