Mauritius firms splurge Sh5bn on Kenyan companies in one year

Fidelity Bank along Nairobi’s Kaunda Street. FILE PHOTO | SAMMY KIMATU  

Mauritian firms have injected more than Sh5 billion into the economy through acquisitions and investments in Kenyan companies, indicating tightening economic links between Nairobi and the Indian Ocean Island country. 

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The rush to Kenya by Mauritian firms is partly spurred by a double-taxation agreement signed two years ago.

Mauritian fund manager Axis acquired Kenyan stockbroker ApexAfrica Capital for Sh470 million last year, making it the highest priced takeover of a market intermediary in East Africa. Xterra Capital Advisors, a fund management firm domiciled in Mauritius, is in the process of raising cash to construct a high-end, mixed-use real estate in Nairobi at a cost of Sh1.4 billion.

Investment analysts say Mauritius firms are driven by the need for geographic diversification and the desire to tap into Kenya’s economic growth.

Diversify risks

“Mauritian companies are trying to diversify their risks and capture the growth in our economy plus there is a tax benefit given the double taxation treaty that is in place,” says financial analyst Vimal Parmar.
Axis took over ApexAfrica through its locally registered unit Mauritius Kenya Investment Holding.

The acquisition gave the Mauritian group an entry into the Kenyan stockbrokerage and fund management industry.

Mr Parmar believes the Mauritians are also keen to speed up growth of their companies by tapping the Kenyan firms as opposed to seeking organic growth in their more competitive economy.

Alteo became the second Mauritian company to invest in the Kenyan sugar industry following the purchase of a 25 per cent stake in Kwale International Sugar Company by Omnicane.

The sugar industry in Mauritius is highly efficient owing to competition-driven modern production technology whereas the Kenyan one is beleaguered by mismanagement.

Alteo Limited reported a profit of Sh273 million (96,411 million rupees) for the three months to September, noting that it expected better results in the second quarter following increased production capacity.

“Transmara Sugar Company Ltd (TSCL) in Kenya showed very encouraging performance as it was positively impacted by its recently enhanced production capacity and improved sugar prices. Results for the first quarter last year are not comparable as TSCL was consolidated as from 1st August 2015,” says Alteo in its latest financial statements. 

Xterra Capital Advisors was reported to have entered into a partnership with real-estate developer AMS Properties and property marketing firm Hass Consult to develop properties worth Sh9.7 billion in the East Africa region.