Pangaea Securities @
The Afrexim Bank Forum
Your Speaker …
Chenge Mwenechanya – Senior Associate: IBD
Pangaea Securities Limited
Pangaea Securities Overview
Pangaea Overview
•
Pangaea is a leading full-service
financial advisory firm and
stockbroker in Zambia.
•
We are a member of the Lusaka
Stock Exchange (LuSE) and
regulated by the Securities and
Exchange Commission (SEC).
•
Founded in 1994, Pangaea is
independent, Zambian owned and
managed.
•
We have advised leading global
and Zambian companies, and
entrepreneurs on a range of
successful transactions, with core
experience in the following:
– Equities
– Equity Capital Markets
– Debt Capital Markets
– M&A
Equities
•
Equity sales
•
Trading for individuals, local
institutions and foreign investors
•
Brokerage
•
Market advice
•
Research
Equity Capital Markets
•
Telecoms
•
Financial Services
•
Agribusinesses
•
Metals & Mining
•
Real Estate
•
Private Placements
Debt Capital Markets
•
Telecoms
•
Financial Services
•
Agribusinesses
•
Real Estate
•
Private Placements
•
Local and international currency
denominated instruments
•
Structured debt and hybrids
M&A
•
Advisory on takeovers and
mergers
•
Bespoke financial advisory
(including valuations and
financial modeling)
Pangaea Landmark Transactions
Ongoing
Ongoing
Ongoing
YoY 45% of Trades
with access to the
largest pool of
international fund
managers
MTN Private
Placement
ZMW100.0m
Client
Undisclosed
MTN Private
Placement
ZMW400.0m
Client Undisclosed
Brokerage
Co-Arranger &
Sponsoring Broker
Co-Arranger &
Sponsoring Broker
Agriculture
August 2013 Telecoms
June 2013
Share Consolidation
M&A Transaction
Valuation
Brokerage
Analyst
Agriculture
July 2011 Telecoms
Dec 2010
Agriculture
May 2013
M&A Transaction
With
Rainbow Farms
Investments
Sponsoring Broker
Agriculture
Aug 2009
July 2015 Telecoms
Real Estate
May 2015
Listing on LuSE
Quoted Tier
USD8.3m
IPO in Zambia
USD50.0m
Lead Advisor &
Sponsoring Broker
Placement Agent &
Sponsoring Broker
Manufacturing
May 2013
Telecoms
March 2013
Share
Consolidation
Share
Consolidation
Advisor
Advisor
Consumer
May 2009
Telecoms
June 2008
Telecoms
May 2015 Agriculture
M&A Transaction
USD151.0m
M&A Transaction
With Cargill
USD25.0m
Advisor & Sponsoring Transaction Advisor &
Broker
Sponsoring Broker
Telecoms
Aug 2012
Sponsoring Broker
Real Estate
Oct 2006
Jan 2012
Real Estate
Recommenced
Trading
FIG
Dec 2014
April 2015 FIG
Agriculture
Sept 2014
Private Placement
USD10.0mn
Sell-Down
USD22.9m
Lead Arranger
Sponsoring Broker
Consumer
Dec 2011
Mining
Aug 2011
Settlement
USD25.0m
Rights Offering
USD70.0m
USD18.0m ZDRs
Listing on LuSE
Broker
Lead Manager &
Sponsoring Broker
Lead Manager &
Sponsoring Broker
Aug 2001 Consumer
Feb 2003
Agriculture
May 2001
Zambia
IPO on AIM
USD60.0m
Mandatory Offer
USD100.0m
Rights Offering
USD49.0m
Internal
Re-organization of
Assets
IPO in Zambia
USD190.0m
Rights Issue
USD15.0m
MTN Private
Placement
ZMW50.0mn
Dual Listing on
LuSE
Internal
Re-organization of
Assets
Lead Manager &
Sponsoring Broker
Lead Manager &
Sponsoring
Broker
Lead Manager &
Sponsoring Broker
Sponsoring Broker
Lead Manager &
Sponsoring Broker
Lead Manager &
Sponsoring Broker
Co-Arranger &
Sponsoring Broker
Joint Sponsoring
Broker
Sponsoring Broker
Pangaea Overview
Present
•
Pangaea recently hosted an investment conference in conjunction with
the Zambian Development Agency
•
Key highlights:
– Open discussions regarding the growth sectors in Zambia
– Various distinguished local industry leaders
– Insight from world class speakers
– The prominent keynote speaker being Sir Richard Branson
•
Pangaea has begun trading the two Zambian sovereign bonds
– Projected trades up to US$25.0 mn per annum
Pangaea Overview
Present (cont’d)
•
Pangaea has been nominated for two prestigious 2015 awards:
– The CFI Best Emerging Markets Award; and
– The President Obama’s Global Entrepreneurship Summit (GES) Award
•
Pangaea is a sponsor and partner to the following 2015 events:
– Africa Private Equity Awards (London); and
– Zambia Mining Conference (London)
Pangaea – Present
Proprietary
Brudi
Limited
Franchises
Raising Finance in Zambia
How Does One Raise Finance In Zambia?
Two Options
Financial Institutions
Capital Markets
Capital Markets
Capital Markets
•
Equity Capital Markets
– IPOs
– Active secondary market
•
Debt Capital Markets
– Bond and Derivatives Exchange
– Bonds
– Medium Term Notes
Typical Process on the LuSE
Process for Direct Listing on the LuSE
Listing Process
Listing Requirements
Item
Offering documents
Due diligence
Regulatory approvals
Investor education and road shows
Pricing, offer, and listing
Entire Process to take ~ 90 days
Activity
Requirement
•
No restrictions
•
A subscribed capital of at
least ZMW250,000
(approximately US$40,000)
•
25% (not less than 1,000,000
equity shares in issue)
•
The number of shareholders
of listed securities shall be at
least 300 for equity shares
and 25 for preference shares
Accounting Standards
•
IFRS
Track record
•
3 years
•
A satisfactory profit history for
the preceding three financial
years
•
Pangaea Securities will act as
a Sponsoring Broker for the
IPO and on an on-going basis
•
Disclosure of significant
transactions, financials, other
material information
•
5 – 7% of the gross proceeds
Country of Incorporation
Size of the Company
Minimum Free Float
Number of Shareholders
Pre-tax Profit
Sponsor
Information Disclosure
Estimated Cost
Transaction Execution and Marketing
•
•
Fully marketed/ Institutional Placement
Pre-funded transaction
Preparation
“Pilot Fishing”
Analyst Marketing
Book Building
Pricing
Offering
1 – 2 months
1 week
1 week
2 – 4 days
1 day
2 weeks
• Due
Diligence
• Preliminary
valuation
• Prospectus
(if Retail)
• Research
preparation
• Drafting of
Placement
Agreement
• Management
marketing
• Marketing
meetings by
research analyst
• Price range
• Order book
Pricing
Fixed Price
Retail Offering
Retail Offering: Pre-funded
Primary Market Trade
Secondary Market Trade
1. Timetable
creation
1. Shares
Listed
2. Advertising
(Retail Clients)
2. DVP (Delivery
versus Payment)
method utilized
3. Road Shows
(Institutional
Clients)
4. Market
Participants
Briefing
5. Opening of Offer
Period
6. Close of
Offer Period
7. Shares
Listed
Primary vs Secondary Market Liquidity
Primary Market Liquidity Very high
Secondary Market Liquidity is Relatively Less
600,000
500,000
US$
US$ ‘mn
700,000
CEC Rights Offering (2014)
57
First Quantum ZDR (2011)
18
Lafarge Sell down (2014)
48
Zambeef (excl. AIM… 40
Zambeef Rights Offering…
60
Zambia Sugar (excl.… 30
Zambia Sugar Rights…
50
Zambia Sugar Sell down… 18
Zambian Breweries
70
Zambian Breweries (excl.… 10
ZCCM-IH
ZCCM-IH Rights Offering…
ZCCM-IH fresh capital… 40
400,000
300,000
200,000
283
323
•
The Zambian pension fund community has
around US$2 billion AUM and significant
cash from inflows to deploy
•
Since 2009 the majority of international
funds investing in Africa has arisen from a
small group of dedicated Africa funds
100,000
0
2011
2012
2013
2014
Financial Institutions
Financial Institutions
•
There are numerous financial institutions in Zambia
– 33 microfinance institutions
– 19 commercial banks
•
However, high interest rates are hindering the development of Zambia
Financial Institutions
•
Pangaea is developing solutions and products to support the country
and sector, the answer:
•
Pangaea Finance
Pangaea Finance
Pangaea Finance
Overview
•
Pangaea Finance is being setup to become the leading financial service provider
of structured loan facilities to SME’s with large corporate clients (multinationals,
parastatals, large government divisions, etc.), who are willing to underwrite a
majority of the responsibility.
•
We are in the process of applying for a lending/investing license from the Bank
of Zambia
•
The SME sector has been rapidly growing and over 500,000 SMEs have so far
been registered
•
The SME market has remained relatively untapped by the financial sector
industry in Zambia and yet it has significant growth potential.
•
Our focus is on the incorporated looking for expansion capital, but remaining
under the radar. “The ungooglables”
Pangaea Finance wants to help do this …
Overview (cont’d)
Pangaea Finance
Products/ Services
•
Mezzanine lending
– Fills the gap between Senior Debt and Asset Based Lending, and Equity
Pangaea Finance
Products/ Services (cont’d)
•
Bullet Loan
•
Amortised Loan
•
Invoice Discounting
•
Commercial Paper
Pangaea Finance
Products/ Services (cont’d)
•
Equity Participation
Disclaimer
The information and opinions contained in this presentation have been derived from
Pangaea Securities (“Pangaea”) and sources believed to be reliable and in good
faith or constitute Pangaea’s judgement as at the date of this presentation but no
representation of warranty, express or implied, is made as to their accuracy,
completeness of correctness and any opinions are subject to change and may be
superseded without any notice.
Any information contained in this presentation is not to be relied upon as
authoritative or takes in substitution for the exercise of judgement. This document is
not, and should be construed as, an offer or solicitation to sell or buy any investment
or product. Pangaea accepts no liability (either in negligence or otherwise) for any
loss from any use of the material contained in this presentation.
This presentation is confidential and may not be reproduced, distributed or
published for any purpose, unless with prior written consent of Pangaea. Pangaea
and or/its affiliates and/or their officers, directors or employees may own or have
position in any investment mentioned herein or any investment related thereto and
may from time to time add or dispose of any such investment.
© Pangaea Securities 2015