Helios buys stake worth Sh3.6bn in Wananchi Group

October 8, 2014


Private equity fund Helios has acquired a Sh3.6 billion ($40 million) stake in Wananchi Group, the owners of pay- TV provider Zuku, as part of a Sh11.6 billion cash injection in the company that signals high investor appetite for Kenyan businesses with strong growth potential.

Helios is the single biggest shareholder ofEquity Bank controlling about a quarter of the lender’s shares, and it is also a significant shareholder in oil marketer Vivo Energy, which trades in Kenya as Shell.

The Helios investment in Wananchi is part of bigger $130 million (Sh11.6 billion) funding announced Monday that also includes contribution from other shareholders of the group including Altice SA, Liberty Global, Emerging Capital Partners (“ECP”) and ATMT.

Wananchi Group on Monday declined to disclose the breakdown of the individual contributions by the shareholders, but the Business Daily saw a document which indicated that Helios had acquired a stake in the company that also provides internet and telecommunication services.

“Helios announced an investment of $40 million in Wananchi Group Holdings (“Wananchi”) in a funding round led by Helios and the existing strategic shareholders, Altice S.A. and Liberty Global Inc,” read the statement by Helios Investment Partners.

“Together Helios, Altice and Liberty Global contributed (about) 85 per cent of the funding round, alongside the other existing financial investors.”

The company founded six years ago said it will invest the cash in expanding its fibre-optic and satellite network to cover more homes in more cities across the region.

Helios Partners now becomes the latest entrant to the Wananchi Group shareholding structure, even though the Business Daily could not establish the stakes held by various owners.

“The new capital investment will be used to consolidate the group’s market leadership in East Africa and to extend our services across East and Southern Africa,” said Richard Bell, vice chairman of Wananchi, in a statement.

“We will continue the deployment of fiber to the home networks in more cities in East Africa and extend our business services networks and product offerings across a wide variety of geographies and market segments,” he added.

Helios Investment Partners is one of a few pan-African private equity investment firms founded and led by Africans. The private equity fund has built a record of identifying and funding start-ups as well as providing established companies with growth capital and expertise.

The firm manages funds totaling more than $2.7 billion (Sh238 billion). Its portfolio companies operate in more than 30 countries in all regions of the continent.

Helios’s other investments on the continent include stakes in Helios Towers Africa, Bayport Financial Services, Interswitch/Paynet and Continental Outdoor Media.

Individual shareholders of Wananchi Group include Mark Schneider, Richard Bell, Richard Essex, Ali Mufuruki and Jimnah Mbaru; who are the founders of the East Africa Capital Partners EACP a private equity fund.

The Overseas Private Investment Corporation of the US Government and Liberty Global Inc are also listed as shareholders.

Wananchi Group provides broadband cable triple play (Internet, TV and voice) via fibre and satellite technology in Kenya, Tanzania, Uganda, Malawi and Zambia.

Latest data from the industry regulator, the Communications Authority of Kenya (CA), indicates Zuku has a 44.7 per cent share of the fixed internet market, followed by Liquid Telecoms at 17.8 per cent, Telkom Kenya 11.6 per cent and Safaricom’s 7.1 per cent.

“We believe this capital injection will enable the Wananchi Group to extend the coverage of its infrastructure as well as build upon its strong broadband-led triple play product offering, including direct to home satellite products to many more tens of thousands of consumers across the greater Eastern Africa region and beyond,” said Dennis Aluanga, a Helios Group partner based in Kenya.

Zuku recently announced a partnership with an international communications satellite provider, Eutelsat Communications, to introduce an expanded, free-to-air tariff plan for its TV service subscribers.

The partnership allows Zuku, through its sister company iSAT, to deliver local, African and international free-to-air (FTA) digital channels in Kenya and across East Africa.

iSAT and Eutelsat uses satellite to broadcast a range of channels to digital head-ends(cable) and on a direct-to-home basis beyond ordinary terrestrial reception.

The partnership also enabled Zuku to join Star Times Media in providing free-to-air channels provided by Signet Media, which is owned by public broadcaster, KBC.

The new financing is also expected to give Wananchi Group financial muscle to fight competition both from satellite and fibre internet home connections business.

Unlike fibre connections which can provide guaranteed internet connection speeds of up 100 Mbps, satellite internet connection are usually shared and does not offer guaranteed speeds, therefore at times compromising on the customer’s internet access.

Last week, Abu Dhabi-based satellite operator, announced its YahClick satellite broadband internet promotional offer in Kenya for period of two months.

Yahsat is offering a free satellite modem and dish for new YahClick subscribers to selected service plans as part of its entry plan in the Kenya market. The firm however has not indicated how much it will charge the subscribers after the expiry of the promotion.

Jamii Telecoms charges its subscribers on its Faiba business plan Sh10, 000 per month.

Those subscribing to 6mbps of Jamii’s business faiba pay Sh15,000 – the capacity can serve up to 20 active business users. Majority of Kenyan however are still accessing the Internet through the mobile phones.

The drive for working from home, e-learning and the private sector adopting technologies such as e-conferences is however driving the demand for dedicated Internet connections such as fibre optic. Source: Business Daily