UPDATE 1-Kenya’s Equity Bank H1 profit up 46 pct,sees growth

July 21, 2010 By Leave a Comment

NAIROBI, July 20 (Reuters) – Kenya’s Equity Bank (EQTY.NR) posted a 46 percent rise in first-half pretax profit on Tuesday and its chief executive forecast earnings would rise further on easing costs and economic growth in the region.

Equity, which has operations in neighbouring Uganda and Sudan, said profit rose to 3.88 billion shillings ($47.65 million) during the first six months of the year.

Depositors jumped by 400,000 to nearly five million, mainly due to a new mobile phone service called M-Kesho, run jointly with Kenya’s biggest mobile operator Safaricom (SCOM.NR), which allows users to access credit, earn interest on deposits and buy insurance. [ID:nLDE64H1DF].

Equity’s CEO James Mwangi told investors the bank’s recent expansion costs had started to taper off and combined with better economic growth prospects in the region this signalled further profit gains.

“The profitability of the bank is likely to accelerate because of costs. Most of the costs are now fixed,” Mwangi said.

Equity’s loan book expanded by just over a quarter during the period while bad debt provisions rose 211 percent to 920 million shillings to clean out the threat of defaults, Mwangi said. (Editing by James Macharia)

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Australia’s Valemus to expand, IPO looms

June 17, 2010 By Leave a Comment

(Reuters) – The Australian unit of German construction group Bilfinger Berger (GBFG.DE) said on Wednesday it expected to double the size of its services business in three years through bolt-on acquisitions and organic growth.

The company, recently renamed Valemus ahead of a $1 billion-plus stock market listing next month, said it had no immediate plans to expand offshore and growth at its larger construction unit would be more steady in coming years.

“In the next three to four years we don’t see the need to go overseas. We see the growth opportunities in Australia as significant enough,” Valemus chief executive Peter Brecht said at the Reuters Global Real Estate and Infrastructure Summit.

Brecht was speaking ahead of a roadshow in Asia, Europe and the United States to market plans for an up to $1.1 billion float next month. He said investor interest in the float was high but there were some concerns about a predicted slowdown in Australian mining infrastructure spending.

Valemus, which translates from Latin to mean “we are strong”, earlier this month announced plans to push ahead with the country’s largest IPO in 8 months despite volatile markets which drove down valuations for the float to the lower levels of earlier expectations.

Brecht flies to Hong Kong on Wednesday to meet with investors to pitch the construction, engineering and services group which is being priced at 10.5 to 12 times 2010 earnings, lower than larger rival Leighton Holdings

Speaking in Sydney at the Reuters Summit, he said there was some concern from investors about a recent BIS Shrapnel report which predicted a 3 percent fall in mining and heavy industry construction in 2011.

However, he said this was not the indication Valemus was seeing from its own pipeline of work. The company has a forward order book of A$5.7 billion of work in hand at March 31, 2010.

“We have more work in hand for the 2011 year now than we had this time last year for the 2010 number so that is an indicator to us we will still have some growth in the business for 2011,” he said.

Valemus, named after an internal competition which drew over 1,200 submissions, has a 4 percent share of an estimated A$120 billion in Australian construction and engineering work up for grabs each year.

Brecht, a more than 22-year veteran with Valemus, would not say how much the company wanted to lift its market share to but said an infrastructure backlog, population demand and pressure on resources infrastructure would drive demand.

Valemus’ services business Conneq was expected to double in size of the next two or three years, he said, both through organic growth and strategic bolt-on acquisitions in mining, power and oil and gas.

The Valemus chief, who swims laps near the company office each day and loves rugby, boating and golf, said growth at its larger construction unit would be “steadier” but the company was underweight in the resource-rich state of Western Australia.

Valemus is hoping for a high level of interest from investors in Asia, Europe and the United States over the next week. He said there was no plan to attract large cornerstone investors.

Brecht said the company’s strategy would not change after the IPO but it would have the ability to respond faster to acquisition opportunities without needing clearance from parent Bilfinger which will no longer own a stake in the company after the float.

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UPDATE 2-Bilfinger seeks to raise $1.1 bln in Australia IPO

June 9, 2010 By Leave a Comment

SYDNEY, June 8 (Reuters) – The Australian unit of German construction group Bilfinger Berger (GBFG.DE) hopes to raise as much as $1.1. billion in the country’s largest IPO in 8 months, but volatile markets pose a challenge.

The offering, Australia’s biggest since private equity floated department store chain Myer (MYR.AX) for A$2.2 billion in November, comes as recent IPOs post double-digit declines against their debut prices and markets globally have been roiled by fears about the spreading European debt crisis. [ID:nSGE65703L]

“I would be kidding you if I said nobody had any nervous moments about it … but the timing (of the float) is very close to the original schedule,” Valemus chairman Nick Greiner told reporters. Bilfinger, whose past projects include the Sydney Opera House and several motorways leading out of Sydney, was recently rebranded as Valemus.

The success of the Valemus IPO could open a choked pipeline of share sales that includes offering from miners INR and Aston.

Valemus is selling 555 million shares at A$2.20 to A$2.50 a piece, pricing the offer at 10.5 to 12 times 2010 earnings, according to the company’s offer prospectus.

By comparison, its much bigger rival, Leighton Holdings (LEI.AX), is trading at about 14.5 times forecast earnings for 2010 following the market’s slide.

Valemus is about one-sixth Leighton’s size and lacks a large mine-contracting business, which is one of the most valuable parts of Leighton’s portfolio.

“It will not be the easiest of the IPOs,” Peter Chilton, an analyst at fund manager Constellation Capital said. “What works in its favour is it is a domestic story and the pricing looks quite reasonable.”

Chilton said he was evaluating the offering and was yet to decide on whether to put money into it.

Bilfinger ran a trade sale process for the Australian business, which includes construction units Abigroup and Sydney Opera House builder Baulderstone, but that option was later dropped.

Recent stock market falls have already eaten into the offer, which was originally expected to raise at least $1.3 billion. The benchmark index .AXJO has fallen more than a tenth since end March as Europe debt woes and a planned mining tax scared investors.

Greiner said there were “three or four” potential Australian and overseas trade buyers who had expressed interest but Bilfinger decided to pursue the float plan which was shelved during the global financial crisis.

About A$1 billion is expected to be returned to Bilfinger’s coffers to pursue cash acquisitions in Europe following the float. This excludes about A$200 million to recapitalise the Australian operation’s balance sheet plus transaction fees.

Bilfinger will not retain a stake in the floated business.

A stronger Australian dollar against the euro was also a factor in Bilfinger’s decision to proceed. EURAUD=

Bilfinger’s offering follows lacklustre performance by previous share offerings, including Myer and oil and gas services firm Miclyn Express Offshore (MIO.AX). Myer shares have fallen about 25 per cent since listing, while Miclyn stock has lost 21 per cent of its value since floating in March.

The Bilfinger IPO is managed by Goldman Sachs JBWere (GS.N), Deutsche Bank (DBKGn.DE) and Macquarie Capital Advisers (MQG.AX).

The retail offer will open on June 16 followed by an institutional bookbuild from July 6-7 and then pricing on July 8 and an expected stockmarket listing on July 9. (Editing by Ed Davies and Valerie Lee) ((michael.jsmith@thomsonreuters.com; +61 2 9373 1812; Reuters Messaging: michael.jsmith.reuters.com@reuters.net)) ((If you have a query or comment on this story, send an email to news.feedback.asia@thomsonreuters.com)) ($1=1.235 Australian Dollar)

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