Actis has completed a two-part transaction that sees the firm’s subsidiary, Umeme Holdings sell a total 45.7 percent of Ugandan electricity distribution company, Umeme for $98 million. Stanbic acted as lead transaction advisor and Stanbic and Rencap as joint bookrunners.
Actis, the pan-emerging markets private equity firm, today announced the successful conclusion of a two-part transaction that has seen the firm’s subsidiary, Umeme Holdings Ltd (“UHL”), sell a total 45.7% of Ugandan electricity distribution company, Umeme Ltd (“Umeme”) for US$98m.
The final step in the transaction was the sale of shares totalling 6.7% of the company for US$13m to Ugandan retail investors and Umeme Management and Directors. Stanbic acted as Lead Transaction Advisor and Stanbic and Rencap as Joint Bookrunners.
The retail and management tranche follows the US$85m institutional tranche (39% of the company), which was heavily oversubscribed by more than 20 institutional investors in May 2014. Following this latest transaction the Actis subsidiary, UHL, remains the second largest shareholder in Umeme, with a 14.3% shareholding.
Strong demand from local investors prompted UHL to release additional retail shares. Local investors were given the opportunity to purchase shares at the same price offered to institutional investors (UGX 340), and in addition were entitled to one additional share for every ten purchased. The sale was structured to ensure smaller investors were given their full allocation.
Umeme’s Directors and Managers invested US$6m in the share purchase and have increased their shareholding in the Company to approximately 5% from the previous 2%. In the institutional offer, Investec Asset Management increased its shareholding to 18% to become the largest shareholder, while the Ugandan National Social Security Fund became the third largest shareholder after increasing its shareholding from 8% to 14%. The overall transaction has been the largest offering of secondary stock to date on the Uganda Securities Exchange.
David Grylls, Partner at Actis, commented: “We have been delighted by the strong take-up of Umeme shares, first by heavyweight institutional investors, and now by retail investors and Umeme Management and Directors. Not only is this indicative of a healthy appetite for solid Ugandan companies, but also a commitment to Uganda’s powerful macroeconomic story. This can only be good for Uganda’s capital markets.”
Patrick Mweheire, Lead Transaction Advisor at Stanbic, added, “The accelerated book-build for Actis’ sale of a stake in Umeme was highly successful and the first of its kind. It signalled significant appetite from both institutional African investors and international investors who are keen to tap into the opportunity in these increasingly sophisticated and liquid markets, this was evident in the strong demand seen across all investor classes (including retail and management) for the transaction.”
Since Actis (via UHL) invested in Umeme in 2005, the company has invested over US$224m in modernising its distribution system. By the end of 2013, Umeme had increased its customer base from 250,000 to in excess of 580,000 customers, connecting over 50,000 customers to its network per year. Umeme now directly employs over 1,300 staff.
Actis invests exclusively in the emerging markets with a growing portfolio of investments in Asia, Africa and Latin America; it currently has US$6.5 billion funds under management. Combining the expertise of over 100 investment professionals on the ground in nine countries, Actis identifies investment opportunities in three areas: private equity, energy and real estate. Actis is proud to actively and positively grow the value of those companies in which it invests and in so doing contribute to broader society. www.act.is
Umeme is the largest electricity distribution company in Uganda. As an electricity distributor, Umeme is mandated to:
– Operate, maintain, upgrade and expand the distribution network
– Retail electricity to its customer
– Improve efficiency within the electricity distribution system
Umeme continued to return strong results for the year ended 31 December 2013. Earnings before Interest Taxation Depreciation & Amortization (EBITDA) grew by 27% to UGX149bn in 2013 from UGX117bn in 2012. Profit after tax grew from UGX57bn in 2012 to UGX84bn in 2013.