DealMakers AFRICA 2019 Annual

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Deal of the Year (West Africa)


Merger of Cement Company of Northern Nigeria

and OBU Cement

The consolidation of the cement businesses comprising the publicly-listed Cement Company of Northern Nigeria plc (CCNN) with OBU Cement, both subsidiaries of the BUA Group – a leading Foods & Infrastructure Conglomerate with headquarters in Lagos – was initiated by the board of directors of OBU Cement in the belief that the growth of the cement industry in Nigeria could be enhanced with the merger. BUA Group indirectly owns a 97.03% stake in CNN and 95% of OBU Cement.

The consolidation will strengthen BUA’s positon as the second largest cement producer in Nigeria and position it to take advantage of the combined synergies, in the form of greater economies of scale and enhanced operating and administrative efficiencies. The merger increases the production capacity of the company to 8 million metric tonnes per annum which, in addition to meeting the demand from customers in the core regions in Nigeria, will place the enlarged company in a position to distribute its products to new geographic markets, creating the potential for additional shareholder value creation.

In 2018, the deal between CCNN and Kalambaina Cement won the DealMakers AFRICA Deal of the Year (West Africa) and established the enlarged company as the second largest cement producer on the NSE, after African behemoth Dangote Cement.

The deal saw CCNN shareholders receive 1 share in OBU Cement for every 1 share held in CCNN. CCNN’s 13,145,500,966 shares were delisted from the Nigerian Stock Exchange on 9 January 2020, and 33,864,354,060 ordinary shares of 50 kobo each were listed under the new company name, BUA Cement plc (previously OBU Cement). As at the date of listing, BUA Cement was the third largest company on the Nairobi Stock Exchange by market capitalisation of $3,3 billion.

The landmark transaction was the largest M&A deal completed in Nigeria in 2019, with a transaction value of US$1,28 billion, and is one of the first mergers to be executed in Nigeria under the newly enacted Federal Competition and Consumer Protection Act, which makes it mandatory to notify and obtain approval for large mergers before they are implemented. Small mergers, while not notifiable, may be invoked by the Commission within six months of the merger being implemented.  

Stanbic IBTC Capital, financial adviser to CCNN, says that engagement with shareholders led to overwhelming support for the deal, with over 99% of the minority shareholders of CCNN present at the court-ordered meeting voting in favour of the merger. The result significantly exceeds the statutory minimum threshold of 75%. 

Financial Advisers: Stanbic IBTC Capital, Rand Merchant Bank Nigeria
Legal Advisers: G. Elias & Co., Olaniwun Ajayi LP
Stockbrokers: APT Securities and Funds; Stanbic IBTC Stockbrokers
Accountants: KPMG Advisory Services (Fairness Opinion), Gbenga Badejo & Co.


Pick of the Best (in no particular order)


Listing of MTN Nigeria Communications plc

On May 16, 2019, MTN made history as the first mobile telephone company to list its Nigerian arm – MTN Nigeria Communications – on the Premium Board of the Nigerian Stock Exchange (NSE) to become the second most capitalised company on the NSE after Dangote Cement plc. Reaching this point, however, was no mean feat. 

The company which has, over the past several years, had numerous run-ins with the Nigerian Government had, as part of a deal reached with local authorities, agreed to sell down its majority 79% stake as settlement for a $5,2 billion regulatory fine after it failed to meet the deadline for SIM card registrations in 2016. 

The listing, a significant milestone in deepening local ownership of MTN Nigeria (MTNN) shares, was without the anticipated initial public offering (IPO). Instead of an IPO, MTNN listed by way of introduction, allowing shareholders to trade on the NSE without the issuing of additional new shares. A total of 20,354,513,050 shares were listed at a price per share of NGN90 (US$0.25) giving it a market capitalisation of NGN1,83 trillion ($5,1 billion). Barely 24 hours after the listing, MTNN broke into the top 5 on the NSE, topping the gainer’s table at the close of trading for May 17, 2019. The All-Share Index of the NSE was boosted on MTNN’s debut which rose 10% in the first five days of its listing, and of the total NSE ASI turnover for this period, 76.3% was represented by MTNN.

However, listing did not spell the end of turbulent times for MTN in Nigeria, weathering all kinds of storms, from reports of an investigation into MTN by the Economic and Financial Crimes Commission (EFCC), to reports of xenophobic attacks on Nigerians in South Africa, the listing of Airtel Africa on the NSE pushing MTNN shares softer, to the exit of the MTNN chairman along with four executives. 

Despite these setbacks, the counter has, on occasion, leapfrogged Dangote to become, if only briefly, Nigeria’s most valuable company. As the company was at pains to communicate at the time of listing, it intends to pursue a public offer in the future, to give more Nigerians access to the stock.

The Nigerian business is owned by parent MTN Group, which holds 78.8%, Nigerian investors with 19.4% and smaller investors with 1.8%. It is the leading mobile operator with over 60 million subscribers, offering an integrated suite of communications products and services to its customers, including mobile voice, data and digital services, fintech and business solutions. 

Financial Advisers: Stanbic IBTC Capital, Chapel Hill Denham
Legal Advisers: Banwo & Ighodalo, ENSafrica
Stockbrokers: Stanbic IBTC Stockbrokers


Visa’s strategic investment in Interswitch

Interswitch, the technology-driven company focused on the digitisation of payments primarily in Nigeria, but also in other countries in Africa, entered into a strategic partnership with Visa to further advance the digital payments ecosystem across the continent.   

The deal, which was first announced in November 2019, saw Visa acquiring a significant minority equity stake in Interswitch, alongside company management and current investors Helios Investment Partners, TA Associates and the International Finance Corporation. The investment has elevated Interswitch to a position as one of the most valuable African FinTech businesses, with a valuation of US$1 billion.

Interswitch services range from powering online payment platforms (Quickteller) and point-of-sale terminals to a debit card network (Verve) with 19 million active cards. 

Aside from its home-base in Nigeria, Interswitch has a physical presence in Uganda, Gambia and Kenya and sells its products in 23 African countries.

For Visa, the deal is in line with its strategy to seek out partnerships with local players in Africa to strengthen its leadership position and support the rapid growth of digital commerce across the Continent. The deal changes the fintech landscape, confirming the strategic interest of global payments giants in Africa’s financial services sector. The partnership will create an instant acceptance network across Africa to benefit consumers and merchants, and facilitate greater connectivity for communities.

According to Visa, sub-Saharan Africa is the fastest growing digital payments market in the world, with electronic payment volume in the region (excluding South Africa) expected to grow at a CAGR of approximately 35% from 2018 to 2023. The progress, it says, is expected to be driven by deepening payments infrastructure, population and urbanisation growth, GDP growth above the global average, increased mobile and internet penetration due to a supportive regulatory landscape for electronic payments and financial inclusion. Reforms in Nigeria, Ethiopia and Egypt could see more than 110 million mobile money accounts added in the next five years.

The deal is unlikely to derail the planned 2020 listing on the London Stock Exchange. In 2016, the IPO was scrapped amid a recession in Nigeria, but this latest partnership confirms the long-term appeal for investors – particularly those with an environmental, social and governance (ESG) bent to facilitate payments and savings, to ensure financial inclusion of the unbanked, and to tackle access to credit for small businesses and individuals. 

Financial Advisers: FT Partners 
Legal Advisers: Banwo & Ighodalo, ACAS Law, Latham & Watkins, Morrison Foerster, Akulo & Oyebode


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DealMakers Africa’s awards are based essentially on objective evidence - the value of deals or transactions, and the number of them. In limited instances judgment has to be applied on the categorisation and value ascribed to a particular deal or transaction. In only two of the awards is selection subjective and we approach these with considerable circumspection; they are for the Deal of the Year and the Private Equity Deal of the Year.

The first stage with both Deal of the Year and Private Equity Deal of the Year is that the DealMakers Africa editorial team, with nominations from the advisory firms, produce a short list of those it believes best qualify for consideration with input from the Independent Panel. The papers and press comment on each deal is then bundled and delivered to the members of the panel.

The Panel ranked the deals on the following criteria:

Deal of the Year:

Transformational transaction – does the deal or transaction transform the business or even the industry in which it operates? What is the extent of potential transformation as a result?

Execution complexity – does the overall deal or transaction involve multiple steps/a number of smaller inter related deals? Are there numerous conditions precedent that need to be fulfilled? Does it involve many and/or complex regulatory approvals?  Are there related debt/equity raising processes and how difficult are they to implement? Was there significant time pressure to conclude the deal/transaction? Did the deal/transaction exhibit innovative structuring?

Deal size – not an over-riding determinant but a significant factor.

Potential value creation – to what extent could shareholders and other stakeholders transaction over time?

Private Equity Deal of the Year:

Asset with good private equity characteristics – cashflow generative business and able to service an appropriate level of debt? A business model that is resilient to competitor action and downturns in the economic cycle? Strong management team that is well aligned with shareholders and capable of managing a private equity balance sheet? Predictable capex requirements that can be appropriately funded?

Deal size – is a factor to filter deals but plays a limited role for acquisitions. It does carry more weight for disposals.

Potential/ actual value creation – was the asset acquired at an attractive multiple? If the deal is a disposal was it sold at an attractive price? What is the estimated times money back and/or internal rate of return?


There is limited information available in the public domain on the private equity deals, and even somewhat educated guess work doesn't provide all answers in all instances.