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Corporate deals

Fairfax Africa Holdings enters purchase agreement with Helios Holdings Ltd 

Fairfax Africa Holdings Corp. agreed to merge with Helios Holdings Ltd.

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Fairfax

Canada-based Fairfax Africa Holdings Corporation has reached an agreement to merge with Helios Holdings limited, the Africa-focused private equity firm which was co-founded by Tope Lawani and Babatunde Soyoye. The purpose of the merger is to create a truly pan-African investment firm.

A statement made available by Fairfax, as seen by Nairametrics, noted that when the deal is finalised, Fairfax Africa Holdings Corporation will be renamed Helios Fairfax Partners Corporation. The company will remain listed on the Toronto Stock Exchange and the Helios co-founders will be joint Chief Executives of the new company. 

The terms of the deal will also require Helios to exchange 45.6% of equity and voting interest in the new company. Helios will contribute its performance and management fees through its present and future holdings under the Helios funds, thereby making Helios Fairfax Partners Corporation one of the biggest Africa-focused asset management firms by complementing the experiences and funds of both companies under one umbrella. 

The new company will also have a larger capital base for diversified investment inflows to the continent through years of experience in third-party investment management operations and the support of longer-term institutional shareholders. 

The main objectives of this deal are summarised below:

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  • Helios Fairfax Partners Corporation to become the leading pan-Africa focused listed alternative asset manager with unique capabilities to invest across the continent
  • Creates a diversified investment platform combining best in class third-party investment management capabilities with the strength of long-term shareholders in a permanent capital vehicle
  • Provides an enlarged capital base, increasing capacity to invest as well as to launch additional and differentiated Africa focused asset management strategies and initiatives
  • Reinforces the parties’ shared long-term commitment to be a consistent and trusted provider of capital to growing African businesses across market cycles
  • Tope Lawani and Babatunde Soyoye, the co-founders and Managing Partners of Helios Investment Partners LLP, will become joint CEOs of the combined holding company, enabling the company to build on the track record they have established over the last 15 years

In his remarks, Tope Lawani disclosed that the deal will offer emerging market investors the opportunity to gain exposure to the continent through their portfolio.

“We take a long-term view on our investments, and many have proved resilient even in this pandemic with a number of our investments in sectors such as telecommunications, payments, and food,” Lawani said. 

He added that the transaction will offer Helios access to permanent capital from equity markets that can be used to accelerate its product and growth strategy.

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Helios, which was founded in 2004, has raised third party private capital for the past 15 years investing in Africa companies including First City Monument Bank (exiting in 2013), Interswitch, Vivo Energy and Helios Towers Plc. 

Fairfax was founded by Canadian Billionaire Prem Watsa and will own 45.6% of the Helios Fairfax Partners Corporation. Before the merger, Helios was raising $1.25 billion for its Africa focused fund and had landed a commitment of $100 million from the U.K’s CDC Group. 


You may read the full statement by Fairfax by clicking here.

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Corporate deals

Access Bank acquires Zambian Cavmont Bank Ltd

The statement from Access Bank says that the deal is a highly complementary transaction.

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Access Bank Zambia, a subsidiary of Nigeria’s Access Bank Plc, has reached a ‘definitive agreement’ with Cavmont Capital Holdings Zambia Plc (CCHZ) to acquire Cavmont Bank Ltd.

The tier-1 bank announced this latest development regarding the merger talk which has been ongoing for a while, in a statement that was signed by its Company Secretary (Sunday Ekwochi) and issued to the Nigerian Stock Exchange earlier today.

According to the statement by Access Bank, the deal is a highly complementary transaction that is expected to combine Access Bank Zambia’s wholesale and trade finance capabilities with Cavmont Bank’s retail and commercial banking operations.

READ ALSO: CBN debits banks N216.1 billion for CRR compliance

The proposed transaction which, in the meantime is still subject to relevant shareholder and regulatory approvals, is also expected to better position Access Bank Zambia as one of the top 10 banks in the Southern African country.

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Customers from the enlarged bank will benefit from greater security offered by what will be one of the most capitalized banks in Zambia with a more diversified product and service offering and a broader geographical footprint and infrastructure.

Access Bank on its notification stated, ‘’Subsequent to our announcement on July 8, 2020, the Board of Access Bank Plc announces today that its subsidiary, Access Bank (Zambia) Limited, has entered into a definitive agreement with Cavmont Capital Holdings Zambia Plc (CCHZ) regarding proposed acquisition of Cavmont Bank Limited, a subsidiary of CCHZ and subsequent merger of Cavmont Bank’s operations into Access Bank Zambia. The proposed transaction, which remains subject to relevant shareholder and regulatory approvals, will position the enlarged Access Bank Zambia as one of the top 10 banks in Zambia and create the momentum to advance its strategic objectives.’’

READ: A look at how much banks paid their workers in Q1 2020

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‘’Under the terms of the agreement, Access Bank Zambia will acquire the entire issued ordinary share capital, assets and liabilities of Cavmont Bank while Capricom Group Limited, the ultimate majority shareholder of CCHZ will invest at least ZMW300 million ($16.5 million) of preference shares into Access Bank Zambia. Capricorn will hold preference shares in the enlarged Access Bank Zambia for a period of five years, after which the preference shares will be acquired by Access Bank Plc.’’

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The statement also notes that the enlarged bank will be well placed to participate in the long-term economic growth of Zambia and will be predicated on the country’s vast reserves of natural resources and fast growing young population.

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The transaction is expected to be completed during the fourth quarter of 2020.

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Corporate deals

DEAL: Custodian Investment agrees to buy majority stake in UPDC

Custodian Investment announced on Monday to acquire a 51% stake in UPDC, a real estate company owned by UACN.

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DEAL: Custodian Investment agrees to buy majority stake in UPDC

Custodian Investment announced on Monday to acquire a 51% stake in UPDC, a real estate company owned by UACN. This is confirmed in a press release posted on the website of the Nigerian Stock Exchange.

UACN announced plans to spin off its investment in UPDC in 2019 after multiple years of losses and value accretion threatening to undermine the going concern status of the parent. Last June, UPDC announced it has raised N16 billion from the right issue as it prepared for its unbundling.

In separate press releases between Custodian and UACN, the duo agreed to a sale of 51% or 9, 465, 584, 668 ordinary shares of UPDC in a transaction that will occur in two phases.

Deal Details

  • An initial sale of 5.1% of UPDC will be sold to Custodian Investment
  • The second sale of 45.9% of UPDC will then be sold to Custodian Investment
  • The companies did not reveal timelines for the consummation of the deal
  • Due to this deal, UACN will stop its unbundling plans for UPDC
  • The deal is subject to regulatory approvals.
  • The purchase consideration was yet to be disclosed, however, UPDC has a market capitalization of N15 billion while Custodian has a Market Capitalization of N30 billion as at press time.

What they are saying

The CEO of Custodian, Wole Oshin and his counterpart in UACN, Folasope Aiyesimoju also commented on the transaction providing reasons for consummating the deal.

  • According to Wole Oshin of Custodian Investment, “The rationale for the Transaction is that Custodian and UAC share the view that their ambitions for capturing opportunity in the real estate industry will be better achieved working in partnership.”
  • Custodian also believes the transaction “will provide Custodian with a platform to capture arising real estate opportunities. It also immediately provides recurring cash flow visibility and attractive yields as a result of its direct exposure to Nigeria’s leading real estate investment trust (“UPDC REIT”) with a track record of profitability and annual dividend distribution which offers a good compliment for our product portfolio.”
  • According to Folasope Aiyesimoju, Group Managing Director of UAC, “UAC received a credible offer from Custodian. The terms of the offer compelled the Board to re-evaluate the planned approach to de-consolidate UPDC and influenced the Board’s decision to proceed with the sale of a portion of UAC’s interest in UPDC to Custodian, effectively putting an end to the UPDC Unbundling.”

What they stand to gain from this deal

The two companies also revealed what they stand to gain from this transaction. According to Custodian, it decided to acquire for the following reasons;

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  • The company claims it is attracted to the ‘recurring cashflow visibility from UPDC REIT citing the huge cash flow it hopes to enjoy from rental income
  • “The UPDC REIT is highly cash generative with recurring income streams. It has distributed an average of N1.4 billion p.a. over the last five years. Rental income from UPDC REIT is underpinned by leases with first-tier tenants. This presents a good match for our business.”
  • Custodian also mentions the N10 billion in assets for sale on the books of UPDC which it will focus on “realising”.
  • For UAC, while it will no longer be pursuing its deconsolidation strategy for UPDC, it will still retain part ownership of the company but will cease to have it as a subsidiary of UAC operating as a standalone.
  • UPDC will now be a subsidiary of Custodian Investment.

UPDC’s Challenges

  • UPDC reported a loss after tax of N15.8 billion in 2019 and has accumulated over N33 billion in losses since 2016.
  • However, its REIT business has faired better reporting a pre-tax profit of N816.5 million in the first half of 2020. It has consistently declared dividends.
  • UPDC collected about N956 million in cash distribution from UPDC Reit in 2019 alone.
  • UPDC has undergone several restructuring since Themis Capital acquired majority ownership in UACN in 2018. However, it was unable to stop the hemorrhaging of losses.

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Corporate deals

Access Bank completes acquisition of Kenya’s Transnational Bank Plc.

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Access Bank, Scam Alert: Access Bank issues warning to customers over fraudulent acts , Director, West Africa region, IE, Onyekachi Eke, Access Bank lists N30 billion bonds on NSE , Access Bank, Zenith Bank Plc, Access Bank Plc and United Bank for Africa Plc, Zenith Bank Plc, Access Bank Plc and United Bank for Africa Plc, A new BVN guideline to curb e-fraud is coming soon - CBN announces , Access Bank donates 66 laptops to children in underserved communities, Access Bank postpones closed period for 2019 Year-End financial statement, Access Bank dispels rumour about its CEO being arrested, Access Bank set to establish subsidiary in Cameroon after acquiring Kenyan bank, Access Bank finally acquires Kenyan bank, Transnational Bank Plc, Herbert Wigwe: We are clamping down on malaria with the Malaria-To-Zero Initiative, Access Bank to list N15 billion green bond on Luxembourg Stock Exchange 

Access Bank Plc. completes its acquisition of Transnational Bank Plc., following its earlier announcement on October 28th 2019 as well as its receipt of full regulatory approvals and fulfilment of all conditions precedent to completion.  

The notice which was disclosed in a corporate disclosure on the Nigerian Stock Exchange read, “The Bank’s vision is to be the World’s Most Respected African Bank and our entry into the Kenyan market, a gateway in East Africa, not only brings us closer to that vision but enables our customers tap into our extensive global network that translates into immense business opportunities, robust and efficient digital solutions, competitive products and unrivalled customer experience.” 

READ MORE: FCMB Pensions Limited enters into an agreement to acquire 96% of AIICO Pensions Limited

Mr. Herbert Wigwe, Managing Director/ Chief Executive Officer, commenting on the acquisition said, “We are excited to make an entry into the vibrant Kenyan market. We pledge to put our customers at the forefront of everything we do. Through the creation of a world class payment system, we will build and support our wholesale and retail customers using our strong customer insights to deliver beyond their expectations.” 

The company has been carrying out a myriad of expansionary projects in recent time. Just two weeks ago, Access Bank Zambia Limited announced that it was in advanced discussions with Cavmont Capital Holdings Zambia Plc. regarding a possible merger of Cavmont Bank Limited.  

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Access Bank Plc.recorded a profit after tax of N40.9 billion in the first quarter period ended March 31st, 2020. It had recorded an increase in Net interest income which was N72.2 billion in the period, indicating a 27% increase juxtaposed with the N56.8 billion that was recorded in Q1 2019.  

Its shares at market close today stood at N6.10, on the lower end of its 52-week range of N5.30 and N12.00. Its price to earnings ratio was 2.86 and price to book, 0.34.   

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