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South Africa’s MTN says may list in Nigeria once fine resolved

3 March 2016 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – South Africa’s MTN Group may list its Nigerian unit on the stock exchange in Lagos once it has resolved a disputed $3.9 billion fine with authorities in the Western African nation, its executive chairman said on Thursday.

MTN also said it has set aside 9.3 billion rand ($600 million) to cover a potential settlement of a fine imposed by Nigerian authorities last year for failing to cut of unregistered SIM card users.

Shares in the mobile company rose more than 9 percent to 149 rand by 0845 GMT.

($1 = 15.645 rand)

 

(Reporting by Tiisetso Motsoeneng; Writing by Joe Brock; Editing by James Macharia)

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Janine Diagou rises to number 2 in family company

2 March 2016 Comments (0) Africa, Featured, Leaders

janine diagou

As head of banking of NSIA Group, Janine Diagou prepares to introduce company shares on the regional stock exchange.

When Janine Bénédicte Diagou joined the family insurance and banking business in 1999, it wasn’t guaranteed that she would be running it one day.

But 17 years later, she is group managing director and head of the banking division at NSIA Group, a leading insurer in French-speaking Africa based in the Ivory Coast, and the number two to her father, Jean Kacou Diagou, who founded NSIA Group in 1995 and serves as its president.

These are busy times for the Diagous as their company, which has pursued an aggressive growth strategy, prepares to take their bank public and introduce shares on the regional stock exchange for eight West African countries, including Ivory Coast.

For Janine Diagou, that has meant months of travel to meet with boards of subsidiaries in the region to smooth the way for the initial public offering, which will enable the bank to raise capital.

Diagou studied business in England, France

Janine Diagou studied business and finance in Paris and in London, obtaining a Bachelor’s Degree in business administration in France and a Master of Science degree in finance in England.

After she finished her studies in 1995, she joined Citibank in Abidjan, and then moved to Mobil Group ACOE as an internal auditor.

She said she took what was essentially a demotion to join her father’s company at his request in 1999, trading an executive role at Mobil Group for the more modest role of auditor at NSIA.

Her father was forming a new auditing group and asked her to join as a simple auditor.

“He asked me to cut my salary in half. I was not very excited at first, especially since I did not know the insurance industry. So we had to work hard to prove that I deserved my place,” she said.

Skepticism, then success

She said she faced skepticism and took pains to avoid being perceived as having the job because she was the daughter of the boss, including addressing him as “mister president.”

She rose to become financial director of the group and then took charge of strategic development. She assumed her current position in 2011.

She said she and her father never had a game plan for her advancement.

“He never promised me anything and, believe me, he did not ease the task either. I think in my job, I won his trust,” she said.

Progress for women in business

She believes her success is a victory for women in business.

“Convincing men in industry of your competence is not simple in Africa,” she said. “The main challenge was to prove again and again that I was capable of doing the job at least at the same level as men — and even better.”

She said she and her father have not reached a stage of discussing succession. Instead she is focused in gaining investor confidence that the company is sustainable.

Family, private investors having holdings

NSIA currently owns nearly 80 percent of the bank, with the family holding 60 percent and the remaining 20 percent in the hands of private investors. National Bank of Canada bought a 20.9 percent share in the bank for approximately $94 million in 2015.

NSIA Bank, formerly known as BIAO-CI is part of the financial group NSIA, which is a leading insurance provider in 12 countries across West and Central Africa. NSIA also owns a bank in Guinea. The company reported revenue of $3.3 million in 2014 and Jean Diagou forecast revenue would increase by 10 percent in 2015.

Few details of the initial public offering have been made public and no date for the stock sale has been announced.

Ivorian law requires companies to offer at least 10 percent of their shares to be listed on the exchange.

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Why Would Saudi Aramco Consider an IPO?

18 January 2016 Comments (0) Business, Featured, Middle East

Saudi Aramco

Saudi Arabia, the world’s biggest producer of crude oil, is considering a public offering of shares in its state-owned oil company Aramco

Saudi Arabia, the world’s biggest producer of crude oil, is considering a public offering of shares in its state-owned Saudi Arabian Oil Company (Saudi Aramco) and / or some of its downstream assets. The news was announced by the influential Saudi deputy crown prince and the country’s defense minister, 30-year-old Mohammed bin Salman, in an interview with The Economist. He framed it as a step toward transparent governance of state-owned oil and the Saudi market: “I believe it is in the interest of the Saudi market, and it is in the interest of Aramco, and it is for the interest of more transparency, and to counter corruption, if any, that may be circling around Aramco.”

His announcement was reaffirmed in an official statement released by Aramco: “Saudi Aramco confirms that it has been studying various options to allow broad public participation in its equity through the listing in the capital markets of an appropriate percentage of the Company’s shares and / or the listing of a bundle of its downstream subsidiaries.”

Saudi Arabia facing significant political and economic challenges

Many are asking why the royal family would consider selling shares in its largest asset, especially when it’s at its lowest point since 2004. The complete control of Saudi Arabia’s oil is in large part the source of the government’s power and success. Some have suggested that Aramco has predicted the end of the age of oil, and that the Saudi’s are looking to cash out while they can. But, on the other hand, it could be more linked to the Kingdom’s politically and economically challenging time.

Oil income makes up about 90% of government revenue, but with crude oil prices at their lowest levels in over a decade, the Kingdom is losing billions of dollars in revenue. And while it is sitting on around $630 billion in reserves, Saudi Arabia’s 2015 budget deficit was 15% of GDP, and a record budget deficit of $98 billion is expected in 2016. Also, instead of slowing production to increase oil scarcity, as has so often been Saudi Arabia’s tactic, last year, Aramco pumped a record 10 million plus barrels a day to compete with the US and Russia. The strategy cost Saudi Arabia around $120 billion of its foreign currency reserves. And the Kingdom is starting to struggle to maintain its expensive military campaigns in Yemen and Syria, and to manage the resulting clashes with Iran.

The country is also facing high unemployment, currently at 12%, and a demographic bulge, which counts more than two thirds of the population under the age of 30. The bulge will require almost three times as many jobs in the coming decade than were created between 2003 and 2013 during the oil boom if the country is to avoid soaring unemployment and increasing the volatility of the political environment.

So as its most valuable asset shrinks, the Kingdom needs to find a way to diversify its economy in order to improve its long term economic capabilities. Working with McKinsey, Saudi Arabia has developed long term path that involves pushing $4 trillion into eight new sectors (finance, construction, healthcare, tourism and hospitality, retail and wholesale trade, petrochemicals, manufacturing, and mining and metals) to contribute 60% of growth. However, it seems likely that adding value across all of its oil related actions and managing its hydrocarbon resources, both conventional and unconventional, would also be part of the plan to prepare Saudi Arabia for financial and economic stability. It would also signal to Iran, the US, and Russia that Saudi Arabia is in the oil-game for the long-haul.

Saudi Aramco gas facility

Saudi Aramco gas facility

Saudi Aramco IPO

The details of the potential IPO are not yet clear. Aramco’s statement confirmed that: “Once the study of these various options is complete, the findings will be presented to the Company’s Board of Directors which will make its recommendations to the Saudi Aramco Supreme Council.” Aramco Chairman Khalid Al-Falih adds: “There is no plan that is concrete at this stage to do the listing. There are studies ongoing. Serious consideration. It will take time.” Falih also clarified that an IPO could be “shares in Aramco and/or some downstream assets. We are considering a listing at the top. So a listing of the main company, and obviously the main company will include upstream.”

But, it does seem more likely that Aramco will offer a small portion of downstream assets – a bundle of refineries or other assets such as petrochemical units – in order to allow the state to retain full control of its oil fields which produce more than 10 million barrels a day. Although significantly less valuable than a full IPO, downstream assets would still offer buyers a piece of a huge global business which processes more than 3.1 million barrels a day, with plants across the world in Saudi Arabia, the US, South Korea, Japan, and China.

$10 trillion valuation

Looking at a full IPO, the valuations are simply enormous. Based on claims that the company’s reserves are 265 billion barrels of crude oil and 50 billion barrels of natural gas, its market capitalization is estimated to be $10 trillion. This would make it significantly bigger than the world’s current most valuable company, Apple, worth $741.8 billion. It would also make Aramco significantly more valuable than ExxonMobil, the world’s current most valuable publicly traded energy company at $357.1 billion.

Even a listing that included just 5% of Saudi Aramco shares could raise around $500 billion, a figure far larger than Alibaba’s history topping $170 billion IPO of 2014. It would also make it too big to be included in Saudi Arabia’s stock market, the Tadawul.

The listing fees for the bank taking a company of this size public would also be huge, and there are already reports of strong competition for the role. HSBC, Citi, Barclays, Bank of America Merrill Lynch, and Deutsche Bank hold the biggest market share in the Middle East and Africa, making them likely contenders. Citi and Deutsche Bank have also already worked on deals with Saudi Aramco. But we’ll have to be patient until we can find out which bank is set to make a figure of around $17.5 billion working on the deal.

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Egypt’s stock exchange will allow ten companies to delay IPOs

1 December 2015 Comments (0) Australia, Latest Updates from Reuters, Middle East

CAIRO (Reuters) – The Egyptian stock exchange will allow ten companies to delay their initial public offerings due to global market conditions, Mohamed Omran, the head of the bourse, told state news agency MENA on Tuesday.

The Egyptian exchange usually requires newly listed companies to hold an initial public offering within six months, but this period can be extended if there are good reasons, such as volatile global markets.

Omran told Reuters in November that about a dozen companies had registered a new listing on the Egyptian market in 2015, but only half of these had proceeded with an initial share issue.

 

(Reporting by Eric Knecht, editing by Louise Heavens)

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