Mauritian fund manager Axis has acquired Kenyan stock broker ApexAfrica Capital for Sh470 million, making it the highest priced takeover of a market intermediary in East Africa.
Details of the transaction, which is expected to be completed in the coming weeks, have been made public by the Competition Authority of Kenya (CAK), which allowed it to progress on grounds that it is not subject to the regulator’s review.
Axis is taking over ApexAfrica through its local unit Mauritius Kenya Investment Holding.
“The authority … excludes the proposed acquisition of 100 per cent of the issued share capital of ApexAfrica by Mauritius Kenya Investment Holding,” CAK director-general Wang’ombe Kariuki said in a notice dated July 10, 2015.
Mr Kariuki said he decided not to interrogate the takeover because it was unlikely to affect competition.
The CAK’s decision was also informed by the fact that ApexAfrica earned Sh122 million in revenues in 2014 a level that is below the merger notification threshold.
The acquisition will see Mauritius’ Axis enter the Kenyan stockbrokerage market for the first time, betting on its solid base of individual and corporate clients in East Africa to build on ApexAfrica’s existing clientele.
Axis offers a wide range of financial services, including fund management, investment advisory, establishment of trusts and tax shelters in the Seychelles, Mauritius and Kenya.
Sources familiar with the deal told the Business Daily that Axis had hunted for a takeover candidate among several Nairobi-based stock brokers and settled on ApexAfrica mainly because of its strong base of local corporate and high-net-worth individual clients.
ApexAfrica’s long-serving CEO Kassim Bharadia has been behind the building of a network of wealthy clients, including entrepreneurs in Mombasa.
Like other brokers, the firm offers research and trading of bonds and stocks on the Nairobi Securities Exchange (NSE) for commissions capped at 2.1 per cent of the transaction value.
This commission structure has meant that brokers with higher trading values are better positioned to earn more, placing a premium on wealthy individuals and institutional clients that buy stocks worth millions of shillings in a typical transaction.
The acquisition of ApexAfrica — which was licensed in 1994 — is set to earn its founders substantial gains, being the priciest takeover of a stockbroker in Kenya.
The company’s founders will be venturing into the real estate business after ceding ownership to Axis, sources said.
Such large investment in a stock broker was last seen in 2008 when Renaissance Capital (Rencap) paid Sh250 million for a seat at the Nairobi bourse, which at the time was seen as an exclusive club with high barriers to entry.