Beruflich Dokumente
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Africa
Exploring international and local legal
considerations for investors in, and from, Africa
Editorial
Welcome to Issue 15 of our market leading Nigeria. More generally in Africa, the energy In South Africa, further scrutiny of compliance
publication Made in Africa. In this issue we and infrastructure sector is in need of long with the black economic empowerment
continue to focus on the latest legal and term capital and is being boosted by existing laws is expected and in Zimbabwe there has
market developments, with our partners and new entrants, such as Themis Energy, been some clarification of the changeable
across Africa, that are of interest to investors a new energy development company, with indigenisation laws.
and businesses operating on the continent. big ambitions.
In this issue we also focus on managing and
From an international perspective, we look A healthy source of capital for Africa continues mitigating risk and consider the importance of
enviously at the key markets in Africa and to be private equity funds and their investors. international arbitration in resolving disputes
see relative stability, positive deregulation, Together with SAVCA, we report on the between parties on the continent.
investment promotion and growth. Whereas numbers, showing that funds raised by
in the UK, due to Brexit, we have been beset managers have reached new highs, a good This year is also the 10th year of ilfa which our
by political leadership battles, fluctuating example being Investec Asset Managements firm founded to support legal capacity building
currencies and stock markets, and short-to- second pan-African fund with its successful in Africa. We celebrate this milestone with an
medium term macro-economic uncertainty as final close reported in this issue. The common interview with the Executive Director of ilfa,
well as legal and regulatory uncertainty. question remains as to how these managers Anna Gardner.
deploy the capital raised. This is increasingly We expect there to be something of interest
As we report on in this issue, there have been
being achieved through innovative strategies for anyone active in Africa so do please read
positive developments in Nigeria with the
and structures such as buy-and-build, through this issue and contact the authors
Central Bank (CBN) finally announcing the
investment platforms and follow-on growth or any of your usual KWM contacts to take
deregulation of the Nigerian foreign exchange
investing, rather than typical buy-outs. matters forward for you.
regulations. This has been touted as the
most significant re-ordering of the market We also look at the trends in the mining sector, We look forward to representing you through
since the repeal in the 1990s of its historical which has seen a period of subdued activity 2016 and beyond.
exchange controls. Although some details are but sizeable divestments have occurred and
outstanding, this step should give investors opportunities remain for savvy investors. We
more certainty on their ability to invest in see new regulations in the resources space, in
the country, which will hopefully boost new countries such as Mozambique and Angola,
investment. There have also been real efforts to adapt to the prevailing market conditions.
made by the CBN to promote local exports.
In other jurisdictions such as Kenya, change
In terms of new investment in the region, we has been a long time coming. With the launch
report on significant relations between China of the new Companies Act, the country has
and Nigeria, with steps being taken to utilise brought its legislation substantially in line with
Chinese will and finance to develop sizeable the modern UK Companies Act, which will
energy and infrastructure opportunities in further comfort investors targeting this region.
30
Managing Funds
32
Celebrate Africa
34
Interview with
36
Lights, Camera,
38
Kenya's New
40
Fronting
42
Indigenisation Law
44
Oil in Crisis
46
Financial
48
Nigeria Boosting
50
Competition Law
52
Trends in merger
Investec Asset 8th Annual Africa Anna Gardner Action! Company Act Undermines in Zimbabwe The impact of the Regulation in Local Exports Developments in control in South
Management Group Braai Executive Director, The first network 1948-2015 in the Transformation RONALD MUTASA oil price crisis in the South Africa An overview of the Africa Africa relating to
and Cardano ilfa of cinema and live making Could you be guilty? Senior Associate Angolan market New developments recent scheme PAUL P J COETSER public interest
BARRI MENDELSOHN
Development to Managing Associate performance venues Manokore Attorneys in the financial sector by the Central Head of Competition
OFEI KWAFO-AKOTO ANNE KIUNUHE SANJAY KASSEN JOO ROBLES PAUL P J COETSER
Manage PIDG Funds King & Wood Mallesons UK Associate in Africa Partner Director Partner Bank of Nigeria for Werksmans Attorneys Head of Competition
STEPHEN MASON
CINDY VALENTINE King & Wood Mallesons UK RICHARD MUGNI CIRU LONGDEN PARUSHA DESAI FCB Sociedade de Special Counsel diversification of the Werksmans Attorneys
Partner Partner Professional Support VALODIA Advogados in association JODI GRAY Nigerian economy
BRENDAN GALLEN Lawyer Associate with EVC Advogados Associate
CHARLES-ANTOINE JENNIFER
Managing Associate ERIGNAC Anjarwalla & Khanna ENSafrica King & Wood Mallesons MARTINS-OKUNDIA
SEAN CURRAN Counsel Australia Senior Associate
Trainee Solicitor JOANA Aluko & Oyebode
King & Wood Mallesons UK BECQUET-ZARDI
Associate
King & Wood Mallesons
France
53
Developing Africa
54
Managing Risk
55
Mauritius Taking
57
Rebirth of
Mauritius eyes Risk Management Centre Stage Opportunities
economic & Litigation in Africa in International in Sight
collaboration with conference held in Arbitration Reforms post Arab
Cte dIvoire Paris MUSHTAQ Spring in Tunisia
MATTHIEU FELIX RICHARD MUGNI NAMDARKHAN ISSAM MOKNI
Associate Partner Senior Associate Avocat
ABAX ANNE-LAURE VINCENT MANISH MEETARBHAN Barreau de Tunis
Counsel Legal Executive
CHARLES-ANTOINE YOHANN RAJAHBALEE
ERIGNAC Junior Legal Executive
Counsel BLC Robert & Associates
King & Wood Mallesons
France
3
JAMES DOUGLASS GREG STONEFIELD
EMEA Head of Energy, Partner
Resources & Infrastructure King & Wood Mallesons UK
King & Wood Mallesons UK T +44 (0)20 7111 2440
T +44 (0)20 7111 2230 greg.stonefield@eu.kwm.com
james.douglass@eu.kwm.com
Made in China?
Financing Nigerias infrastructure
For the next five years, Nigeria is reported instability in Nigerias oil producing Delta China and Nigeria loan
to require US$166 billion to provide energy region, due to a series of attacks on oil
and infrastructure for its growing population. pipelines in southern Nigeria by militants commitments
Demand for energy and infrastructure in Nigeria, causing crude output to hit the lowest One of the mechanisms to address the
Africas largest economy, is ever increasing as levels in decades; infrastructure funding gap has been a US$6
its population grows. Consequently, so has the
billion loan commitment from China to
demand for viable financing solutions to support US dollar scarcity; and fund infrastructure projects in Nigeria. It is
investment in such infrastructure projects, which
according to the African Development Bank
currency exchange risk volatility. understood that the Nigerian government
According to the Nigerian Bureau can access this credit facility by identifying
has an infrastructure deficit of US$300 billion. In
of Statistics, these macroeconomic and putting forward the relevant projects to
fact, overall infrastructure spending (and in turn
challenges have obstructed infrastructure the Chinese presumably through a series of
demand for financing) in Nigeria is expected
investment in Nigeria and contributed to tranches in respect of each identified project.
to grow from US$23 billion in 2013 to US$77
billion in 2025. Nigerias gross domestic product ("GDP") The loan commitment coincided with a
growth rate contracting 13.7% in the currency swap deal agreement between the
Where will this financing come from? Nigeria
first quarter of this year to a 25 year low. Industrial and Commercial Bank of China
has recently attracted Chinese financial
Nigerias GDP growth is forecasted to be Ltd ("ICBC"), which is China and the worlds
and technical support for its ambitious
3.8% in 2016, as investments will seek to largest bank, and the Central Bank of Nigeria
infrastructure plans. This article will look at the
somewhat rebound an economy, which (CBN). The swap deal should facilitate the
role and significance of Chinese investment
settlement of Nigeria-China trade by removing
and key trends relating to how Chinese has grown around 7% per annum for the
the dollar from transactions and trading
infrastructure financing transactions are past decade.
instead in yuan, whilst in tandem boosting
typically structured.
In light of the challenges, President imports from China, whose exports represent
Nigerias infrastructure challenges have Muhammadu Buharis government intends some 80 per cent of the total bilateral trade
become protracted due to a number of to address the infrastructure funding gap volume. It is anticipated that this in turn should
reasons, which include: and support businesses which now need reduce the demand for dollars on the CBN.
dwindling oil revenues, which makes up competitive, cheaper and longer term The swap deal also fits neatly in CBNs plans
around two third of the countrys revenue financing to fund infrastructure and other to diversify its foreign exchange reserves
due to the fall in global oil prices; related projects in Nigeria. away from the dollar by switching a stockpile
Experience of Chinese
infrastructure financing
transactions
In light of the above, the financing structures
for the funding of these projects by Chinese
counterparties may not vary too much from
western project financings. However, from our
extensive experience of advising sponsors,
borrowers and lenders on a significant number
Introducing
James Douglass
James Douglass is the King & Wood Mallesons EMEA Head of Energy, Resources &
Infrastructure and has over 20 years experience in M&A, project development and financing
in the oil & gas (including LNG), petrochemicals, power, infrastructure and mining sectors.
James advises numerous Chinese SOEs, banks and companies on outbound investments
in the energy and resources sectors as well as international clients looking to do business
in China and on oil and gas and LNG projects worldwide. James has one of the strongest
China outbound finance credentials of any international lawyer in London.
New Energy
Establishment of a new energy and
infrastructure project development company
The Abraaj Group, a leading investor in with a strong track record in energy project In relation to the addition of Themis to the
growth markets, recently announced development. The company has collaborated Abraaj Group, Sev Vettivetpillai, Partner
the establishment of a dedicated project in energy projects under development in and Global Head of Abraajs Thematic
development unit to further extend its excess of 1,300 MW and has advised several Fund Business said that Abraajs ambition
investment capabilities in the energy, power African governments and lending institutions is to effectively manage capital across
and infrastructure sector. As a member on energy and civil infrastructure related a number of energy sub-sectors and
of The Abraaj Group, Themis Energy will projects. through all stages of the energy asset life
leverage the Groups local teams, global cycle, from early developments through
Themis consists of a team of highly
network, execution capabilities and existing greenfield to operations. We believe that we
experienced infrastructure project developers
infrastructure team to develop and manage can successfully achieve this objective by
who will enable Abraaj to benefit from
energy and infrastructure projects in Africa expanding our scope of activities to include
deeper execution capabilities in the energy
and other growth markets from concept a dedicated focus on project development.
infrastructure sector. As part of the Abraaj
stage to operation.
Group, Themis will lead or partner with other The Abraaj Group, founded in 2002, has
Abraaj has the stated aim of addressing project developers in order to bring projects invested c. US$ 1 billion in ten investments
the large power deficit in growth markets from concept to bankability and mobilise debt in global growth markets to date. In October
where a lack of well-structured, quality and and equity towards financial close. 2015, Abraaj announced a partnership with
bankable projects is inhibiting economic the Aditya Birla Group to build a gigawatt
Tas Anvaripour, former chairperson of Themis,
development. Abraajs global strategy is aimed scale renewable energy platform focused
joined Abraaj as a Partner in the energy
at capturing value throughout the life-cycle on developing solar power plants in India.
infrastructure team to help direct Themis,
of primarily renewable and energy efficiency
following her previous roles as Chief Executive The Abraaj Group were advised by a
projects. With the establishment of Themis
Officer of Africa 50 and other senior positions King & Wood Mallesons team comprising
as its development arm, Abraaj will be able
in the sector. Marc Mandaba, Founder of Barri Mendelsohn (Managing Associate,
to unlock a supply of bankable quality energy
Themis and former private infrastructure Corporate), James Douglass (Partner) and
assets developed on a proprietary basis.
investment officer at the African Development Francis Iyayi (Associate), in the Energy and
Themis was independently launched in 2013 Bank, now acts as Managing Director and Infrastructure department and Patrick Deasy
by Marc Mandaba and other professionals Head of Themis. (Partner, International Funds).
An Era of Change
The Nigerian Foreign Exchange Market
After prolonged waiting and speculation, investors and Nigerian businesses, this article and other institutions issued with a licence
the Governor of the Central Bank of Nigeria is intended to provide a brief insight to the to deal in foreign exchange (the Authorised
(the CBN) on June 15, 2016 finally foreign exchange regime which existed in Dealers), bureaux de change, hotels or other
announced certain far-reaching changes Nigeria prior to the issuance of the New FX corporate bodies authorised by the CBN to
to the foreign exchange regime in Nigeria. Guidelines and then highlight some of the sell and purchase foreign currency (together,
The announcement was quickly followed headline changes made to the old regime by the Authorised Buyers), foreign exchange
by the release of a new set of guidelines for the New FX Guidelines. end-users and other persons recognised by
the implementation of the changes. (The the FGN. The foreign exchange market was
new guidelines comprising the (a) Revised further expanded in 1999 by the introduction
Guidelines for the Operation of the Nigerian The Old Foreign of the Nigerian inter-bank foreign exchange
Inter-bank Foreign Exchange Market; and
(b) Guidelines for Primary Market Dealership
Exchange market (the NIFEX Market), thus creating a
dual foreign exchange market in the country.
in Foreign Exchange Products, are together In order to encourage foreign investments and
Besides the Foreign Exchange Act, dealings
referred to in this article as the New FX generally liberalise the economy, the Federal
in foreign exchange were (and continue to be)
Guidelines). Government of Nigeria (the FGN) in 1995
regulated by the Foreign Exchange Manual
repealed a number of laws which contained
Although some of the practical details are still issued by the CBN and such circulars, notices
stringent exchange control rules.1 In place of
being developed, there is no doubt that the and directives issued from time to time by the
those repealed laws, the Foreign Exchange
changes represent the most ambitious and CBN in furtherance of its general powers to
(Monitoring and Miscellaneous Provisions) Act2
extensive reordering of the foreign exchange regulate the procedures for transactions in the
(the Foreign Exchange Act) was enacted.
market in Nigeria since the repeal in the 1990s foreign exchange market and other related
The Foreign Exchange Act relaxed the strict
of the Exchange Control Act of 1962. matters.3
exchange control rules then in place in Nigeria
As market participants and the advisory and established an autonomous foreign The existing laws on foreign exchange in
community continue studying the changes exchange market (the AFEM) on which Nigeria cover a wide range of issues including
and watching the markets to determine their the sale and purchase of foreign exchange the manner in which investors can import
exact ramifications and impact on both foreign were to be conducted by the CBN, banks and repatriate capital, the utilisation of
by losses as daily foreign currency trading Authorised Dealer who then issues a CCI 7
CBN Circular No. TED/FEM/FPC/GEN/01/001.
position limits. To ensure flexibility, an upon conversion of such foreign capital into 8
This was done by the CBN via Circular No. TED/FEM/
Authorised Dealer which requires a higher Naira. Similarly, foreign investors will still be FPC/GEN/01/010 of June 23, 2015.
A Corporate Focus
Introducing KWM's new corporate partner,
Greg Stonefield
Greg Stonefield has recently joined KWM Greg has advised clients from a broad array of Kenyas Fina Bank Limited for US$100 million
in the London office having spent 12 years industry sectors including real estate, oil and (16 billion). At the time Fina Bank had total
as a partner at White & Case and 2 years at gas, mining and metals and telecoms. assets of US$338 million with operations in
Mayer Brown. Kenya, Rwanda and Uganda. Greg has also
With a strong track record in cross-border
acted for Afren plc in its US$125 million equity
Greg has a broad corporate finance practice M&A to complement his domestic work,
raising by way of open offer, its move up from
focusing on ECM related transactions Greg has advised on innovative transactions
AIM to the main market of the LSE and on
(including IPOs (equity and GDRs), involving a number of African jurisdictions - its acquisition of Black Marlin, the East Africa
introductions, secondary offerings, block building strong links and connections with focussed energy company with assets in
trades, private placements) and on domestic leading firms including in South Africa, Nigeria Kenya, Madagascar, Ethiopia and Seychelles.
and international public and private M&A. and Ghana. Greg is recommended as an
Africa specialist by Legal 500 2015. As an expert in structuring international
He has significant experience in advising investments in Africa, Greg is frequently
clients on the UKLA Listing Rules and Gregs recently advised Standard Bank and approached by international media for
Disclosure and Transparency Rules, the Renaissance Capital as managers to the comments on trends and developments on
Prospectus Rules, the AIM Rules and general US$98.7 million sale of shares in Umeme the continent.
corporate law. He has a wealth of experience Limited, an energy distribution network
Greg was recently interviewed on investment
in representing both issuers and underwriters company in Uganda, by Umeme Holding
trends in Africa infrastructure by Reuters
Limited as well as Guaranty Trust Bank and
on equity transactions and in bringing (Money Matters AM) as well as on the
Diamond Bank on their offer of GDRs and
overseas companies to the London Stock opportunities for local and international
admission to trading on the LSE.
Exchange. Greg also regularly advises both investors in the African Telecoms sector
purchasers and sellers on a variety of M&A Greg has also acted for Guaranty Trust Bank by The New Economy magazine and is a
transactions (domestic and international). on its acquisition of a 70 per cent stake in frequent contributor on CNBC Africa.
Opportunities
for the Bold
Africa mining M&A in 2016 and beyond
For those miners in a position to pursue been elusive in 2016. Activity in Africa has These trading houses are comfortable with
distressed deals, there are once in a generation been particularly thin, with only very small non-operating interests, have a need to secure
opportunities and the focus will be on those deployments such as Tembo Capitals long-term off-take and have built up a portfolio
that offer growth and genuine long-term value, US$4.75 million placement in Strandline of financial, infrastructure, power and transport
whether by realising improved operating Resources Tanzanian mineral sands project. assets in Africa (particularly East Africa), which
synergies, commodity and geographical Nevertheless, there has been substantial can be brought to bear in supporting project
diversification or (as is likely among the mid- interest and tyre-kicking, suggesting that it development.
caps) consolidation which paves the way to may only be a matter of time before more of
They are also sitting on large cash reserves
becoming leading producers when prices the private equity players make their move.
(Citigroup estimates that corporate Japan has
rebound. Justifying such value propositions
While private equity has a good hand at the some US$3 trillion in holdings) and have been
will be particularly important to publicly-listed
moment, Bert Koth, Managing Director of actively encouraged by the Japanese Ministry
entities as shareholders remain wary of any
Denham Capitals* mining division, has noted of Economy, Trade and Industry to pursue
new buying spree.
that private equity funds cannot compete for investments in Africa.
We expect that with a greater focus on quality strategic assets with Chinese buyers that have
and aversion to risk, distressed assets in stable As such, we expect that the latter half of the
a much lower cost of capital.
and well-understood mining jurisdictions, year will see the more assertive of these trading
like Ghana, Botswana and Namibia, will be With this in mind, we see real opportunities for houses begin to take up minority positions
particularly attractive. Nevertheless, copper, private equity in the small-mid caps, especially with offtake agreements in base and industrial
iron ore, platinum and coal assets in South given the potentially greater yields that can metals, including by way of opportunistic
Africa and the DRC (especially those being sold be generated from backing development approaches. However, only prime assets with
by the majors) will also attract attention purely stage projects and the increasingly distressed associated infrastructure opportunities are likely
because of their high quality, notwithstanding disposition of the junior market. This also to capture their attention.
political instability, corruption issues and aligns well with the landscape in Africa, which
regulatory uncertainty within those jurisdictions. is dominated by small developers, and we
expect to see an increase in the number of The tech effect
deals involving funds and low-cost start- In Africa, the big-hitting commodities have
Chinese and Private ups that are run by teams with genuine traditionally been diamonds, iron ore, gold and
Equity eyeing track records, in stable jurisdictions and in copper. But with the global energy landscape
commodities that have a strong future (e.g. rapidly changing and disruptive technologies
opportunities copper, zinc, nickel, gold, platinum, tungsten on the rise in 2016, many investors are
With much of the industry capital constrained, and rare earth elements). We are also seeing turning their attention to opportunities in
cashed-up Chinese companies and private increased interest by private equity firms in specialist technology metals during the current
equity players have the funds to pursue South African uranium and coal opportunities. downturn.
King & Wood Mallesons has continued to for high quality offshore assets to expand and Corporate partners Stephen Minns,
support long-term client China Molybdenum and diversify its global portfolio. Paul Schroder and Jingchuan Zhao (PRC
Co., Ltd (CMOC) on its global expansion, Law) in Australia.
The same core King & Wood Mallesons
advising CMOC on the two largest mining
team from the United Kingdom, China, Tim Bednall, Corporate partner at King
acquisitions by a Chinese company this Australia and Hong Kong advised CMOC on
year - the US$1.5 billion acquisition of & Wood Mallesons who led on the Anglo
all three transactions. The team also advised
Anglo Americans niobium and phosphates American deal said, We are delighted
CMOCs largest shareholder Cathay Fortune
businesses in Brazil and the US$2.65 to have once again leveraged our global
on an earlier USD 850 million off-market
billion acquisition of Freeports indirect 56% takeover bid. capability and deep local expertise to
interest in Tenke Fungurume located in the support CMOC. These latest investments
Democratic Republic of Congo (DRC). The full team was led by anti-trust partners
reflect CMOCs ambitious strategy to
Susan Ning and Liu Cheng, Corporate
King & Wood Mallesons has advised CMOC become a world-class mining player and
partner Xu Ping and Securities partner
on all of its major outbound investments. King & Wood Mallesons is pleased to be
Rebecca Chao in Beijing, Corporate partner
Since advising CMOC on its acquisition of Tim Bednall and managing associate able to assist CMOC as it executes these
Rio Tintos majority stake in the Northparkes Michaela Moore in London, Corporate strategic transactions that will deliver
copper mine in Australia in 2013, the firm partner Raymond Wong and senior long-term value to the company and its
has remained close to CMOC as it searched associate Sherman Chan in Hong Kong, shareholders.
Mozambique
Mining
A new regulatory framework
Since the discovery of vast coal reserves (iv) the new Mining Law Regulation (Decree Second, whenever the price of Mozambican
in 2005, Mozambique has attracted the No. 31/2015, of 31 December 2015); and goods and services does not exceed 10% of
attention of foreign investors, looking at the comparable imported goods or services, mining
(v) the new Mining Tax Law Regulation
countrys huge export potential. According operators must give them preference, provided
(Decree No. 28/2015, of 28 December
to the Mozambique Mining Report Q2 2016, they are of comparable quality and are available
2015).
the country's coal production is expected to in the timeframes and quantities required.
grow from 8.0mnt in 2016 to 9.5mnt by 2020, The main features of this legislation are the The government may establish domestic
representing an average growth of 4.2% y-o-y promotion of local participation in the mining supply obligations for the local industry
over 2016-2020. sector and the increase of control over reaching up to 10% of the declared
The Mozambique coal sector is currently mining activities. production. This domestic supply obligation
dominated by international mining companies is to be established by the Minister of Mineral
such as Brazils Vale, Coal India and more Resources and Energy on an annual basis.
recently International Coal Ventures, which Local requirements
acquired Rio Tintos assets in 2014. The new Mining legislation stipulates that the
Nevertheless, other Asian firms are likely to join mining titles required to undertake mining Increasing government
Indian companies in order to secure long-term activities in Mozambique can only be granted control over transfers
access to mineral resources. This is the case to Mozambican natural or legal persons, even
The new law also includes a government
of the Japanese trading house, Mitsui, who though legal persons can be foreign-owned.
consent right upon any direct or indirect
bought a 15% participation in Vales Moatize
In addition, the new Mining Law states that transfer of mining titles, including through a
coal mine and 35% in the Nacala Logistics
the government shall promote the listing of direct or indirect sale of shares. This prevents
Corridor in 2014.
mining companies on the Mozambican Stock exit transactions which are structured in
Recognising the key role the mining sector Exchange. However, it remains unclear as to order to avoid the need for prior Mozambican
may play in the countrys development, the whether this will be mandatory and, if so, how government consent. This consent will
Mozambican government recently approved much of the share capital of the company is to obviously affect exit strategies, as all sale
a new set of legislation, repealing the existing be listed. transactions, irrespective of the way they are
regulatory framework. The new regulatory structured, will require a government consent
framework includes: Furthermore, the new Mining Law and its condition precedent.
implementation decree set out local content
(i) the new Mining Law (Law No. 20/2014, of requirements for the procurement of goods
18 August 2014), which repealed the 2002
Mining Law;
and services for mining activities. Fiscal provisions
First, foreign persons providing services to Under the new regulatory framework, mining
(ii) the new Mining Tax Law (Law No. mining operations are required to associate operators shall pay: (i) income tax; (ii) VAT; (iii)
28/2014, of 23 September 2014);
themselves with Mozambican entities. tax over the mining production; (iv) tax over
(iii) the Regulation on Mining Work (Decree No. However, this obligation remains vague and the surface; (v) tax on income from mineral
1/2015, of 23 July 2015); with little practical applicability. resources; (vi) municipal tax, where applicable;
Conclusion
The approval of the much anticipated new
mining legislation enables foreign investors
who are intending to invest in Mozambique to
decide on how to structure their investments
and to approach the country.
While the new legislation establishes a regime
more favourable to Mozambique, it continues
to welcome foreign investors to develop the
mining sector.
Furthermore, this new regulatory framework
ensures greater competitiveness and
transparency and guarantees the protection
of rights. As a consequence, it is expected
that Mozambique will continue to attract
great interest from overseas investors as they
position themselves for an improvement in
resource pricing and an end to commodity
cycle downturn.
19
20 King & Wood Mallesons / Made in Africa
JOHN SULLIVAN MARIAM AKANBI
Partner Associate
King & Wood Mallesons Singapore King & Wood Mallesons Singapore
T +65 6653 6501 T +65 6653 6729
john.sullivan@sg.kwm.com mariam.akanbi@sg.kwm.com
Asian
Influence
Singapores increasing role in Africa
The Asia Africa relationship has generally Corporation (GIC) was reported to have seeking to improve relations between the two
focused on a discussion of the relationship invested USD100 million in two African- regions. The next ASBF is due to be hosted in
between various African countries and focused private equity funds - Actis Real Singapore this August and aims to discuss the
China. However, as well as China, Singapore Estate Fund III and RMB Westports Real strategic growth of both regions.
is reacting positively to Africas improving Estate Development Fund II. Though,
investment climate despite the effect of low GIC does not currently have a significant
commodity prices. investment portfolio in African jurisdictions, Focus on East Africa
these investments could see the beginning of The East African region has emerged as
a change of tactics for the SWF.
The rise in investments a viable trade partner for Singaporean
companies. In 2014 the Singapore Business
There is also a history of Singaporean family
Africa has emerged as the leading destination offices investing in mining assets in certain Forum and IE Singapore organised a business
for foreign direct investment (FDI) globally jurisdictions in Africa. mission to Tanzania and Kenya with the
with significant investment from the UK, US objective to promote bilateral economic
and China. As a result of the increase in cooperation and trade and investment
viable long-term opportunities in industries Trade relationships opportunities. The business mission resulted
that Singaporean businesses have significant in the signing of two memorandums of
experience in, more and more investment Singapore has one of the highest trade to
understanding between Kenya and Singapore.
relationships between African jurisdictions and GDP ratios and its growing partnership with
At the time the group director for Middle
Singaporean companies are being explored. African jurisdictions may reflect a motivation
East and Africa at IE Singapore stated "East
to achieve greater diversification among trade
Some notable Singaporean investments have Africa's geographical proximity and historical
and investment partners.2 The governments
spurred an interest in Africa. In 2013, Temasek trade links with Asia make the region a natural
international trade initiative with Africa is an
reportedly became a significant shareholder gateway into Africa for Singapore companies.
example of the powers that be seeking to
in Seven Energy, an oil and gas group based take advantage of another opportunity. The Since then, in April this year, Singapores
in Nigeria. In the same year, Pavilion Energy, a role of Singapores International Enterprise minister of trade and industry announced two
subsidiary of Temasek, was reported to have (IE) so far has been to foster relationships East African ambitions; the intention to use
made its first acquisition in the continent by between African and Singaporean companies. the Dar Es Salaam Port in Tanzania as a trade
acquiring a stake in three gas blocks off the IE Singapore is part of the States Ministry of link between the two states, with the offer of
coast of Tanzania. Trade and Industry. In 2013 the body opened exchange programmes for Tanzanians to work
It has since been reported that investments into two overseas centres in Johannesburg and at Singaporean ports; and a desire to share
Africa from Singapore have been growing at Ghana to facilitate business links between bilateral trade experience with Uganda, with a
more than 11 per cent annually since 2008.1 Singapore and the African countries. IE also particular emphasis on agriculture.
launched the Africa Singapore Business
Notable recent examples of indirect The East African connection is also boosting
Forum (the ASBF) in 2010.
investment include those of sovereign the energy sector in both Singapore and
wealth funds (SWFs). In March of this year, The ASBF is a biennial event attended by a East Africa. Singapore is growing as an oil
the Government of Singapore Investment number of business and government leaders and liquefied natural gas (LNG) trading hub
21
Our
Singapore
practice
King & Wood Mallesons Singapore office,
led by partner in-charge John Sullivan,
assists clients with cross-border and
domestic work in South-East Asia and
supports Singaporean and Singapore-based
clients with capital raising and M&A, including
inbound and outbound investments. The
teams expertise includes the real estate,
infrastructure, private equity, energy,
resources, telecommunications and projects
sectors and the team also offer construction
and dispute resolution (including international
arbitration) capability.
Mariam Akanbi is an associate from
King & Wood Mallesons international
investment funds practice currently
seconded to the Singapore office.
African jurisdictions. The two companies to host delegates from African governments
2
R. MacPherson, Singapores Approach to Africa:
have since merged and it has been reported supporting cooperation wherever possible. Promising, But More to Do, 19 April 2016
that Surbana Jurong sees Africa as a land Singapore also has double taxation
3
J. Khoo, Africa beckons, as Surbana Jurong eyes
of many opportunities amid strong demand agreements with key jurisdictions in Africa 40-60% of revenue from overseas in 3-5 years, The
for infrastructure, affordable housing and job such as Mauritius and South Africa. Business Times, 7 March 2016
King & Wood Mallesons (KWM) were the which raised just under US$300 million, based in South Africa and London means
winners of the Private Equity Africa Funds led by South African based funds partner that innovative tax and platform structuring,
Legal Advisor of the year Award 2016 at Cindy Valentine. The award is testimony efficient investor negotiations and top class
the Private Equity Africa Awards held in to KWMs leading role in private equity in international European and US regulatory
London in June. KWM also won the award Africa, with the firm currently acting for over advice is available to Africa focused
in 2014. KWM were also a top two finalist 20 active managers and advisers with a investors. Cindy Valentine, Patrick Deasy,
for the Fund of the Year award for their focus on Africa. The international expertise Jonathan Blake and Ravi Chopra were on
work on Investec Africa Private Equity 2 brought to Africa by leading KWM lawyers hand to receive the award.
Reaching
New Heights
Private equity fund raising for
Southern Africa reaches record high
Africa Funds
New approach to implementation of
ESG policies by Investecs Africa Fund 2
Investec Asset Management (IAM) was As with many funds investing primarily in With investors from across the globe,
launched in South Africa in 1991, and now, African interests, the Fund has a committed including supranational organisations with
over two decades later, is one of the first focus on the sustainability and ethical impact strict internal policies, the Funds ESG Policies
asset management firms to build a global of investments. In light of this, IAM developed meet not only the standards of each of the
franchise from emerging market origins. an approach to streamline the often differing jurisdictions in which the Fund invests, but
Managing approximately US$109 billion in investor approaches to the adoption also higher global standards. To manage the
assets globally, the team offers a broad and of environmental, social and corporate implementation of ESG Policies throughout
successful range of Africa-specific investment governance policies ("ESG Policies) by the the life of the Fund, IAMs dedicated and
strategies across a number of funds. Fund with investors. well-resourced ESG team is on hand to
implement and monitor these high standards
One notable jewel in IAMs crown is the During the negotiation of the Funds
in a dedicated way throughout the life of the
Investec Africa Private Equity Fund 2 L.P. (the constitutional documents, it was agreed that
investments, ensuring that they are not simply
Fund"), which first closed in mid-2014, and a cornerstone investors ESG Policy would
seen as a box-ticking exercise.
which most recently had its final closing in be adopted by other investors to the extent
early 2016. King & Wood Mallesons (KWM) required as a single uniform ESG Policy, with With the sub-Saharan economy having
was shortlisted for Fund of the Year in any additional requirements of a particular quadrupled in size since 2000, the market
the Private Equity Africa 2016 Awards for investor being documented in their own side for sustainable and rewarding private equity
its work on the Fund, spearheaded by letter. This approach promised to ensure investing in Africa continues to expand.
International Funds partner Cindy Valentine, equality across all investors, and represented The work that KWM carries out alongside
who has worked alongside IAM throughout an alignment not only on paper but also in IAM and other African funds demonstrates
the life of the Fund. the universal commitment to responsible and a commitment to sustainable investing in
sustainable investing. Africa to ultimately generate thriving growth
With significant investors in the Fund being
in the region.
development finance institutions, the Fund This is a commitment shared by IAM, the
places a strong emphasis on ensuring that Funds investors, and KWM, who each ensured
appropriate governance structures are in place, that the ESG Policies in the investors side
providing hands-on monitoring and guidance to letters reflected the Funds forward-thinking
the management of investee companies. approach to investment.
Invest Responsibly
UNPRI publishes a standardised DDQ
on responsible investing
Environmental, social and governance partly in response to requests from managers procedures that are in place to identify and
(ESG) issues have become increasingly who have signed up to the PRI for more manage ESG incidents. There are also links
important to private equity and venture consistency across the industry. The PRI have to publicly available resources to assist LPs,
capital fund managers and their investors been keen to point out that the DDQ should such as the CDC toolkit for ESG.
over the last few years. And as well as the not be used as a checklist and is by no means
There is no doubt that ESG will continue to
various pressures to ensure responsible exhaustive, but more a tool to establish a
be an important issue for managers and their
investment, there is some evidence that dialogue between investors and managers,
investors, and resources such as the DDQ
ESG policies may have a positive effect and that investors may well want to tailor the
and the CDC toolkit that encourage greater
on returns. Managers starting the fund questions or indeed add some of their own.
consistency in approach across the industry
raising process are therefore subject to
The DDQ covers four areas: the ESG policy should be welcomed. As with any attempt
numerous due diligence requests, and the
of the fund and the influence of ESG factors, to standardise, whether it be reporting, due
Principles for Responsible Investment (PRI),
management of ESG related risks and value diligence questionnaires or other issues, it is
an investor initiative in partnership with the
creation, contribution to ESG management at important to remember that a "one-size fits
United Nations, have recently released the
portfolio company level, and communication all" approach may not always be suitable.
"Limited Partners' Responsible Investment
with LPs on ESG related matters. There And the PRI have made it clear that this is not
Due Diligence Questionnaire" (DDQ) to assist
are 21 questions in total, but it is also the intention, with the aim being to promote
investors and encourage more standardised
accompanied by a guidance document discussions between all parties and that
due diligence.
which provides useful background to the consideration needs to be given to the diverse
As well as assisting those investors who may questions posed as well as case studies and nature of private equity as an asset class
not have a formal ESG policy, or who have examples of how some LPs and GPs work when approaching issues such as ESG.
not previously submitted questions at the in relation to ESG. The guidance document
due diligence stage about ESG, standardised also includes further "developed questioning"
questions could also help managers by that LPs may want to put to GPs, which
cutting down on the time and cost required expand on the initial questions and many
to answer different questions on the same ask for examples of past situations where
subject. In fact, the creation of the DDQ was an ESG issue has arisen or descriptions of
Permanent
Capital Vehicles
Are they worth it?
In our last issue of Made in Africa (Issue 14), investment in longer term capital vehicles and to their admission to the vehicle. In a Typical
we discussed increasing interest in permanent alternative structures, managers need to ensure Fund, subsequent investors are drawn down
capital vehicles (PCVs), covering an overview they get their approach to valuation right. upon admission to fund their proportionate
of the key drivers for PCVs, limitations in Below, we discuss high-level issues around share of the existing assets and expenses,
respect of investor appetite and a high level the impact of valuation on investor admission, i.e. they are equalised across the fund. This
comparison of PCV structures and terms as management fees and incentivisation. equalisation payment (plus interest) is then
compared to a typical PE fund structured as returned to the first or earlier close investors
a fixed life, self-liquidating limited partnership who have essentially funded the subsequent
(a Typical Fund). Investor admission investors proportions, so that all investors have
funded the same proportion of their subscribed
In this piece, we focus on a key feature of the One of the attractions of raising capital
commitments. The interest payment recognises
PCV formulation: valuation. The method of through a PCV instead of a fund with a fixed
the time value of money in respect of the
valuation of the assets of the holding vehicle fundraising period (usually 12-18 months)
amounts originally drawn down from the earlier
impacts, for example, upon the economics for managers is that they can fundraise on investors on behalf of the subsequent investors.
of investor admission, as well as fees, which an on-going basis or via multiple rounds of With fundraising for PCVs taking place over
are often calculated in full or in part on NAV, fundraising. This can fit an organic growth a longer period of time (or even an indefinite
and incentivisation. Investors therefore seek strategy, where fundraising can be matched period in the case of evergreen vehicles), fund
a robust approach to valuation in part to with the more immediate asset pipeline. There managers however need to assess whether an
ensure they are not overpaying in any of these is also the possibility, which can be particularly amount equal to interest is appropriate in a PCV.
areas. If a PCV lists on a stock exchange, attractive for first time fund managers, to
raise capital to fund a track record, with The value of the funds assets may increase
the valuation of the PCV assets will also tie
significantly more than an assumed rate of
into the market price and the perception of the performance of the existing asset base
interest over the period of time in which capital
whether, absent other market considerations potentially making subsequent fundraising
is raised in a PCV. Existing investors will be
such as the relative attraction of different more attractive to prospective investors.
averse to see their holdings diluted, with
sectors, the valuation presented by the
Managers using a PCV therefore must subsequent investors receiving the benefit
manager is reasonable.
determine on what basis (if at all) to equalise of asset performance for an effective cost
With Development Finance Institutions (DFIs) investors coming in at different times such (i.e. a lower interest rate) below the market
and other investors increasingly looking at that they share in the investments made prior price. There could also be an incentive for
Managing Funds
Investec Asset Management and
Cardano Development to manage PIDG Funds
Following a competitive tender process that catalyse African infrastructure projects and that they can raise medium and long-term
brought interest from over 30 companies from invest in sustainable businesses to help reduce debt for deployment in infrastructure projects.
across Europe, Africa and North America, poverty in Africa while delivering on investment- GuarantCo also provides dollar-denominated
Private Infrastructure Development Group specific and development goals. guarantees in fragile and conflict affected
(PIDG) subsidiaries the Emerging Africa countries.
Launched in South Africa in 1991, IAM is one
Infrastructure Fund (EAIF) and GuarantCo
of the first asset management firms to build Originally set up to help promote economic
have appointed Investec Asset Management
a global franchise from emerging market development and reduce poverty, GuarantCo
(IAM) and Cardano Development,
origins, offering a broad range of Africa-specific has to date issued guarantees totalling US$
respectively, as new fund managers.
investment strategies. 513 million for 36 infrastructure projects in 14
PIDG mobilises private sector investment lower-income countries, creating 275,000 jobs
IAM took over the management of the
to assist developing countries in providing and giving 32.2 million people improved access
approximately US$ 670 million EAIF fund
infrastructure vital to boosting their economic to infrastructure. It has an ambitious target to
on 9 May 2016. IAM will manage the entire
growth and combating poverty. PIDG is have outstanding guarantees of greater than
investment process for EAIF, from seeking
funded by the governments of the UK, the US$ 1 billion by 2020.
out projects, evaluating loan applications,
Netherlands, Sweden and Switzerland as well
carrying out due diligence and managing Cardano Development B.V. was started in
as private sector banks and development
the administration of transactions. IAM will 2010 as a subsidiary of Cardano, one of the
finance organisations.
also market the EAIF fund internationally and leading Dutch firms involved in strategic risk
monitor the loan portfolio. management and implementation, executing
Emerging Africa between 80 billion and 120 billion notional
of OTC-derivatives and LDI oriented bond
Infrastructure Fund (EAIF) GuarantCo programmes annually the last five years
Established in 2002 as a subsidiary of PIDG, GuarantCo is a public/private partnership that on behalf of pension and insurance clients.
the EAIF provides debt finance to private sector helps finance privately-sponsored infrastructure Cardano, with a strong reputation for managing
infrastructure projects in sub-Saharan Africa. projects in Africa and Asias emerging and risk, will seek to leverage their wealth of
To date, it has committed over US$ 1.2 billion frontier markets, providing local currency experience working on local currency funding
to 63 projects in 20 countries. EAIF seeks to guarantees to local and regional banks so to help GuarantCo increase its impact on
Celebrate Africa
8th Annual Africa Group Braai
OFEI KWAFO-AKOTO
Associate
King & Wood Mallesons UK
T +44 (0)20 7111 2142
ofei.kwafo-akoto@eu.kwm.com
Interview with
Anna Gardner
Executive Director, ilfa
Gambian-born Anna Gardner is a charity Tell us a bit about your background before
worker, rule of law activist, and international your current position as Executive Director
lawyer. Anna gained her LLB at Nottingham of ilfa.
University in 1991 and qualified as a solicitor
in England in 1994. Her 20 year legal career Anna Gardner (AG) I qualified in 1994, with
includes tenure at the BBC, Accenture and the media firm Davenport Lyons who did a lot
Hewlett-Packard. In 2010 she was recognised of work for the BBC at the time and when I
by the Law Society of England and Wales with qualified I then joined the BBC as an in-house
an award for In-House Counsel of the Year. lawyer. I went on to work for International
Computers Limited (later taken over by
In addition to her role as Executive Director
Fujitsu), including a secondment in Norway.
of ilfa, Anna is the founder of Tesito (a UK
charity which partners with local communities I subsequently joined Accenture, starting off
in Gambia to improve the lives of ordinary in the outsourcing unit before taking on a
Gambians) and a patron of Conserve Africa country counsel role in South Africa before
(a non-governmental organisation that aims a nine year stint as general counsel for the
to promote and implement sustainable Middle-East, the Mediterranean and Africa for
development). Hewlett-Packard.
Lights, Camera,
Action!
The first network of cinema and
live performance venues in Africa
Vivendi has launched its project, CanalOlympia, The CanalOlympia project, which involves the venues are outfitted with state-of-the-art digital
focussed on the development of entertainment development of entertainment facilities in West projection and sound equipment and are eco-
facilities in West and Central Africa. and Central Africa, will be the first network of friendly: in Yaound, for example, the entire
cinema and live performance venues in Africa. building is powered by 720 m of solar panels.
Vivendi is an integrated media and
content group. The company operates This is the first CanalOlympia venue in King & Wood Mallesons advised Vivendi on
businesses throughout the media value Africa, located in Yaound, Cameroon. all legal aspects of the infrastructure project,
chain, from talent discovery to the creation, This venue was inaugurated on June 14 by including the structure and the deployment
production and distribution of content. Cameroonian Prime Minister Philmon Yang of this eco-responsible project, operated
The main subsidiaries of Vivendi include and Vincent Bollor, President of Vivendis in Cameroon by Talents & Spectacles
Canal+ Group, its subsidiary Studiocanal, Supervisory Board. Cameroon.
Vivendi Village (which brings together The CanalOlympia venues have a unique The KWM team was led by Paris partner,
Vivendi Ticketing, MyBestPro, Watchever, architectural design, which permits them to Richard Mugni, assisted by counsel
Radionomy and the Paris-based concert accommodate three hundred people indoors Charles-Antoine Erignac and associate
venue LOlympia) and Dailymotion. and several thousand people outdoors. These Joana Becquet-Zardi.
Kenyas New
Companies Act
1948-2015 in the making
Fronting
Undermines
Transformation
Could you be guilty?
The year 2016 marked the beginning of the B-BBEE scorecards favour companies that are increase levels of equity ownership by black
overhauled, and more stringent, broad-based fronting. people in businesses operating in South
black economic empowerment (B-BBEE) Africa;
In light of the significant changes and recent
landscape in South Africa.
commentary relating to fronting practices, it is increase the number of black people in
Among the most significant changes that have imperative for enterprises operating in South management positions of business;
come into effect this year are the criminalisation Africa, particularly in the B-BBEE arena, to:
of fronting practices, which are aimed at improve the skills of black employees;
understand the concept of fronting practices;
deliberately circumventing the B-BBEE laws, and
the establishment of the B-BBEE Commission,
and assist small and medium businesses that are
majority-owned by black people; and
which will oversee compliance with the Broad- safeguard themselves from the risk of being
Based Black Economic Empowerment Act a fronter. procure goods and services from businesses
53 of 2003, as amended (the B-BBEE Act). that are good contributors to B-BBEE and
These changes are aimed at addressing the corporate social investment.
unintended consequences of B-BBEE. Background to B-BBEE The South African government and state-owned
At a recent conference hosted by the South By way of background, B-BBEE is a strategic enterprises are obliged to take B-BBEE into
African Department of Trade Industry (DTI) and policy of the South African government, which account when procuring goods and services.
the B-BBEE Commission, the DTI noted that aims to rectify the legacy of apartheid through
fronting practices significantly derail economic increasing meaningful participation in economic
transformation. At the same conference, the activities by previously disadvantaged South What is a fronting
Minister of Trade and Industry, Rob Davies,
stated that fronting undermines deserving
Africans. The B-BBEE Act is the primary
legislation through which the B-BBEE policy
practice?
companies, which should easily be awarded is implemented. In terms of this Act, B-BBEE A fronting practice is defined in the B-BBEE
certain tenders but are overlooked because consists of measures and initiatives that aim to Act as a transaction, arrangement or other
Indigenisation Law
in Zimbabwe
President clarifies the Governments position on its
indigenisation and economic empowerment policy
Oil in Crisis
The impact of the oil price crisis
in the Angolan market
As an economy that is heavily dependent on economies like Angola must urgently adapt to showing a strong commitment to a policy
its oil resources, following the drop in oil prices this new reality. of diversification of the local economy by
Angola has been struggling to maintain its promoting investments in areas as diverse as
traditional high growth in GDP rates and to be This is exactly what the Angolan government agriculture, fishing, manufacturing, tourism,
at the forefront, as one of the most promising has been doing and it is anticipated that IT, electricity and water, transportation
emerging economies in the world. The golden steps taken by the government should and logistics.
era when the price of the oil barrel was well position the country well economically in
Foreign investment is seen as a positive force
above US$100 seems to have long gone and the long run. The Angolan government is and benefit to the Angolan economy and
welcomed. The Angolan government has
made several legal reforms which are aimed at
making the local business environment more
attractive and acceptable to foreign investors.
One of the most important steps in this
respect was the enactment of the new
private investment law in August 2015
which is now in full force and effect.
The new investment law eliminated the
former minimum threshold of US$1 million
for foreign investments as well as the
mandatory waiting-period before investors
could repatriate dividends. The new
private investment regime also simplified
the approval process for new private
investments projects.
Under the new regime all new investments
with a value not exceeding US$10 million must
be approved by the government department
in charge of the sector in which the investment
will be made. This should afford foreign
Gulf Rugby
Goodwill Hunters
Tom Calnan, a real estate partner based in rehabilitation of the Abu Dhabi Harlequins TOM CALNAN
the Dubai office of King & Wood Mallesons, player who was paralysed after a back Partner
King & Wood Mallesons Dubai
joined the rugby players of the Air Seychelles injury sustained during a match. The team T +971 4 313 700 734
Mike Ballard Foundation Conquistadors to played against the Madagascar National XV, tom.calnan@me.kwm.com
make their mark during a goodwill tour of ranked 42 in the world. Tom returned from
Madagascar. The Mike Ballard Foundation Madagascar with tremendous goodwill and
was set up in 2014 to raise funds for the stories of heroics on and off the field.
Financial
Regulation in
South Africa
New developments in the financial sector
South Africas financial sector is currently "We remain committed to seeing a financial A new body, the Prudential Authority,
undergoing significant regulatory reform, which sector, which is transformed and supports will have responsibility for prudential
will likely result in the establishment of a twin financial inclusion. We would like to see a regulation of financial institutions. The
peaks model of regulation in the near future financial sector, which continues to innovate, focus of its work will be enhancing
through the enactment of the Financial Sector but also treats customers fairly and properly the safety and soundness of financial
Regulation Bill at some point during 2016. through offering them the right products and institutions and market infrastructures
services. We would like to see a financial (such as stock exchanges) and
This article summarises the outcomes of
sector, which continues to be well regulated protecting financial customers against the
the past few years of reform efforts since
and therefore embraces the good intentions risk that those institutions will fail to meet
the Government first announced its reform
behind the Twin Peaks model of supervision. their obligations. The Prudential Authority
program in 2011, looking at: the institutions
We are keen on a sector which continues will be an independent body but,
that will be established, the importance of
to support key government initiatives on because of the close linkages between
financial stability and the enforcement and
infrastructure without compromising hard its work and the role of the South African
review mechanisms that will be put in place
earned investor or clients savings." Reserve Bank (SARB), the Authority will
when the reforms are passed. It also provides
be located within SARBs administrative
an overview of further reforms of the financial The twin peaks regulatory model gives framework and SARB will provide the
sector that are in the pipeline. responsibility for financial sector regulation to Authoritys resources.
two separate independent bodies:
The Bill requires the two agencies to
Recent financial The existing Financial Services Board cooperate in carrying out their roles.
will be reconstituted as the Financial
sector reform Sector Conduct Authority (FSCA). The A centrepiece of the reforms is the ability of
the Prudential Authority and the FSCA to
Twin peaks institutional model FSCA will have the role of enhancing and
make wide-ranging prudential and conduct
The Director-General of the National supporting the efficiency and integrity of
standards to apply to financial institutions.
Treasury Lungisa Fuzile recently told financial markets and protecting financial
the Association for Savings and Investment customers, including by promoting fair Prudential standards will be aimed at
South Africa Conference: treatment of them. ensuring the safety and soundness of
Nigeria Boosting
Local Exports
An overview of the recent scheme by the
Central Bank of Nigeria for diversification
of the Nigerian economy
The ESF, which was unveiled in June 2016, In implementing the RRF, as with the ESF,
is designed to provide financial assistance of it is intended that NEXIM would issue a
up to 5 Billion to non-oil exporters in Nigeria debenture, which would be invested in by
in the form of a low interest facility with a the CBN. This would essentially create an
tenure not exceeding 10 years. The essence avenue for the inflow of finance to NEXIM for
of the ESF is to offer non-oil exporters in the purpose of facilitating the creation of a
Nigeria additional opportunities to upscale discount window to add liquidity to the export
and expand their businesses in addition to credit transactions of DMBs, and accordingly
improving their competiveness. The ESF is improve exporters access to export credit as
also intended to attract new investments and may be required.
Competition Law
Developments in Africa
Africa is said to be on the rise. So is not recognise the authority of the CCC. 12 COMESA Member States, illustrating the
competition law enforcement throughout the breadth of its regional reach. This merger,
However, this situation is now much improved
continent. Despite initially facing challenges which comprised the African leg of the global
following the publication of monetary
in establishing competition authorities, more acquisition of Lafarge by Holcim, reportedly
thresholds,3 merger assessment guidelines4
and more African countries have adopted created the largest player in Africa in the
and a significant reduction in the filing fees.5
competition policies and enacted domestic cement production industry. Other industries in
The CCC has also found its feet and its
legislation aimed at prohibiting anti-competitive which the CCC conducted merger reviews are
merger control process is for the most part
behaviour and preventing mergers from being agriculture, petroleum, telecommunications
efficient and rational. It is important to note
implemented before they are scrutinised for and the fast moving consumer goods.
that it is not required for COMESA jurisdiction
anti-competitive consequences. In addition,
for a firm to have established a branch or Despite the level of growth and effectiveness
Africa has seen the development of a number
a corporate entity in the COMESA region; it has reached with regard to introducing
of regional competition regimes, most
the mere earning of revenue from COMESA competition policies and a merger control
notably, the Common Market for Eastern and
through exports to Member States constitute regime, the CCC has not been very active
Southern Africa ("COMESA"), the Central
as qualifying "business operations" within in antitrust enforcement cases, especially
African Economic and Monetary Community
the region. Unfortunately, all the jurisdictional those relating to cartel behaviour in the
("CEMAC")1 and the East African Community
issues have not been resolved as yet, as region. The CCC has reportedly alluded to
("EAC"), to name but a few.
certain of these Member States have not the challenges it faces in this regard, which
This article considers some developments of passed legislation to incorporate the COMESA include jurisdictional issues between the
African competition law enforcement and merger treaty into their domestic laws. Therefore, CCC and some of the domestic competition
control through these regional competition law these States, notably Kenya and Ethiopia, still authorities and corporations in terms of
authorities. In addition, we note a number of require merger filings in respect of transactions sharing of information and investigations
important multi-lateral co-operation treaties occurring in their territories despite the between Member States. These challenges
which have been concluded recently. fact that a filing with the CCC is made. may have hindered the progress and the
COMESA is in the process of establishing potential benefits that could derive from the
co-operation agreements with each Member competition enforcement by the CCC. That
Common Market for State's competition authority (a co-operation said, the CCCs executive director, George
Eastern and Southern agreement was recently entered into with Lipimile, indicated in August 2015 that the
Kenya) but it is not clear how soon this will CCC would be commencing a series of
Africa result in finally resolving these turf wars. antitrust investigations. These investigations
The COMESA currently consists of 19 would include a sector inquiry into shopping
The CCC investigated 13 transactions in
Member States2 and the COMESA malls as well as investigating cartels in the
2013. This number rose significantly to 44 in
Competition Commission ("CCC") is the fertiliser, bread and construction industries.
2014. However, only 18 mergers were notified
responsible body for competition law
to the CCC in 2015, probably as a result of
enforcement and merger regulation in cross
border transactions affecting its Member
the introduction of monetary thresholds. This
brought the total number of transactions before
Eastern African
States. Although its Rules were already
established in 2004 by multilateral treaty, the
the CCC to 77 in a period of two years. This Community
dedication is commendable in light of the short
CCC officially commenced operations only The EAC is a bloc consisting of 5 Member
period in which the CCC has been in existence.
in January 2013, amidst great confusion States (namely Burundi, Kenya, Rwanda,
about the scope of its jurisdiction in respect According to the COMESA Annual Report Tanzania and Uganda with South Sudan
of merger control. In particular, there was no (2014) the majority of the CCC merger possibly coming on board at some later
prescribed monetary threshold which filtered notifications since 2013 fell within the stage) and its Ministers' Council has adopted
out merger transactions without a common financial services sector, with 75% of those the East African Competition Amendment Bill
market dimension. The filing fees were also transactions involving acquiring firms from (2015) which provides for the establishment of
prohibitively expensive and the competition South Africa and Kenya. Interestingly, the the Eastern African Community Competition
authorities of many of the Member States did CCC has assessed a merger that related to Authority ("EACC"). The EACC, however, has
The South African Competition Act enjoins through the creation of a dedicated approach that the Commission is likely to
the South African Competition authorities business incubator facility, which will follow and the types of information that the
to consider the public interest in assessing provide South African suppliers with Commission may require when evaluating
mergers which are filed with them. In earlier training to develop various skills, and public interest grounds when assessing
times, the main focus in this regard was on to introduce new low or no alcohol mergers.7
preserving employment for the staff of the products into South Africa.
The guidelines consider in detail how the
merging firms. However, since the merger of
Walmart and Massmart in 2011, other public
The merged entity is not allowed to lay Commission will view the four public interest
off any employees as a result of the grounds set out in the Competition Act,
interest factors have received more intense namely:
merger. It must in fact keep its pre-
focus, such as preserving and promoting
merger job numbers constant for a (i) the effect of a merger on particular
local supply chains, promoting small and
period of 5 years. industrial sector or region;
medium enterprises and those controlled by
Black people, and industrial development. AB InBev has undertaken that it will (ii) employment;
This then typically results in a range of public continue SABs policy and practice of
maximizing local production of beer (iii) the ability of small businesses controlled
interest conditions being attached to the
and cider. In this regard, it will ensure or owned by historically disadvantaged
merger approval.
that South Africa maintains at least the persons to become competitive; and
The Minister of Economic Development same ratio of local production as pre- (iv) the ability of national industries to
has a statutory right to participate in merger merger. compete in international markets. It is
investigations to advance the public interest
and he has done so in two recent large In order to address any potential impact expected that in future far more detailed
information will have to be presented
cross border transactions. In the merger of that the merger may have on the South
African suppliers of input products such to the Commission during the merger
three Coca-Cola bottling operations in May
as glass bottles, cans, ends, crowns, investigation process.
2016 the Minister's intervention has resulted
in merger conditions relating to retention of paper labels, kegs and raw materials Whilst the guidelines set out the general
the African head office in South Africa, an required for beer production, the approach that the Commission is likely
increase in shareholding of Black people in merged entity must source its inputs to follow in assessing the public interest
the merged entity to 20%, localisation of the from local suppliers and comply with effects of a merger, it should be borne in
supply-chain, establishment of a ZAR800 the terms and conditions of SABMillers mind that the detailed evaluation of these
million fund for development of agricultural existing supply agreements. factors will be conducted on a case by case
and other inputs as well as the downstream The merged entity must within 2 years basis. It is therefore incumbent on merging
parties to put forward comprehensive fact
retail sector, access for smaller suppliers from the closing of the transaction
to fridge space in the retail units that utilise based argument to the Commission during
propose to the Minister and the
fridge facilities of the merged entity and a 5 the merger assessment process in order
Competition Commission a scheme to
year moratorium on job losses. to demonstrate that the merger will not
secure ownership of Black people in the
compromise the public interest. In particular
South African business of the merged
In the well-publicised merger of AB InBev circumstances, it may expedite the process
entity.
and SAB Miller in June 2016 the following to propose public interest conditions with
conditions were imposed, amongst many the merger filing or at an early stage of the
others: proceedings.
It is expected that this trend will continue,
AB InBev has to create a fund of ZAR1 especially in regard to cross border Many African countries have public interest
billion for investments in South Africa for investment into South Africa. In fact, the provisions in their competition legislation and
the development of the South African Competition Commission has signalled have started to flex these muscles. Given
agricultural outputs for barley, hops and its intent in this regard on 8 June 2016 by the multitude of regional authorities and
maize, as well as to promote entry and publishing a set of formal guidelines for cooperation agreements, we expect that
growth of emerging and black farmers the assessment of public interest effects other countries may soon follow the South
in South Africa. The investment will also in merger investigations. These guidelines African example in ensuring that mergers are
be utilised for enterprise development attempt to provide guidance on the not contrary to the public interest.
Developing Africa
Mauritius eyes economic collaboration
with Cte dIvoire
On 21 and 22 April 2016 the 5th Economic strengthening of economic cooperation, on Ivorian entrepreneurs to live their dreams
Forum of the General Confederation of 20 April 2016 Cte dIvoire and Mauritius and to move forward to ensure their projects
Enterprises of Cte dIvoire (CGECI Ivorian inked an important treaty for the protection materialise. This message was also relayed
National Council of Employers) took place in and promotion of investments (IPPA). Other with passion by renowned industry leaders on
Abidjan, Cte dIvoire, and is also known as agreements include a framework for economic the continent, namely Dr Chris Kirubi (Kenya)
the CGECI Academy. Mauritius was the guest and financial cooperation, a memorandum and Tony Elumelu (Nigeria).
of honour of the event. of understanding on strengthening co-
operation between the Board of Investment, Arlove further added that the CGECI
The Mauritius government delegation to the
the Mauritius agency for the promotion of Economic Forum has been a great
Forum was led by Hon. Xavier Luc Duval,
investments, and its Ivorian counterpart opportunity for entrepreneurs and investors
Deputy Prime Minister and Minister of Tourism
CEPICI. to share their experience and ideas for
and External Communications of the Republic
of Mauritius. He praised the exemplary the development of the economy of
During the Forum, officials from both countries
journey Cte dIvoire has been forging since Cte dIvoire. Indeed, with an annual
indicated that the real estate development
the countrys political crisis came to an end. economic growth close to 9%, the country
of the Village of Information Technology and
The Hon. Duval further said his presence at Biotechnology (VITIB) of Grand Bassam in is currently confirming its position as an
the Forum confirms the interest of Mauritius Cte dIvoire could be an interesting pilot important business hub for the western
to develop closer cooperation ties with Cote project in the implementation phase of African region. This Forum is a fabulous
dIvoire and with other countries in western these new agreements. Meanwhile, the two opportunity for the Mauritian private sector
Africa and that he hopes that his presence countries have entered into negotiation for and international investors alike since
at the Forum will encourage Mauritian the signing of a Double Taxation Avoidance the country presents several business
entrepreneurs to become aware of investment Agreement (DTAA). opportunities. Cte dIvoire, which has
opportunities in western Africa and particularly a population of 24 million, gives indirect
in Cte d'Ivoire, which is one of the strongest During his speech, the Prime Minister of Cte
access to a market of 300 million people
economies on the continent. He went on dIvoire, Daniel Kablan Duncan described
Mauritius economic development as an as it is part of the West African Economic
to say that the country now positions itself
inspiration, urging the Ivorian private sector to and Monetary Union (WAEMU) and of the
as a true leader in the region and presents
use the Mauritius International Financial Centre Economic Community of West African
numerous investment opportunities.
(IFC) to develop their projects. States (ECOWAS).
The Forum followed a lengthy preparatory
mission with an Ivorian delegation visiting The theme of the Forum focused on financial The CGECI Economic Forum 2016
Mauritius in August 2015 and April 2016, challenges faced by entrepreneurs and small attracted close to 6,000 international
with the objective of exploring and developing and medium enterprises (SMEs), and what participants, including investors, project
business collaboration opportunities between innovative financing solutions are available. developers, Development Finance
Mauritius and Cte dIvoire. The Hon. Duval The team from ABAX, a provider of integrated Institutions and entrepreneurs, as well as
added that he believes that the stage is now corporate, advisory and business services some big names from the African business
set for the private sectors of Mauritius and headquartered in Mauritius, with offices in world. With many considering Africa as the
Cote dIvoire to work together to develop Africa, including in Cote dIvoire, was present last growth frontier, the future editions of
numerous business opportunities. at the Forum. the CGECI Economic Forum are expected
Further to signing an agreement in New Speaking at a round table dedicated to the to gather more and more entrepreneurs
York on 4 March 2016 for the establishment advantages of using the Mauritius IFC, Richard and participants willing to fast-track Africas
of future diplomatic relations and the Arlove, the CEO of ABAX, urged young development.
Managing Risk
Risk Management & Litigation in Africa
conference held in Paris
Mauritius Taking
Centre Stage
in International Arbitration
The Congress of the International Council Mr Donald Donovan, stated in his welcome however, in respect of the ever-increasing
for Commercial Arbitration (commonly message to the delegates prior to the development of international arbitration as
known as ICCA) is the largest regular Congress: [w]e have a lot to absorb and a dispute resolution mechanism were to
conference devoted to international much to gain. the effect that the aim is to strengthen the
arbitration. It takes place every two years, foundation, not destroy the temple.
on each occasion in a different city and
country, bringing together eminent judges, An intrinsic link between In his first official visit in Mauritius, Ban Ki-
moon, the Secretary General of the United
arbitrators and practitioners specialised in
the field of commercial arbitration under one
international arbitration Nations, applauded the role of the United
roof. The 23rd ICCA Congress was held in and the rule of law Nations and UNCITRAL, its core legal body in
the field of international commercial law, in the
Mauritius from the 8th to 11th of May 2016.
The principle of the rule of law is at the heart harmonisation and development of the Model
This was the first ICCA Congress held in
of international arbitration. They are inherent to Law on international commercial arbitration. He
Africa in its 50 year history.
each other since international arbitration must be further saluted the strides made by Mauritius in
By choosing Mauritius, the ICCA recognised governed by a system of clear and predictable developing its legislation in line with the global
the considerable and continuing efforts of laws, which are applied equally and fairly. trend of internalisation of arbitration.
Mauritius to establish itself as a neutral and
Dr Mohamed ElBaradei, prominent Nobel A panel of economists, political scientists
state-of-the art arbitration venue for a region of
Laureate, provided a reality check at the and jurists focussed on the necessity, both
the world that could derive great benefit from
opening ceremony of the Congress, observing for economic development and human rights
more effective dispute resolution processes
that international arbitration still requires some protection, to ensure the protection of the
in light of the ever-increasing number of
fine-tuning to fully conform to the rule of law rule of law through a robust legal system.
arbitrations involving Africa related parties and
and highlighting possible avenues which International arbitration is in effect a system
projects. ICCA Mauritius 2016 was attended
could improve the dispute resolution process. separate from, and in addition to, national
by over 800 delegates, of whom about a third
These included increased transparency, an court systems, and offers an alternative to
came from Africa.
international framework in furtherance of a resolving disputes before the national courts.
This years theme was centred on international coherent development of case law and the There is a need for strong collaboration
arbitrations contribution to, and conformity with, possible establishment of an appellate body to between national courts and arbitral tribunals
the rule of law. As the new ICCA president, review arbitral awards. His concluding words, at the points at which the two systems
Rebirth of
Opportunities
in Sight
Reforms post Arab Spring in Tunisia
Since the revolution in 2011, it is undeniable simplification Limitation of the number of activities
that the business environment in Tunisia requiring an authorisation under specific
Tunisia has had an Incentive Investment Code
has had a difficult time. The social unrest regulation and review of the terms of
since 1993. Focused on a list of specific
caused by the populations expectations, specifications when they exist;
business activities, it provides for various tax,
the weakness of non-elected rulers and
the instability of neighboring Libya were
financial and labor incentives. However, over Increase of the number of foreign
time the list of activities has been reviewed employees that can be hired freely in a
contributing factors. local offshore entity from 4 to 10;
and updated, making it an unclear source of
Five years later, the situation has stabilised and
there are legal changes that allow for optimism
regulation due to several amendments.
Possibility of foreign participation in
The proposal of a new code arose in 2007, Tunisian companies owning agricultural
regarding several key business sectors. Since lands (direct ownership will remain
and the final draft is now ready to be voted
Tunisia successfully and peacefully held its first prohibited);
in by the Tunisian Parliament as well as its
free and transparent elections in 2014, the
resulting legitimate Government have worked
three application decrees. The result is a Creation of a Tunisian Investment
draft much lighter than the current code, due Authority that will be the sole vis--vis of
on legal reforms to improve the local economy
to tax aspects and related provisions being investors for any issue they may have;
and business environment.
regrouped and inserted into a separated new
Below is an overview of the current situation, General Tax Code. Simple and precise procedures for the
foreign investor with deadline and tacit
the changes to watch for, and the changes
The Investment Code draft provides for the approval in case of non-response; and
that have already started in the areas of
following:
Investment, Tax, Banking, Oil & Gas, Public Settlement of investment dispute opened
Private Partnership and Renewable Energy. Full opening in the Code of all activities to international arbitration.
JULIA COURT
RICHARD MUGNI MEG UTTERBACK
Partner, Construction
Partner, Energy & Intrastructure Partner, Litigation
UK
France China
T +44 (0)20 7111 2411
T +33 (0)1 44 346 285 T +86 21 2412 6068
julia.court@eu.kwm.com
richard.mugni@eu.kwm.com meg.utterback@cn.kwm.com
Vivendi on CanalOlympia, the first network A leading African conglomerate on its Bank Limited of Kenya and on its
acquisition of Family Bank, Uganda
of cinemas and live venues in central and auction bid and proposed acquisition of
west Africa Fan Milk, a leading West African AfricInvest Capital Partners on a 9
China Molybdenum on the US$2.65 FMCG business and other matters million investment in a Libyan soft drink
billion acquisition of Freeport's indirect 56% Baiyin and China Africa Development and bottled water business and on KES
918 million investment in Family Bank,
interest in Tenke Fungurume in the DRC Fund consortium on the takeover of ASX
the second largest microfinance bank
A private equity investor on its and JSE listed Gold One with gold assets
in Southern Africa in Kenya
co-investment with Abraaj into The Tiba
Group/Thebes Schools, the leading
Glencore on its Burkina Faso copper Africa Opportunity Fund on its its AIM
Egyptian education business joint venture with ASX listed Blackthorn listing and US$125 million fundraising for
Coronation Capital on its captive fund Resources and Glencores acquisition of a
13% stake in Blackthorn
strategic and opportunistic investments
in Africa
establishment and related transactional work
South32 on the demerger from BHP Helios Investment Partners on the Aureos Capital on the global emerging
Billiton of its aluminium, manganese and US$145 million acquisition of South markets fund managers US$380 million
coal assets in South Africa, Mozambique, Africas INM Outdoors Limited, the leading Africa Fund as well as on its US$100 million
Australia and South America with South32 outdoor advertising business in Africa with African healthcare fund
listed on the ASX, the JSE and the LSE operations in 13 African countries
Development Partners International on
Green Investment Bank plc on its Investec Asset Management on the final their deal flow in a number of jurisdictions in
international renewable energy investment closing of its second pan-African private both Anglophone and Francophone Africa
programme, including key jurisdictions equity fund at just under US$300 million
in Africa Masawara plc on its admission to AIM
South Suez on its Africa Fund II fund of and US$25 million placing and on its
A leading shipping services group on its funds offering
acquisition of the downstream assets of
transactional work in Africa and elsewhere
British American Real Estate on its Shell and BP in Zimbabwe
Meridian Port Services on the US$1.5 $100 million East Africa focussed fund
Satya Capital on its co-investment in
billion expansion project of Ghanas busiest
seaport terminal, Tema Port Berkeley Energy on its Africa Renewable Chemi & Cotex Industries, the Tanzanian
Energy Fund and transactional work FMCG business
Bollor Group on the construction and The sellers of Aureos Capital on the China Guandong Nuclear Power Group
operation of 1,205 km of rail infrastructure
sale to Abraaj Capital to form a combined on the acquisition of a 43% share of
linking Cotonou (Benin) to Niamey (Niger)
global private equity fund management Kalahari Minerals Plc for 632 million (US$
A large Chinese SOE consortium on an group with c. AUM US$7.5 billion under 991 million) cash
iron ore joint venture project in Africa management
ICVL on the acquisition of Rio Tintos 2.6 Sinopec on the construction of a US$850
billion tonnes coal resource in Mozambique
CNODC on multiple projects in Africa million LPG gas pipeline and processing
including oil transportation and supply plant in Ghana
ADC on the sale of the leading Rwandan agreements and export pipeline
arrangements Diageo on various joint ventures with
payments business Rswitch to Millicom
Heineken and Namibian Breweries in South
Atlas Mara Co-Nvest Limited on its African Development Partners II L.P Africa, Kenya, Namibia and Uganda
acquisition of a 77% controlling stake in the on its US$20 million equity investments
commercial arm of the Development Bank in Universit Prive de Marrakech of Investor on the development of a 100MW
of Rwanda (BRD) and other matters Moroccos private universities hydropower plant in Guinea
Warburg Pincus on its lead investment of Government of Lagos State on the Investors in Africa acting on various
up to US$600 million into Delonex, the US$1.2 billion light rail mass transit system mandates for the Bill and Melinda Gala
East African-focused oil and gas known as the Blue Line and on a separate Foundation, DEG, FMO, OPIC, Norfund,
exploration company PPP agreement EBRO, IFC and ADB
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