| |
Tuesday 31st of July 2018
|
Morning Africa |
Register and its all Free.
If you are tracking the NSE Do it via RICHLIVE and use Mozilla Firefox
as your Browser.
0930-1500 KENYA TIME
Normal Board - The Whole shebang
Prompt Board Next day settlement
Expert Board All you need re an Individual stock.
The Latest Daily PodCast can be found here on the Front Page of the site
http://www.rich.co.ke
Macro Thoughts |
| read more |
|
'Unlawful interference' potential cause for MH370 disappearance @FastFT Law & Politics |
Malaysia’s safety investigation team said the disappearance of
Malaysia Airlines flight MH370 may have been caused by “unlawful
interference”, according to findings the team presented on Monday,
more than four years after the aircraft went missing.
Kok Soo Chon, head of the safety investigation team, said this
conclusion was based on findings that show the flight’s pilot and
first officer had no history of mental illness or anxiety, and that
the aircraft, which unexpectedly was rerouted back toward Malaysia,
was flown manually and not on auto-pilot.
Mr Kok underscored this possibility is not certain however, partly
because nobody has claimed responsibility for the flight’s
disappearance.
The MH370, a passenger flight with a total of 239 passengers and crew
on board, went missing en route from Kuala Lumpur to Beijing on March
8 2014.
The latest attempt at finding the aircraft, which was carried out
until the end of May in the southern Indian Ocean by Ocean Infinity, a
Texas-based surveying company, reached no conclusion.
But Mr Kok said this does not mean the issue is resolved. “The
wreckage has not been found. The passengers have not been found. How
can we call our report a final report? There must be some form of
closure.”
|
| read more |
|
25-AUG-2014 The signal announcing this new arrhythmic normal was the disappearance of #MH370 Law & Politics |
‘’For years he’d been studying the phenomenon of chaos, of which an
arrhythmic heartbeat was a perfect example’’
His excellency Johan Borgstam told me the signal announcing this new
arrhythmic normal was the disappearance of the MH370. Since then
planes have been falling out of the sky like flies. And the
uncertainty around MH370 and MH17 which is sharpened by the way the
story is seemingly turned on and off took me back to Don Delillo
‘’”We are not witnessing the flow of information so much as pure
spectacle, or information made sacred, ritually unreadable. The small
monitors of the office, home and car become a kind of idolatry here,
where crowds might gather in astonishment.’’
|
| read more |
|
The story behind the spectacular collapse of Dubai's star financier @business Emerging Markets |
Days before rubbing elbows with global business titans in Davos in
January, Arif Naqvi set out to charm another circle of friends—Gulf
Arab tycoons—in a last-ditch attempt to save his Dubai private equity
firm.
But things were already on the cusp of spiraling out of control.
Dogged by allegations Abraaj had mismanaged investors’ money, Dubai’s
star financier soon couldn’t pay the rent.
After Naqvi, 58, surrendered control of Abraaj in June, it was
revealed that for years, its main revenues didn’t cover operating
costs. Abraaj borrowed to fill the gaps and now owes creditors over $1
billion. Once lenders turned off the taps, the firm collapsed, leaving
losses, lawsuits and shattered reputations in its wake.
Abraaj’s reliance on multiple levels of leverage created a “highly
unstable” business model that’s unusual for the private-equity
industry, the court-appointed liquidators that are dismantling the
firm said in a report dated July 11 and seen by Bloomberg.
After analyzing the documents they could get their hands on—since some
went missing—investigators at PricewaterhouseCoopers said Abraaj’s use
of loans to cover operating expenses left it “sensitive to volatility
and potential liquidity crises.” They are now selling Abraaj assets to
pay creditors and investigating allegations of “mismanagement,
comingling of funds and misappropriation of assets.”
Abraaj assets for sale include stakes in 12 funds and holdings in a
Pakistani utility and a discount voucher business
Naqvi declined to comment, while the firm defended its use of
leverage. Borrowing was a necessity because most of its clients,
especially early on, were family businesses that weren’t always timely
in making payments, according to an e-mailed statement from Abraaj.
“In hindsight, the pace of growth should have been more measured,” the
statement said. “The back office was not keeping pace in terms of
sophistication or best practice.” Back-office operations encompass
things like record maintenance, accounting and regulatory compliance.
Abraaj’s spectacular demise has dealt a severe blow to Dubai’s
reputation as a global financial center. It rattled the trust of
investors who included Bill Gates, the International Finance Corp. and
U.S. and U.K. government agencies, triggered defaults on loans from at
least 10 sources and set off lawsuits in the United Arab Emirates and
Turkey.
Abraaj’s Biggest Creditors
Dubai private equity firm is defaulting on at least $1.1 billion of
debt Source: PricewaterhouseCoopers liquidation report dated July 11,
2018
* Air Arabia separately disclosed $336 million exposure to Abraaj,
without specifying details
The chronology of the collapse, drawn from conversations with about a
dozen people with direct knowledge of the company, lays out how
rapidly things fell apart for Naqvi, the suave Pakistani entrepreneur
who built Abraaj from the ground up in the past 16 years only to see
it crumble in under 10 months.
A fixture at the annual World Economic Forum in Davos, Naqvi had
crafted Abraaj’s image as the face of Middle East private equity.
Starting with $3 million of capital in 2002, it grew by leaps and
bounds, at one point managing almost $14 billion of assets for
investors like the Bill & Melinda Gates Foundation and the retirement
fund for teachers in the state of Texas.
Abraaj oversaw funds from 18 offices in emerging markets spanning
Latin America, Africa and Asia—a network that several U.S. investors
have since tried to buy at fire-sale prices.
Former employees said Naqvi did everything he could to portray Abraaj
as a powerhouse. He lavished staff with big salaries, had generous
budgets for travel and leased a private corporate jet. He sponsored
events like Abraaj Week, an annual business conference that featured
gala dinners at Dubai’s luxury Armani hotel in the world’s tallest
tower, the Burj Khalifa. An avid art collector, Abraaj even financed a
coveted annual art prize that furnished the winner with a $100,000
grant.
But the firm’s foundation was shaky: fees earned from managing
investments between 2014 and 2017 at some points barely covered half
of costs, according to numbers released in the liquidators’ report.
While it’s true that the world’s private equity firms thrive by
borrowing money to fund acquisitions, they don’t typically use debt to
pay for basic expenses, according to Ludovic Phalippou, associate
professor of finance at Oxford University’s Said Business School.
“It is unusual for any PE firm to finance operations with a loan,”
said Phalippou, author of Private Equity Laid Bare. “We could see this
as Abraaj applying what they preach to themselves. In contrast,
several major PE firms are actually publicly listed and have no
leverage, the exact opposite of what they preach.”
Naqvi’s house of cards began teetering last September when investors
in a $1 billion health care fund raised in 2016—including the Gates
Foundation—asked questions about what happened to their money,
according to four of the people.
In the course of monitoring investments, they grew suspicious that not
all proceeds were deployed and wanted to know why because a clause in
the fund stipulated that any extra cash would be returned to them, one
person said. A spokesperson for the Seattle-based charity declined to
comment.
Starting about a year earlier, Abraaj did in fact begin pulling tens
of millions of dollars from at least one flagship fund—the Abraaj
Private Equity Fund IV—to prop up its finances, three people said. By
the early months of 2017, it was moving money out of the health care
fund, too, they said. Abraaj then deposited borrowed cash into both
funds’ accounts just before the auditors, KPMG, compiled subsequent
quarterly earnings statements, they said.
Earlier this year, Abraaj hired KPMG’s local office to verify
transactions made by the health fund and said the auditor found no
misuse of money. KPMG International said it’s now investigating the
2018 review with its legal advisers, Linklaters. It said KPMG wasn’t
hired to do an official audit or verify how the funds were used.
The cash crunch only got worse. Abraaj had planned to sell a stake in
Pakistani utility K-Electric to Shanghai Electric in March 2017, which
would have raised several hundred million dollars, but the transaction
was delayed due to regulatory hurdles.
By the fall, Abraaj was trying to reassure the health-fund investors
that everything was fine. But in November, four of them accused it of
withdrawing cash without their consent. They hired forensic
accountants to examine what happened. The unused funds were later
returned, which only deepened the liquidity crunch.
With pressure mounting, Naqvi’s inner circle started to unravel. In
the final two months of 2017, key executives quit, among them Mustafa
Abdel Wadood, who resigned but agreed not to leave immediately,
according to several people.
Waqar Siddique, Naqvi’s brother-in-law, served as Abraaj’s managing
partner and head of risk and compliance
Naqvi wasn’t about to give up. Before going to Davos—where he sat on a
panel with Bill Gates—he tried to convince numerous members of the
Gulf business elite to give Abraaj tens of millions of dollars in
short-term loans, three people said.
One was Sharjah-based businessman Hamid Jafar, who offered a
short-term loan of $300 million – including $100 million for Naqvi
himself. Jafar later sued Naqvi and one of his directors, claiming
personal checks they’d issued as security on the loan bounced. In the
U.A.E., a seven-sheikhdom federation including Sharjah, that’s a
criminal offense that can get you thrown in jail. A spokesman for the
family declined to comment.
According to three people, Naqvi also got about $75 million from Air
Arabia, a discount airline that still lists him as one of its board
members on its website. Up until a few months ago, Abraaj owned a
stake in Air Arabia that a separate person with direct knowledge said
was pledged as collateral with banks. They sold the shares when Abraaj
defaulted. By June, the carrier disclosed a $336 million exposure to
Abraaj, equal to about a quarter of its current market cap. A
spokesman said the carrier had nothing new to say.
Other business leaders declined to give Naqvi money, two people said.
One was Damac Properties Chairman Hussain Sajwani, the billionaire
who’s partnered with Donald Trump on Dubai projects, they said. Niall
McLoughlin, Damac’s senior vice-president for marketing and corporate
communications, said the assertion that Sajwani was approached for a
loan “is not true.”
After Naqvi ceded control of the fund management business in February,
things deteriorated fast. By the spring, more executives quit and job
cuts ensued. Yet even in May, Abraaj was trying to reassure its
creditors they’d be paid.
Just weeks later, one debtor, a Kuwaiti pension fund with $200 million
of exposure, sealed its fate by refusing to agree to a standstill on
debt payments. Instead, it put pressure on Abraaj to wind down
operations.
Naqvi capitulated not long after that, filing on June 14 for a
court-appointed restructuring in the Cayman Islands, where the holding
company and investment-management arm are based. The liquidators’
report valued Abraaj’s known assets at $1.1 billion, including stakes
in 12 funds and investments like the K-Electric holding.
That’s a full $1.4 billion less than Abraaj’s total assets as of
March, according to financial statements disclosed in the report. The
liquidators suggested that either Abraaj’s solvency position had
“declined markedly” or had been “overstated.”
Over the years, Abraaj invested in a wide range of industries and
regions, as these nine companies from its portfolio show
Some former employees said the speed of the demise didn’t surprise
them. They described Naqvi as “aggressive” and “competitive” and said
he ran Abraaj like he was a king; little could happen without his
approval and attempts to question his actions often drew furor.
Abraaj disputed the idea that Naqvi was that influential. In its
statement, it said the firm “has always been run as a partnership” and
that “dialogue and engagement has always been encouraged, both
internally and externally.”
PwC said key financial statements were either missing or non-existent.
In particular, the company produced only consolidated financials, not
separate ones for the asset management and holding companies, making
it difficult to analyze how money moved between the two.
While the Dubai Financial Services Authority hasn’t said what
investigations—if any—it’s conducting, Abraaj’s legal troubles have
already started. Aside from the case over the bounced check, which
Naqvi’s lawyer has said was provisionally settled out of court, the
firm is being sued by a founder of the Turkish dairy maker it bought
with the European Bank for Reconstruction and Development in 2014.
Abraaj wouldn’t respond to those accusations.
Frontier Markets
|
| read more |
|
Zambia commits to paying Eurobond debt 'on time and in full,' finance minister says Africa |
Zambia is committed to meeting repayment obligations on its Eurobonds
“on time and in full,” and comments by the president that it’s seeking
help to refinance the securities are not “a signal of failure” to
repay the debt, Finance Minister Margaret Mwanakatwe said.
Zambia, which Moody’s Investors Service cut further into junk last
week, wants assistance to refinance its first Eurobond that matures in
2022, President Edgar Lungu said during a meeting with his Turkish
counterpart Recep Tayyip Erdogan. The southern African country has
three dollar-denominated bonds totaling $3 billion outstanding.
|
| read more |
|
Phone monopoly is big prize in Ethiopia sell-off @Reutersafrica Africa |
“Everyone is here. MTN is here, Safaricom. I mean everyone is coming,”
the new head of the Ethiopian Investment Commission (EIC) said of the
stiff competition to enter the previously off-limits telecoms sector.
“A lot of them. Including U.S., by the way,” Belachew, an affable
lawyer who is the first port of call for foreign investors, said with
a smile following an evening meeting with an executive from Kenyan
mobile operator Safaricom.
Of the industries facing privatization - the government will also open
up Ethiopian Airlines [ETHA.UL], the state logistics firm and the
power monopoly to private investment - Ethiopia’s state
telecommunications monopoly is the prize because of its huge protected
market.
But the form liberalization takes and the speed with which it is
carried out will hinge on competition between the government’s two top
priorities: raising foreign exchange and creating jobs.
Since coming to power in April, Prime Minister Abiy Ahmed, 41, has
turned Ethiopia on its head with a dizzying drive towards openness.
On the diplomatic front, he has made peace with neighboring Eritrea
and is pushing for reconciliation with exiles.
Turning to the economy, Abiy aims to loosen the government’s tight
grip on strategic sectors after decades of socialist central planning
and authoritarian rule.
The impact of the reform push in sub-Saharan Africa’s second most
populous nation could be huge for multinationals, which are currently
restricted to a handful of sectors.
International telecommunications firms in particular are excited at
the prospect of entering one of the few African telecoms sectors - one
that serves a population of 100 million - still protected by a state
monopoly.
“Technology companies and telecoms companies want to get in as quickly
as possible. It’s a rare thing,” Andrew Kitson, head of
telecommunications research with BMI Research, told Reuters.
Reuters reported this month that Safaricom, whose parent companies are
South Africa’s Vodacom and Britain’s Vodafone, is in advanced talks to
introduce its popular M-Pesa mobile money service there.
MTN, which operates in 24 countries in Africa and the Middle East,
last month said the Ethiopian market “would be a natural fit”.
France’s Orange, whose subsidiary Sofrecom won a two-year contract to
manage state-owned Ethio Telecom in 2011, is also interested.
“If the state opens a process to privatize or seek a partner for Ethio
Telecom, we would be in the running. That’s certain,” a source close
to the matter said.
Vietnam’s state-owned Viettel, which operates or holds licenses in
Mozambique, Burundi, Cameroon and Tanzania, is looking at
opportunities in Ethiopia, a company official said.
Other potential suitors include Etisalat and Zain from the Middle
East, Kitson said.
A Zain spokesperson was not immediately available. Etisalat did not
respond to a request for comment.
Though the competition has already begun, no one yet knows what the
ultimate prize will be.
The government is yet to chose consultancy firms to advise on the
overall shape of privatization, which will include valuation of Ethio
Telecom.
Selling a piece of Ethio Telecom, which boasts over 60 million mobile
subscribers, could provide much-needed foreign exchange, especially if
the deal comes with a pledge to maintain the monopoly.
It’s a model Ethiopia has used before.
In two transactions in 2016 and 2017, Japan Tobacco International
(JTI) bought more than 70 percent of Ethiopia’s National Tobacco
Enterprise Share Company.
Though the company only had annual earnings of around $15 million, the
government included a 10-year monopoly, according to a rival bidder.
JTI paid almost $1 billion for the stake.
Investor interest in Ethio Telecom could be dampened, however, once it
is forced to open its books to bidders.
“We’ve got no idea how big this company is, what its liabilities are,
what its weaknesses are. All we know is how many subscribers,” Kitson
said.
The government has also made clear the state will maintain a majority
stake and control of the board, which could discourage investors.
If the main goal of privatization is to foster competition to improve
services as a boost to the economy, the government may want to take
another tack.
“You cannot grow the manufacturing sector without efficient telecoms
and less costly telecoms services,” the EIC’s Belachew said.
Though it wouldn’t generate the same amount of foreign exchange,
licensing other operators could boost government revenues through
spectrum license fees and taxes on mobile services and SIM card sales.
With one of the lowest mobile penetration rates in Africa - around 60
phones per 100 inhabitants - there is plenty of scope for growth.
The government may balk, however, over fears Ethio Telecom, currently
Addis’ main cash cow, would struggle to keep pace with international
competition on prices and service.
A middle way would be to stagger liberalization, starting with the
sale of a minority stake in Ethio Telecom and, once the partnership
has matured, opening the market to new players.
For all the enthusiasm, both from Ethiopian authorities and interested
companies, little has been decided.
The government must still establish the bodies that will oversee its
privatization scheme. It then must hire financial advisors and carry
out a valuation of assets before placing them on the auction block.
It could be two years or more before new investors enter the sector,
analysts say.
But the current momentum is encouraging, observers say. And officials
like Minister of Public Enterprises Teshome Toga are quick to play up
the government’s determination to follow through on its announcements.
“In the last 20 years we have divested fully or partially privatised
377 enterprises,” Teshome told Reuters. “The only difference now is we
are venturing into big enterprises.”
|
| read more |
|
Norwegians buy Uganda's Bujagali hydropower dam Africa |
Norway’s SN Power has acquired a majority stake in the 250MW Bujagali
Hydropower dam on the River Nile from an American private equity fund.
SN Power paid approximately $277 million for the two-thirds stake in
the project previously held by SG Bujagali Holdings, a Sithe Global
company owned by the New York-based private equity fund, Blackstone,
which has more than $430 billion in assets under management.
The dam will continue to be operated by Bujagali Energy Limited, whose
other shareholders include the Aga Khan Fund for Economic Development
as well as the Government of Uganda.
Earlier this year lenders, led by the International Finance
Corporation and the African Development Bank, completed a refinancing
package that extended the tenor of their loans in the project in order
to reduce the cost of electricity from Bujagali.
|
| read more |
|
|
|
|
