ICEA Lion Acquires 100% Stanlib Kenya For Kshs 1.5 Billion

ICEA Lion Asset Management, a Kenya based fund manager, signed an agreement to acquire Stanlib Kenya, another Kenya based fund manager, for an estimated 1.5 billion shillings for a 100 percent stake.

ICEA Lion is acquiring Stanlib Kenya from South Africa based Liberty Holdings Ltd, who in their FY’2018 Annual Report announced they would be selling majority stakes in their asset-management operations in East and West Africa, and Liberty Health and Liberty Africa’s Insurance short-term insurance businesses in Malawi and Namibia; as the company pushes ahead with plans to improve profitability and win back market share by focusing on the South African market.

According to findings made by analysts from Cytonn Investments, Stanlib Kenya had earnings of 65.8 million shillings for the H1’2019 period, which implies that if the transaction is carried at the estimated value of 1.5 billion shillings, the transaction will be carried out at a P/E ratio of 11.4x.

The P/E ratio is 53.8 percent lower than the average P/E multiple of other similar transactions in Kenya.

Other similar transactions carried out in the past include the acquisition of a 100 percent stake in ApexAfrica Capital by Axis, a Mauritian private equity fund in 2015 for 470 million shillings, translating to a P/E multiple of 40.2x.

Another transaction is the 90.9 percent acquisition of GenAfrica Asset Managers Ltd by Kuramo Capital, a New York-based investment management firm focused on alternative investments in frontier and emerging markets, in two different transactions in 2018, for 2.9 billion shillings, translating to a P/E multiple of 23.6x.

The table below summarizes the details of the transactions:

Analysts from Cytonn Investments say the acquisition by ICEA Lion is strategic, given;

i. It will cement ICEA Lion’s position as the second-largest Unit Trust Fund Manager with combined assets under management of Kshs 9.6 bn as at H1’2019, coming only second to CIC Asset Managers, and increase their retirement benefits assets under management by approximately Kshs 104.0 bn,

ii. The transaction will see ICEA Lion diversify to the listed property market with the assets being acquired by ICEA Lion including the investment management mandates and all rights, obligations, and benefits in connection with, Stanlib’s role as Promoter and REIT Manager in relation to the Fahari I-REIT,

iii. The expected growth of the equities market in Kenya and Sub-Saharan Africa, driven by product diversification, new listings, and continued investor interest fuelled by existing low valuations in sections in the market such as the financial services, and,

iv. The increasing number of institutional and retail investors in Kenya and Sub-Saharan Africa and the assets under their management. In Kenya, the retirement benefits assets under management grew by 8.0% to Kshs 1,166.6 bn in 2018 from Kshs 1,080.1 bn in 2017, an indicator of the growing opportunity for asset managers in Kenya.

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