1

NEWS FROM THE CONSUMER SECTOR IN SUB-SAHARAN AFRICA

May 2018

Retail Private Equity • African private equity firm, Adenia Partners, has

bought a majority stake in Kanu Equipment, a supplier of quality earth-moving equipment. The investment gives Phatisa a partial exit (a reported 55% IRR), and provides Kanu Equipment with US$20m in growth capital.

• South African fund manager, Vantage Capital, has invested US$8m in the 18,211m2 Rosslyn Riviera Shopping Mall in Nairobi.

• UK private equity firm, Alta Semper, has invested US$18m in HealthPlus, Nigeria’s leading retail pharmacy chain with approximately 80 retail outlets.

• Kenyan private equity firm, Funguo Investments, has bought 51% of Kenyan food processing company, Feastfoods Processors. This has been partially funded by the state-owned Industrial and Commercial Development Corporation.

• African leading mobile loan app developer, Branch International, has completed a US$70m Series B from a group of investors, led by Silicon Valley venture capital firm, Trinity Ventures. Other investors include IFC, Victory Park Capital, Andreessen Horowitz and CreditEase Fintech Investment Fund.

• Proparco has invested US$3m in JUMO, a mobile money platform with operations in 7 African countries.

• DOB Equity has completed its first investment in Rwanda, in Sarura Commodities, a grain trading company that links small scale farmers to reliable grain input and service providers. Sarura was founded in 2012 and features over 9,000 small scale farmers on their platform.

• EXEO and Norfund have invested US$17m in Marginpar Flower Group, a Dutch specialist flower distributor which markets and sells flowers from Zimbabwe, Tanzania, Kenya and Ethiopia. The investment supports Marginpar’s acquisition of Kenya’s Carzan Flowers and Marginpar Ethiopia, which will be added to the group’s existing investments in Kariki, a Kenyan summer flower producer.

• Nigerian online shopping mall, Konga, has

merged with Yudala, an ecommerce company affiliated with Zinox Technologies. Zinox Technologies acquired Konga earlier this year.

• Kenyan retailer, Tusky Supermarkets, has backed out of its proposed investment in Nakumatt. Tusky’s said this was because of a concern over certain proposals by the Administrator of Nakumatt.

• Having used the last tranche of its US$18m bailout from the government, Kenyan supermarket chain Uchumi Supermarkets is now looking for private sector support. It reportedly requires US$70m to finance e-commerce, franchises and convenience stores.

• Carrefour will open its fifth Nairobi store at the Sarit Centre, taking over the space vacated by Uchumi Supermarkets. It will also open the first Carrefour Market store format in Kenya, at the Village Market.

• Krispy Kreme has invested US$7m in a new doughnut theatre in Nigeria that will offer 16 different varieties of doughnuts and Nigerian blended coffee. Quality Foods Africa is implementing the expansion under an agreement that will bring 20 Krispy Kreme outlets to the country over a period of five years.

• Ugandan coffee chain, Café Javas, has opened its first branch in Nairobi, under the name CJ’s. The firm’s expansion in Kenya will deepen its rivalry with Kenyan restaurant operator Java House, which approached the Ugandan High Court in 2016 after Café Javas’ owner, Mandela Group of Companies, successfully objected to the registrar of the trademarks’ acceptance of the Nairobi Java House name.

• South African retailer Massmart, owned by Walmart, is continuing its pan-African expansion with a plan to open 20 new stores, over the next three years. This will result in a 36% increase in retail trading space.

Uqalo is a specialist investor targeting opportunities related to the Consumer in sub-Saharan Africa. The Uqalo Report provides the investment and business communities with a regular and concise update on activity in the sub-Saharan consumer products sub-sectors of most interest to Uqalo, namely fabric & clothing, food & beverage, home & personal care and general merchandise. It also contains the Uqalo Consumer Index and highlights recent research conducted by Uqalo, freely available at www.uqalo.com.

2

Manufacturing

25.5

21.2

17.0

19.0

21.0

23.0

25.0

27.0

Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 Jan-18 Apr-18

PEra

tio

UqaloConsumerIndex

UqaloIndex Indexaverage

• Nigeria’s De United Food Industries, the owner

of Indomie noodles, has acquired a food production line from May & Baker Nigeria, an FMCG and healthcare company, for US$2m.

• AB InBev plans to build a US$100m brewery in Dodoma, Tanzania. The company is also building a brewery in Nigeria, which is expected to start production by mid-2018.

• Varun Beverages, an Indian soft drinks

manufacturer, has commenced manufacturing operations in Zimbabwe. However, the company revealed the cost of setting up a plant might increase to about US$40m, from the initial budget of US$30m, due to the foreign currency shortage.

The Uqalo Consumer Index continued to drop in line with the Emerging Markets decline caused by Europe’s slowing, rising US rates and the dollar rebound. The UCI is 21% ahead of the average which we calculate since January 2009 and 8% lower than the all-time high which was achieved in Dec 2014. The Uqalo Consumer Index is a valuation index based on the historical price-earnings ratios of listed consumer businesses in sub-Saharan Africa excluding South Africa. The index is intended to give investors and businesses an indication of current valuation expectations in a historical context. The construction of the index is described in detail at www.uqalo.com

DISCLAIMER: This report has been prepared by Uqalo Advisory (Pty) Ltd, using publicly available information and our own research. Whilst we have used reasonable endeavors to ensure that the information provided is accurate and up to date at the time of issue, we do not warrant that it is accurate, complete or up to date. We hereby disclaim all liability to the maximum extent permitted by law in relation to this report and give no warranties, express or implied, in relation thereto. By receiving this free report, you accept this disclaimer and agree that it is reasonable in the circumstances