NSE weekly catch-up

NSE saw a mild week with index slightly down on Monday's opening. I suspect we've seen the best of this rally and may even head south for a spell. There was also opportunity to shoot itself in the foot via usual funny price plays.

Results:

CFC Stanbic disappointed (down 8.5% in PAT and won't be the last time, even the old CFC used to frustrate because its universal banking model seems to be just a cover for a weak insurance associate). Universal banking has defeated even banking giants (UBS and Citi recorded the highest credit-crunch related writedowns) and the only successful that I know of today is Barclays Plc. The reason? Varley the CEO is an ultra-cautious accountant who can handle retail banking and insurance while Bob Diamond the head of Barcap is an alpha-ib type banker. This means both businesses perform well. Equity's supposed hire of Maina Mwangi of Rencap should be seen thru this lens.

Jubilee performed credibly 9up 3% on prior yr), especially compared with volatile listed counterparty, Pan Africa.

Corporate actions, announcements and wonders:

Following Kenol's results announcement, the 10% allowed what looks like a circular trade to be carried out leading to a 33% drop in price which nobody will sell at. CMA waited a couple of days then opened the 10% rule hoping to push guys upwards. This nonsense has gone on since the Stanley Hotel days and awaits the injection of new blood into the bourse.

Equity got suspended and suspension was revoked the same day apparently because it owed CDSC Ksh47m from the Safcom IPO and other levies. CMA revoked the suspension as unprocedural. Sounds, looks and smells like the old "patel" file over again. Apparently, even though Equity has a custody licence it somehow earns more of the 2% transaction fee that the brokers. At a time like this with anaemic volumes, brokers are naturally aggrieved. Equity now has to factor in reputational and operation risks. Brokers need to look for other jobs. Its a plain vanilla bourse that shouldn't be seeing the kind of stuff investors have put up with for so long from brokers.

More changes at TC where it seems all the guys who came in with Tony Wainaina have now moved on. Group possibly took hits from the RVR-debacle and the bear in the NSE, EA Cables its prime estate had a high of Ksh104 in October 2006, but closed Ksh24 today.

Who is Hellios LLP?

It’s a private equity group founded by two Nigerians (sounds suspicious already doesn't it?). The two are however successful investment bankers/private equity deal makers in their own right having worked for Texas Pacific Group-among the largest private groups in the world with funds under management of $30bn+.
Babatunde Soyoye, the MD was also MD for TPG Europe. Tope Lawani also worked with him.

Main Investors in Hellios:
CDC with $50m repreent the UK interest; OPIC also with $50 represents the US and IFC with $20m represents world Bank. Others with undisclosed 
sums are Soros Fund; TPG and our own Transcentury with 1% holding. Its total funds under mansgement 
are circa $300m

Major Deals:
Investment in First Monument Bank of Nigeria
JV with Portugal Telecom
Sold its joint holding with Actis in Flamingo to James Finlay
Took 25% stake in Equity to be disposed off no earlier than 2014.

So apart from the fact that its a Nigerian-led outfit, what are the issues?

An attempt on Kimendeero? Wonders never cease.

TC listing

Transcentury aka G29 are finally coming to the market! Many will recall that they had tried to do a private placement in November 2007 which they then pulled (lets put it this way, it would have been hard for any investor to commit Ksh335m to an entity that was aligned to one of the presidential candidates in a too close to call general election). The good thing is that as with all IPOs, they'll have to let it all hang out as it were. So we can put down some of the myths about who owns TC-i.e. the 40% that is not widely known and what do they own. There is also the myth about how highly leveraged they are-having seen their books up to 2006, I can confirm that they had one long-term loan of Ksh350m (accounting for around 10% of its balance sheet) and reserves of around 800mn.
Meanwhile, there are now Equity-esque type rumors that EA Cables, in which 75% of TC's investment is in, is facing a liquidity crunch. Cables invested Ksh1bn to build its new factory and HQ in Industrial Area and apparently it’s the financing for this that has led to the liquidity crunch. I might be wrong, but the facts don't stuck up.
Why would you be looking to list when your largest investment which happens to be publicly listed stock is in financial trouble? Bottom-line: Should they as its suggested list before June, this would be a shot in the arm for our bruised NSE. TC's returns in the last two or so years have been phenomeno.

UK interest rates: A stitch in time saves nine

Today's 0.25% cut brought some relief to many in the financial & retail sectors who were staring at a possible meltdown in mortgage borrowing, credit card spend, Xmas shopping not to mention higher repossessions. Thus half the economy will be feeling relieved that when the Bank of England find itself between a rock and a hard place (inflation is also approaching the set target of 2%), it decided to tackle the problem that would have wider ramifications of the two. Even with oil prices now well over the psychological barrier of £1.00, expect another rate cut within the next four months.

Someobody that worked in one of the investment banks that has written off around £4bn in subprime just over a month ago was saying that its credit risk team was worried about the issue, 
two years ago. Lakini these guys had to be seen to be playing with the big investment banks, so on they went the purchase of toxic instruments as they are now know.

When TC aka G29 speak about investments, the least one can do is to listen/read. A nice piece in the BDA today. I definitely second their advice on the need for formal meetings (pinting doesn't exactly led itself to great investment ideas does it?). One thing though, how come they've kept their prospectus hidden (ok, apart from fears of political hijackers) ?

NSE roundup

KCB saw 41% y-o-y increase in PAT for quarter 3, largely driven by growth in interest income of 32% and slower growth in expense of 17%. However the time to check Odour's progress as CEO should be Q1 2008's results. I have no doubt he'll perform though.

StanChart, the laggard among the large banks saw flat PAT yoy growth. For your reference, a bank should always be making at least double the economy's growth rate. The pity of it is that this is happening under the watch of its first Kenyan CEO Etemesi.

NBK started seeing the benefits of the bond interest payments from GoK paying off its debt.

Mumias crystallised some of its plans to generate-revenue from power by signing a contract with KPLC. MSC also closed the offer period on its 2 for 1 bonus share issue. For my money, its
 best purchase price given recent share price history would be under Ksh10, that is unless COMESA extension happens first.
TC announced a private placement. The interesting question is why they are doing it so close to an election.
Finally CFC-Stanbic merger is all but a reality as it enters its final stage. StanChart, your days are numbered.

TransCentury finally join the 21st century

I like their website too. Minimalist to the nth degree. Its also refreshing to see that all the staff are fairly young. The interesting thing would be to see how leveraged they really are if as alleged they make most of their acquisitions using their shareholding as collateral.

Will the G29 follow Blackstone and do an IPO?

Blackstone IPO of 20% of their shares has got everybody (from China to Wall Street) excited today. Si Transcentury do the same for NSE? This would ofcourse mean lifting the veil over their dealings and particularly who the full 29 dudes are...