Another USD2m for Nollywood VC Stars, Iroko Partners

Iroko Partners, the Nigerian online distributer of African movies and music, have secured another USD2m in venture capital funding, Reuters reports. This follows an USD8m Series A round in April 2012 that brought international attention to the potential for bigger VC deals in Africa. The latest funding, from Swedish VC firm Kinnevik, will support Iroko as it pushes into American and European markets through cable and satellite TV partners. Iroko has now commanded support from two quite serious western VCs: Kinnevik, which was an early investor in Groupon, and international VC heavyweight Tiger Global, the Series A funder. Iroko’s steadily rising profile is sure to bring increasing credibility to the African VC and mobile tech space.

In other Iroko news, Nigeria’s Daily Times reports that Iroko is taking legal action against Google’s Android Development Challenge winner, Afrinolly. The start-up runs a mobile application that showcases Nollywood movies and trailers – the same centrepiece of Iroko’s online platform. Iroko says Afrinolly is providing content through its application that has been illegally sourced from Iroko’s legally licensed YouTube channel, NolloywoodLove.

FCMB to complete merger with Finbank by Q3

First City Monument Bank Plc has said it will complete its legal and operational merger with Finbank Plc by the end of the third quarter.

Reuters quoted the Chief Executive Officer, FCMB, Mr. Ladi Balogun, as saying at in investor conference call, “We took full control of Finbank in Febuary 9, and a complete integration is on the way. It will happen by the end of the third quarter.

“We have received approval in principle for the acquisition from the Securities and Exchange Commission, and we are looking at getting a date to arrange a court-ordered meeting of shareholders in the next few days.”

Balogun said he expected Finbank to contribute more than 10 per cent to profits this year after the merger.

SEC had delayed the approval of the acquisition for months.

Banking sources had said that the acquisition had suffered a major setback over recent discovery of hidden bad loans and huge debt profile of the troubled bank.

FCMB, however, said in a statement to shareholders that bank had won all necessary regulatory approvals for the deal and Finbank would become a wholly-owned subsidiary of the bank.

The bank, which refused to disclose the amount paid for the stake in the bank, said the buyout ended the recapitalisation process for FinBank.

However, the Scheme of Arrangement showed that Finbank was being acquired for N6bn.

Reacting to the delay by SEC, the Group Head, Corporate Communications, FCMB, Mr. Kenny Aliu, had said, “We like doing things thoroughly. Currently, we are going over the final details of the transaction. In our view, the transaction is seamless and everything is on track as far as our relationship with all relevant regulators is concerned. Everything is going on track; there is no cause for concern. We are not aware of any setback. It has not being communicated to us.”

The shareholders of FCMB had, on September 29, 2011, approved the bank’s acquisition of Finbank through its subsidiary, FCMB Investments Limited.

The shareholders, also at the court-ordered Extra Ordinary General Meeting, endorsed the issuance and allotment of the bank’s shares or payment of cash to the shareholders of Finbank.

FG to inaugurate SWF by year end–Okonjo-Iweala

The Minister of Finance and coordinating minister of the economy, Mrs. Ngozi Okonjo-Iweala, said on Monday that the Federal Government would inaugurate the Sovereign Wealth Fund by the end of the year.

Okonjo-Iweala said on the sidelines of a conference in London that the government would announce the management team for the fund in August.

She also disclosed that the government would issue a second Eurobond of at least $600m next year which could be open to members of its diaspora.

Reuters quoted Okonjo-Iweala as saying, “The members of the SWF board have been chosen and will be announced in August once due diligence has been carried out. By September/October, we should be getting the team in place and we should be able to inaugurate by the end of the year. We are in the last stage of due diligence.

,”The fund will be inaugurated with an initial $1bn,” according to the minister, after the government gained approval in June from Nigeria’s state governors, who initially blocked the savings fund, saying it was unconstitutional.

“We’re at a stage now where it’s accepted by the governors. The issue is how much goes into the fund not whether the fund should exist,” she added.

The fund was supposed to replace the Excess Crude Account, in which Nigeria saves oil revenues over a benchmark price, currently $72 a barrel. Governors get a portion of any money withdrawn from the ECA but the SWF won’t give those guarantees, which means they are likely to want most of Nigeria’s savings to be kept in the ECA.

The aim of the SWF is to save money for future generations, to finance infrastructure and to defend the economy against commodity price shocks.

Analysts said that the ECA could be easily dipped into by government. The account contained more than $20bn in 2007 but despite years of record high oil prices it now holds around $6.9bn.Nigeria issued a debut $500m Eurobond in January last year, which was 2.5 times oversubscribed

China Mining Fund Targets Africa

State-owned private equity managers China Mining United Fund (CMUF) will launch a second fund for investment in African mineral assets, Bloomberg and Engineering News report. The vehicle is one of the first state-owned RMB PE funds to gain approval to invest abroad. It is CMUF’s second fund, and is expected to follow a similar structure to the USD2bn Fund I. For this round, “CMUF is targeting stakes in companies that are close to starting production in deals from USD20m to USD100m,” Bloomberg reports. The fund will also look to invest in Australia, Asia and Europe.

China has been investing directly in African mineral projects for some time. However, these projects have not traditionally been funnelled through private equity funds.

Adlevo Capital Acquire Stake in Nigerian Pagatech


Adlevo Capital have acquired an unspecified stake in Nigerian mobile money services firm Pagatech, co-investing alongside Omidyar Network, Acumen Fund, Capricorn Investment Group, and current investor, Goodwell West Africa Microfinance Development Company. Pagatech intend to use the capital injection to fund its growth and expansion across Nigeria.

In Nigeria, as in many other countries across the continent, access to retail financial services is still underdeveloped. Around two thirds of Nigeria's 160m population have mobile phones, so this channel has enormous potential. Adlevo Capital’s Managing Partner Yemi Lalude commented on the deal: ‘What we like about Paga is their holistic approach to servicing merchants by providing a secure and simple solution for both banked and un-banked users to pay for goods and services.‘

Helios Towers Eyes USD200m for Further African Expansion

Helios Towers Africa will soon close on USD200m in expansion financing from the International Finance Corporation (IFC) and other investors, LBO Wire reports. HTA was established as a pan-African telecoms tower operator in 2009 with a USD350m investment from a group of investors including PE firms Helios Investment Partners, Albright Capital and Soros Funds. The group has since purchased tower assets in Tanzania, Ghana and the DRC. LBO writes that the IFC will now make a USD100m equity commitment to HTA from two of its funds, with another USD100m coming from new and existing investors, some of whom will be investing in Africa for the first time. HTA is looking to expand its sub-Saharan Africa footprint even further, as the demand for shared telco tower infrastructure rises across the continent.

Indian into Africa: SREI Infrastructure Africa Fund

India’s Business Standard reports that Indian SREI Infrastructure are planning to set up the SREI Emerging Africa Fund to focus on opportunities in telecom, roads, power and ports, possibly also mining and energy, areas where SREI have a track record. The company reportedly aims for a first close of USD50-100m and plan to raise USD300m later. Initial activity will be concentrated in Nigeria, Tanzania, Kenya, South Africa, Mozambique and Namibia.

Indian corporates – e.g. Airtel, Essar and others – have already deepened their engagement with sub Saharan Africa. SREI say they will engage with the usual suspects, for example Germany’s DEG, the Netherlands’ FMO and Belgium’s BIO, to raise funds. SREI already has business connections with these. The article also points out that SREI may well be pursuing direct connections for its own businesses, e.g. through pursuing coal-mining investments to power its own power plants.

Zimbabwe puts squeeze on banks for higher capital

HARARE (Reuters) - Zimbabwe has increased minimum capital requirements for banks to as much as $100 million, a move which could hold back a drive to force foreign banks to sell majority shares to locals while forcing small, locally owned ones to merge.

In a monetary policy statement presented in Harare, central bank governor Gideon Gono pushed for consolidation, warning that poorly capitalised banks posed a threat to the stability of the financial sector and the economy as a whole.

"Mergers and acquisitions have become a major strategic option, aimed at entrenching a strong, efficient and diversified financial sector that ensures the safety of depositors' funds and plays a developmental role in the economy," Gono said.

He added that the size of Zimbabwe's economy was too small to support 25 banks, some of which are already struggling. As many as four banks have been forced to closed or placed under administration in the past year.

The new capital requirements are higher than those in much larger regional economies such as South Africa, Kenya and Angola, according to central bank statistics.

Commercial and merchant banks, whose current minimum capital requirements are $12.5 million, will need to have $25 million in capital by December this year, which will rise to $100 million by June 2014, Gono said.

Mortgage lenders' minimum capital will go up to $20 million in December 2012 from the current $10 million, ultimately rising to $80 million in June 2014.

According to Gono, the latest local bank to fail, Royal Bank, registered a $6 million loss in the six months to June as it choked under a bad loan book, 99 percent of which was not performing
Britain's Standard Chartered and Barclays Plc and South Africa's Standard Bank and Nedbank are the major foreign banks with operations in Zimbabwe.

Local investors in Zimbabwe are likely to struggle to raise the capital needed to buy shares in foreign-owned banks, should the sector be forced to take locals on board as majority shareholders.

Earlier this month, Zimbabwe's empowerment minister Saviour Kasukuwere gave foreign banks one year to hand over 51 percent shares to locals under a controversial ownership law being championed by President Mugabe.

Kasukuwere and Gono, both Mugabe appointees, have frequently wrangled over the application of the empowerment law -- which has so far been used to compel mines to cede shares to locals -- to the banking sector.

On Tuesday, Gono repeated his warning that forcing foreign banks to localise could adversely affect Zimbabwe's stuttering recovery.

Kenya inflation drops to a 17-months low

NAIROBI (Reuters) - Kenya's year-on-year inflation fell to 7.74 percent in July and to its lowest level in 17 straight months, the statistics office said on Tuesday, pointing to another rate cut in September.

A Reuters poll of 10 analysts had forecast the annual rate of inflation would fall for an eighth straight month and gave a median estimate of 9.16 percent.

Analysts attributed the steep drop from 10.05 percent in June to a combination of base effects due to a higher comparison in the year-ago period and lower fuel prices.

Finance Minister Robinson Githae said the fall, which sent the rate firmly into single digit territory, marked a key victory for the Treasury, which had aimed to bring it down to this level by September.

"This is one of the battles we have fought in the ministry of finance... We have achieved our single digit inflation target two months earlier. Inflation is under control," he told a Kenya investment summit in London.

Prices of food and transport fell at the fastest pace during the month, the Kenya National Bureau of Statistics said, adding that the month-on-month overall decline for all prices was 0.85 percent.

Together with its neighbours Ugandan and Tanzania, the east African nation fought a seemingly losing war against soaring inflation and a sharp weakening of the shilling last year.

Uganda, which faced popular protests from citizens who were squeezed hard by high prices for most of 2011, also reported a big improvement in the rate of inflation for July.
Across the region, poor people bore the brunt of the inflation and currency crises, having to scrap some items like bread from their diets and to walk to work due to high public transport costs, in order to make ends meet.

CURRENT ACCOUNT DEFICIT

After the inflation data for Kenya was issued, focus turned to the country's poor external position, which could curb the pace of monetary policy easing by the central bank.

"This is because Kenya's outsized current account deficit persists, and improvement on this front will not be as rapid as was the case with inflation," said Razia Khan, head of research for Africa at Standard Chartered in London.

The current account deficit edged down to 11.3 percent of GDP in May from 11.4 percent in the previous month, the central bank said earlier this month, warning that it was still high.

Policymakers cut the central bank's benchmark lending rate by a bigger-than-expected 150 basis points to 16.5 percent earlier this month, claiming victory over inflation, which peaked at just under 20 percent last November.

"The MPC (monetary policy committee) are to be commended for getting ahead of the curve with their 150 basis points rate cut. They have to cement that advantage with a further cut of no less than 200 basis points and signal that they are ready to do more," said Aly Khan Satchu, an independent trader and analyst.

Although the tight monetary stance adopted by policymakers in the final quarter of last year, it has also crimped economic activities, at a time when exports to the euro zone, a key trading partner, and tourists from the single currency bloc have been hit by the euro area crisis.

Investors buy seven bank-owned insurance firms

No fewer than seven insurance companies, which were formerly either wholly or substantially owned by banks, have been bought by local and foreign investors, investigation has revealed.

The new change of ownership of the underwriting firms is in compliance with the Central Bank of Nigeria ’s directive that Deposit Money Banks should divest from non-banking operations and concentrate on their core business of banking.

Guaranty Trust Bank was one of the earliest banks to commence divestment from its insurance subsidiary, Guaranty Trust Assurance Plc. The underwriting arm has consequently been sold to a consortium of five foreign investors, with the name changed to Mansard Insurance Plc.

Other insurance subsidiaries sold are ADIC Insurance Limited; Oceanic Insurance Life; Oceanic Insurance General; Law Union and Rock Insurance Plc; Crystalife Assurance Plc; and Great Nigeria Insurance Plc.

Skye Bank has divested its stake from Law Union and Rock Insurance and Crystalife Assurance. However, the former two insurance arms have yet to officially unfold their new brands or owners.

Following the CBN’s directive, Diamond Bank had also divested its stake from ADIC Insurance, while the former Oceanic International Bank Plc, now Ecobank Plc, had divested its stake from Oceanic Life and Oceanic General Insurance, selling it to a South African firm, Old mutual.

Also, Wema Bank has divested its stake from GNI, through a management buyout arrangement.

The National President, Constance Shareholders Association of Nigerian, Mr. Shehu Mikail, has expressed worry that many of the insurance companies are not giving shareholders full disclosure on the sale of the firms.

He said, “Most of the insurance companies are not carrying us along in the sale of the firms, which is wrong. They should let us know those who want to buy these companies so that we can know if they can be trusted.”

While noting that the repeal of the universal banking was necessary, he said it would enable the banks to concentrate on their core business of banking, thereby promoting professionalism in the insurance industry.

The Commissioner for Insurance, Mr. Fola Daniel, said that the banking institutions owning insurance companies were actually divesting from the subsidiaries, adding that the commission was quite satisfied with the progress recorded in that area so far.

He, however, assured stakeholders of the commission’s determination to ensure fairness to all.

“As the regulator, we are much interested in what happens to these entities; what sort of investors take over. We need to protect all stakeholders, including the investors, the staff, and even, the insured. We have put in place an appropriate measure to ensure that no stakeholder is short-changed or put in a disadvantaged position as a result of the divestment,” he said.

He, however, said that because of the benefits in bancassurance, NAICOM would not abolish it when universal banking ends.

“Bancassurance that will be allowed in practice will take cognisance of the extent to which a bank may get involved in the marketing of insurance products,” the NAICOM boss stated.

On his part, the President, Chartered Insurance Institute of Nigeria, Mr. Wole Adetimehin, noted that the involvement of the banks introduced unhealthy practices in the industry and jeopardised corporate governance.

According to him, the former banks’ insurance subsidiaries had more access to funds, which enabled them to insure banks’ huge assets, than those firms that had no link with the banks.

FDI to Ethiopia Falls

Foreign Direct Investment to Ethiopia has fallen by 82 million US dollars to just 206 million according to a World Investment Report released by the United Nations Conference on Trade and Development.

The low performance is influenced by Ethiopia’s position in the East of Africa which is a region of low FDI traditionally said the report.

The region's FDI flow increased in 2009-2010 and reached 3.96 billion US dollars in 2011 which was just 5% lower then the peak seen in 2008 noted the report.

It is expected that the discovery of gas resources in the area which was long perceived as lacking natural resources will reverse the trend in the near future added the UN report.
Ethiopia is enacting measures to attract foreign direct investors because local investors lack the capacity to add value to the investment sector in the country according to the Ethiopian Investment Agency.

Ethiopia needs to seek foreign investors until local ones are able to develop the resources within the country according to Aklilu Wolde Mariam, Director of the Promotion and Research Directorate of the EIA.

It is to be remembered that Ethiopia has issued 51,891 licenses to investment projects according to the Ethiopian Investment Agency.

The licensed projects are primarily in the agricultural, manufacturing, hotel and tourism as well as other said Aklilu Woldemariam Director of the Research and Promotion Directorate of the Agency.

World Bank to give tea agency Sh1 billion loan

The Kenya Tea Development Agency is set to receive Sh1 billion from the International Finance Corporation (IFC) to construct a warehouse that is expected to save the company millions of shillings every year in lease payments.

KTDA is the marketing agency for an estimated 562,000 small scale tea farmers, and has been hailed for its positive contribution to economic growth by helping farmers access international markets more efficiently.

The IFC, the World Bank’s private lending arm, is proposing to lend KTDA $12 million (Sh1 billion), half the amount the company needs for construction of a new warehouse that will see it reduce outsourcing costs for tea storage.

“KTDA is constructing a new state-of-the-art 200,000 square feet warehouse complex to replace 50 per cent of its current warehousing space, which is leased from third parties,” says a disclosure note by IFC on the proposed loan.

The planned warehouse is to be located in Malindi, Lamu County.

“The Project will be implemented and located in Section V Mainland North, situated west of Mombasa Municipality (Miritini), Mombasa, Kenya,” says the disclosure note.

IFC, which is the World Bank’s private lending arm, says that the site was chosen due to good access to major transport routes.

Increased outreach to farmers and increased export of tea are additional results expected from the Sh1 billion proposed loan the disclosure note adds.

KTDA is owned by 54 tea companies, each of which own between one and two per cent of the agency and have amongst them 65 tea factories.

The IFC note says that by the end of 2011 the company represented 562,000 small scale farmers and the company makes money by warehousing, tea sales to export and domestic markets, and other services provided to the 65 factories.

Data from the Tea Board of Kenya shows that small-scale farmers accounted for 56 per cent or 224.9 million kilogrammes of the 399 million kilogrammes exported in 2011.

Tea production was lower by five per cent due to poor weather in the first half of the year.

Competition pushes Rwandan banks to launch new products

Rwandan banks have rolled out new products, and slashed lending rates amid rising competition from regional banks entering the market.

In the past three months, banks have repackaged their products, introduced new products like branchless, mobile and electronic banking, and lowered their lending rates.

Central bank figures indicate that commercial banks’ average lending rate slipped to 16.72 per cent from 16.87 per cent in May.

The average deposit interest rate was reported at 8.2 per cent in March, 8.1 per cent in April and up to 9.9 per cent in May.

Industry analysts say the entry of Equity Bank and Kenya Commercial Bank is awakening competition in the retail market as majority of the existing banks had been focusing on corporate clients with little activity in the retail market.

Equity and KCB have introduced agency banking targeting the lower end market.

The recent acquisition of 80 per cent shares in Commercial Bank of Rwanda (BCR) by Kenyan based I&M Bank is expected to further accelerate competition in the sector.

I&M said its entry into Rwanda aims to tap into the growing regional trade and facilitate its customer’s businesses.

In the first quarter of this year, the consolidated assets of the banking sector grew by 2.9 per cent to Rwf1.2 trillion ($1.9 billion) according to preliminary statistics from the National Bank of Rwanda.

Rwanda’s banking sector continues to dominate, controlling over 73 per cent of the total assets.

“It is going to be challenging (for new players), given that everybody has been stepping up their game,” said Lawson Naibo, the chief operating officer of Bank of Kigali (BK), currently the biggest local bank by assets, controlling about 32.8 per cent of the market share.

Central bank figures indicate that new loans grew by 38.9 per cent in the first five months of 2011.

According to Jean Bosco Iyacu, the acting head of retail banking at KCB Rwanda, despite micro and macro - economic challenges facing the banking industry at the moment — the rising cost of funds, inflationary pressures, the depreciation of the Rwanda francs against major hard currencies — the banking industry continues to maintain a positive outlook.

However, he cautioned about the likelihood of competition reducing the banks’ profit margins.
The potential threat linked to the positive outlook is that many regional and international players would be more attracted to the market. This would have an effect, in the long run, of reducing existing players’ margins and returns, especially if all of them concentrate on major centres across the country by serving the already served,” Mr Iyacu said.
But competition has also led to aggressive branch expansion and banks have repackaged some products like home loans.

Earlier this year, to increase uptake of mortgages, KCB Rwanda offered the full amount to the borrower, as opposed to the market requirement of 30 per cent of the value of the property as equity contribution.

On the other hand, BCR has partnered with SORAS and South- African firm Home Finance Guarantors Africa Reinsurance to allow relatively low income earners to make the 20 per cent deposit to qualify for a mortgage.

Analysts say the rising competition will see Kigali’s nine commercial banks rethink their strategies to retain market share.
But perhaps the biggest benefit from the competition will be increased access to financial services.

Rwanda currently has a low banking penetration of 22 per cent banking assets to gross domestic product, the second lowest after Burundi in East Africa.

The introduction of agency or branchless banks, which has been rolled out by KCB Rwanda and Equity Bank, is expected to be a key driver.

This is in addition to mobile banking which has been rolled out by almost all the commercial banks.

In the first quarter of this year, KCB Rwanda introduced a mobile banking platform — KCB Connect — which allows a customer to transfer money from their bank account to their mobile phone and vice versa, among other services.

BK has also partnered with telecom companies MTN Rwanda and Tigo, and launched a mobile money service that allows customers to withdraw, deposit and transfer money at any of its 56 branches countrywide.

“Mobile banking will be the key vehicle for Rwanda achieve its vision 2020 of financial inclusion,” said Mr Iyacu.

2 Private Equity Firms to Buy United Technologies Unit for $3.46 Billion

United Technologies is a step closer to paying for its takeover of the Goodrich Corporation.

Two private equity firms, the Carlyle Group and BC Partners, have agreed to buy Hamilton Sundstrand Industrial, a maker of industrial pumps and compressors, from United Technologies for $3.46 billion, the companies announced on Wednesday.

Proceeds from the transaction, which is expected to close in the fourth quarter of this year, will go toward financing United Technologies’ $16.5 billion acquisition of Goodrich, which was announced in 2011. Carlyle and BC Partners are both investing in the deal, with debt financing from a group of banks.

The agreement is the latest move by United Technologies to shed noncore assets. On Monday, the company said it agreed to sell its Rocketdyne unit to GenCorp for $550 million. In March, United Technologies said it planned to sell about $3 billion worth of assets to help pay for the Goodrich deal.

Hamilton Sundstrand Industrial comprises three businesses, which make components used in industries like energy and mining. United Technologies, which is based in Hartford, Conn., makes elevators and aircraft engines.

“We believe Hamilton Sundstrand Industrial’s strong product mix combined with secular growth trends in the energy, chemicals and industrials sectors create attractive long-term growth prospects for the company,” Vipul H. Amin, a principal of the Carlyle Group, said in a statement.

The buyers were advised by Citigroup and RBC Capital Markets, and the law firm Latham & Watkins. A host of banks — Citigroup, Credit Suisse, Deutsche Bank, Morgan Stanley, RBC Capital Markets and UBS — have committed financing.

24 Hour Fitness Is Said to Be on the Block

The health club chain 24 Hour Fitness is for sale, people briefed on the matter said on Tuesday.

Forstmann Little, the private equity firm that owns 24 Hour Fitness, has hired Goldman Sachs to run the auction process, these people said. Goldman will soon begin soliciting interest from potential buyers, a group that includes other fitness chains and private equity firms.

The chain is expected to fetch about $2 billion in a sale, said these people, who requested anonymity because they were not authorized to discuss the deal publicly.

With about 425 locations, 24 Hour Fitness is the nation’s largest privately owned chain of fitness centers. A representative of the company did not immediately respond to a request for comment.

Forstmann Little’s eventual sale of 24 Hour Fitness was expected. Once one of the world’s largest private equity funds, Forstmann Little began winding down its operations several years ago after ill-timed telecommunications investments. Theodore J. Forstmann, the financier who led the firm, died last November at the age of 71.

The chain is one of the two major investments remaining in Forstmann Little’s portfolio. The other is IMG, the sports, fashion and media company. Forstmann Little is also expected to pursue a sale of IMG next year.

The Forstmann Little fund formally expired on June 30, meaning that it was contractually required to sell its assets and return all money to its investors by then. But the firm’s investors — called limited partners in private equity parlance — had allowed that deadline to lapse and granted the fund extra time to sell 24 Hour Fitness and IMG.

After Mr. Forstmann’s death, Forstmann Little named the hedge fund manager Julian H. Robertson its chairman. He and Mark J. MacDougall, a lawyer at Akin, Gump, Strauss, Hauer & Feld, have been overseeing the sale of the firm’s remaining assets.
Theodore J. Forstmann with Padma Lakshmi, the co-host of "Top Chef," in 2010.Hiroko Masuike for The New York TimesTheodore J. Forstmann with Padma Lakshmi, the co-host of “Top Chef,” in 2010.


Health club chains have been attractive acquisition targets for private equity firms because their membership fees generate predictable cash flows that they can use to pay off the debt taken on to pay for the company. The New York-based chain Equinox, for example, was owned by North Castle Partners and J.W. Childs before it was sold to the real estate developer Related Companies.

Other potential buyers of 24 Hour Fitness include LA Fitness, a chain of health clubs partially owned by the private equity firm Madison Dearborn, and Lifetime Fitness, a publicly traded company.

Forstmann Little acquired 24 Hour Fitness, based in San Ramon, Calif., in 2005 for $1.6 billion. The company’s financial results suffered during the recession, but have since improved. In recent years the company has expanded internationally, opening several outposts in Asia.

24 Hour Fitness was started in 1983 by Mark S. Mastrov, a former natural-foods salesman, with a single club. Today, the company is a sponsor of the United States Olympic team, and at the London Games has several athletes on its “Team 24” squad, including the beach volleyball star Kerri Walsh and the water polo team captain Tony Azevedo.

Heineken to Buy Stake in Asia Pacific Breweries for $4.1 Billion

LONDON — Heineken extended its reach into Asia on Friday after the Dutch brewer agreed to buy a stake in one the region’s biggest brewers for roughly $4.1 billion.

Heineken, which already owns a 42 percent holding in Asia Pacific Breweries, will acquire a further 40 percent stake in the company from Fraser & Neave, a Singapore-listed conglomerate and longstanding partner of Heineken’s in the region.

The deal underscores Heineken’s interest in fast-growing emerging markets
Listed in Singapore, Asia Pacific Breweries operates 30 breweries across Asia, including in far-flung counties like Mongolia, Papua New Guinea and the Solomon Islands. Its brand portfolio includes Tiger Beer and Bintang lager, some of the best-known beers in the regional markets where they are sold.

Heineken previously said a successful deal would give it “direct access to a number of important markets, including Cambodia, China, Indonesia, Malaysia, New Zealand, Papua New Guinea, Singapore, Thailand and Vietnam.”

Larger global brewers are looking to deal-making as growth slows in their home markets.

In June, Anheuser-Busch InBev, whose beer brands include Budweiser and Stella Artois, agreed to buy the half of the Mexican brewer Grupo Modelo that it did not already own for $20.1 billion. Rival SABMiller bought Foster’s Group, the biggest beer company in Australia, for $10.15 billion last year.

Asia Pacific Breweries has been in play for weeks. Last month, Thai Beverage, controlled by the billionaire Charoen Sirivadhanabhakdi, initially offered to buy a 22 percent stake in Fraser & Neave for $2.2 billion. Heineken countered in late July, offering to buy a 40 stake for roughly $4.1 billion. Heineken had set an Aug. 3 deadline for Fraser & Neave’s board to accept its offer.

The agreement on Friday will trigger a requirement that Heineken make a mandatory buyout offer to remaining shareholders of the Asian brewer. The purchase of the remaining shares is expected to cost $1.9 billion. The deal is expected to close at the end of the year.

In early afternoon trading on Friday, shares in the European company rose 3.6 percent.

Credit Suisse and Citigroup advised Heineken on the deal.

Advent to Buy Control of Maker of Serta and Simmons Bedding

Advent International said Sunday that it had agreed to buy a majority stake in the parent company of Serta and Simmons bedding, taking control of one of the country’s biggest makers of mattresses.

The deal for AOT Bedding Super Holdings is valued at about $3 billion, according to a person briefed on the matter. Ares Management and the Ontario Teachers’ Pension Plan, which previously controlled AOT Bedding, will maintain sizable minority stakes in the company.

Advent outbid at least two other private equity firms, Bain Capital and Berkshire Partners, for AOT Bedding, another person briefed on the sale process said.

“We are excited to be investing in Serta and Simmons, two companies with strong momentum in an industry we believe is poised for growth,” Jefferson Case, a principal at Advent International, said in a statement. “We look forward to working with our investment partners and the management teams of both companies.”
Through Sunday’s deal, Advent will control two mattress makers with a collective history of about 223 years. Based in Hoffman Estates, Ill., National Bedding makes Serta mattresses.

Simmons, which was founded in 1870, passed through a series of investors before filing for bankruptcy in 2009, burdened by the cumulative weight of its multiple takeovers.

Ares and Ontario Teachers gained control of National Bedding in 2005. The two later gained control of Simmons in 2010, buying the company out of bankruptcy. Since then, the two mattress brands have been run as separate subsidiaries and continued to compete against each other.

Founded in Boston 28 years ago, Advent has become a particularly notable investor in consumer companies in recent years. Among its investments are Party City and the athletic clothing maker Lululemon Athletica.

Advent was counseled by the law firm Weil Gotshal & Manges. AOT Bedding was advised by Barclays, Deutsche Bank, Morgan Stanley and the law firm Sullivan & Cromwell.

DreamWorks China JV to open $3.1 billion Shanghai theme park

(Reuters) - DreamWorks Animation SKG Inc (DWA.O) and its Chinese joint venture partners will open a theme park in Shanghai by 2016, with a total investment amount of 20 billion yuan ($3.14 billion), the companies said on Tuesday.

The creator of "Shrek," together with its joint venture partners -- China Media Capital, Shanghai Media Group and Shanghai Alliance Investment Ltd -- will also cooperate to produce "Kung Fu Panda 3" in 2016, the joint venture said in a statement.

"Without question, China has what is needed to make great animation film ... this is a perfect fit for us at DreamWorks," Jeffrey Katzenberg, CEO of DreamWorks, told a news conference.

A sharp rise in China's box office revenues, backed by a moneyed middle-class willing to pay top prices for a trip to the cinema, is luring Hollywood to one of its largest untapped markets.

Walt Disney Co (DIS.N) broke ground on its planned Shanghai Disneyland last year. Its Shanghai theme park is estimated to cost 24.5 billion yuan, with hotels and additional facilities costing another 4.5 billion yuan.

In May, News Corp (NWSA.O) agreed to buy a stake in Chinese movie distributor Bona Film Group Ltd (BONA.O).

DreamWorks' theme park, Dream Centre, will be located in the Xuhui district of Shanghai, said Li Ruigang, Chairman of China Media Capital said, adding he hoped it would become China's Broadway or West End.

DreamWorks announced in February it will create a China JV called Oriental Dreamworks that will develop and produce Chinese animated and live-action content for distribution within China and around the globe.

Nigeria's AMCON asks Citi to advise on bank sell-off

AMCON appoints Citi, Rencap to advise on sale of banks

* "Bad bank" runs three nationalised lenders after rescue

* Rival banks had been lined up to bid for them

By Chijioke Ohuocha

LAGOS, Aug 7 (Reuters) - Nigeria's state-backed "bad bank" AMCON has appointed Citi and Renaissance Capital to determine the value of three lenders it nationalised last year before deciding on the best way to privatise them.

AMCON Chief Executive Mustapha Chike-Obi confirmed the appointments in a message to Reuters on Tuesday but gave no further details.

Nigeria nationalised three lenders last year after they failed to find new investors before a recapitalisation deadline and changed their names to Mainstreet Bank from Afribank; Enterprise Bank from Spring Bank and Keystone Bank from Bank PHB.

The three banks were among nine involved in a $4 billion central bank bailout in 2009 when the regulators asked them to find new investors or face nationalisation.

Citi and RenCap have between three and six months to complete their evaluation.

Chike-Obi told Reuters last month AMCON may list the three nationalised lenders instead of selling them to rivals, as it seeks to determine fair value for the banks.

Previously, AMCON said that more than 20 firms - banks and private equity investors - had expressed interest in acquiring the nationalised lenders, but AMCON is keen to have them valued before starting any negotiations.

courage89: Another USD2m for Nollywood VC Stars, Iroko Partners

Iroko Partners, the Nigerian online distributer of African movies and music, have secured another USD2m in venture capital funding, Reuters reports. This follows an USD8m Series A round in April 2012 that brought international attention to the potential for bigger VC deals in Africa. The latest funding, from Swedish VC firm Kinnevik, will support Iroko as it pushes into American and European markets through cable and satellite TV partners. Iroko has now commanded support from two quite serious western VCs: Kinnevik, which was an early investor in Groupon, and international VC heavyweight Tiger Global, the Series A funder. Iroko’s steadily rising profile is sure to bring increasing credibility to the African VC and mobile tech space.

In other Iroko news, Nigeria’s Daily Times reports that Iroko is taking legal action against Google’s Android Development Challenge winner, Afrinolly. The start-up runs a mobile application that showcases Nollywood movies and trailers – the same centrepiece of Iroko’s online platform. Iroko says Afrinolly is providing content through its application that has been illegally sourced from Iroko’s legally licensed YouTube channel, NolloywoodLove.

thanks 9ce 1

10 biggest private equity firms focused on Southern Africa Agri

Is there even such a thing as a “big” private equity firm focusing on Southern African Agri? Er… well here’s a top 10 for all you sceptics!

1.African Agricultural Land Fund, $3.249bn
2.Standard Bank Private Equity, $1bn
3.Futuregrowth Agri Fund, $554m
4.Carlyle Group Sub-Saharan Africa Investment Group, $500m
5.South Africa Silverlands Fund, $450m
6.Chayton Atlas Agricultural Company, $150-200m
7.African Agricultural Fund, $135m
8.Agri-Vie Agribusiness Fund, $110m
9.Actis Africa Agribusiness Fund, $93m
10.Advanced African Solutions, $250m (planned)
What do they all have in common? Backed by DFI money. What’s interesting? Silverfunds (Silverstreet Capital’s fund) is also backed by pension fund money!

Have a look at this superb report by Laurent Thomas, (Study on Private Equity in Agribusiness in Southern Africa)for details of structure, strategy, geo, and track records. A great read.

How to compare private equity strategies with hedge funds?

This question of comparing private equity strategy with hedge funds seems to have appeared a lot in many different forums and social networks but hasn’t yet generated a clear response that answers the question. In an attempt to remedy this, I have reached out to some industry experts and here are their responses so far:

Jon Unger Private Equity has more to do with taking an undervalued company, cleaning it up, and turning it around to sell it at a profit. One would put more weight to ownership in a PE strategy rather than a Hedge Fund. PE could also be Venture Capital in that they bring privately owned companies to Market with an IPO in the effort that the public would value the company at more than what the company can get on its earnings.
A Hedge Fund is basically the grown up version of an investment club where only accredited investors (think high net worth) can invest in the company. There can be up to 200 investors. A hedge fund is not always so concerned about the management or ownership of the company. In fact a hedge fund could be just a large portfolio of short positions on a commodity hedging against a bull market.

Daniel Cross at the Financial Advisory suggests that hedge funds are private investment companies that are structured as Limited Partnerships. The general partner is the Hedge Fund manager while the limited partners would be investors. In order to invest in a Hedge Fund, the potential partner must qualify as a high net worth individual – someone that has earned over $200,000 over the past 2 years with a reasonable assumption that it will continue or a net worth of at least $750,000.00. The manager pools together everyone’s money and trades various products ranging from stocks to bonds to derivatives. It is currently a lightly regulated industry that allows the Hedge Fund manager a lot of freedom but comes with the price of not being allowed to advertise or market the Fund to anyone other than the aforementioned qualified investors.
Private Equity companies invest primarily in companies that are not publicly traded. They profit based on a
companies underlying company and are known for restructuring and streamlining them for maximum efficiency. They are open to any investors as they do not have the type of restrictions Hedge Funds have, although if they begin to trade stocks, they must reorganize as such.

Middle East sovereign wealth funds to increase allocations to alternatives

Sovereign wealth funds in the Middle East are set to increase their allocations to hedge funds and other alternative investments. So says an article published recently on efinancialnews.com, following a roundtable held last month in the Gulf.

Bhisham Manraj from Bank of America Merrill Lynch suggests that regional SWFs’ “need for diversification, increased yield in the current low interest rate environment, increasing sophistication – and the fact that they are uniquely placed to deploy long term capital – makes them well placed to continue and increase their investment programs in infrastructure, private equity, hedge funds and real estate”.

Other roundtable participants supported Manraj’s views; Uwe Eberle, head of Van Eck Global in Switzerland, said: “Recent discussions in the Gulf region have confirmed that [investors in] the region [are] looking for more diversification. If you can deliver [outperformance] or absolute return with strong risk management, investors now express significantly higher interest than in the past. I believe the alternative investment industry has a significant upside in the region.”

When Mark Mobius was in town recently for the Hedge Funds World Middle East conference, we quizzed him for his views on the outlook for Middle East investor allocations to alternatives.

How to grow private equity investment in Africa

Growing private equity investment for Africa really comes down to two major factors: one, the ability to nurture the emerging middle class and two, presenting a convincing case for LPs to invest.

On the first point growing the emerging middle class to create a burgeoning private sector is hardly a new idea. Look at any of the BRICs and you’ll see a similar stage in their early development. Investment into the SME sector now allows for more investable companies later. This is true for Africa as it is for every emerging economy. East Africa presents a great case study for this, here’s a great little article that maps it out.

So now it’s down to convincing the GPs. Many are interested, but it really has only been the DFIs that have led the way, still where they lead others will follow. Jurgen Rigterink, CIO of FMO (who invest over €305m into Africa PE) outlined his fund manger selection process at this year’s Private Equity World Africa event:

■Thorough process of relationship assessment
■Team composition, indiv. & combined track record
■Reputational check (via local network)
■Attractiveness of market and fund proposition
■Competitive analysis

5 biggest private equity deals in Africa

Private equity deals in Africa have remained steady if not particularly fast and furious. The robust growth in the region reflects the universally agreed opportunity of the continent, whilst the modest deal flow is indicative of an emerging market where investors are still cautious and waiting for more adventurous parties to pave the way. And pave the way they are, in 2011 over $3bn worth of deals were closed – E&Y list 5 of the largest in their Private equity roundup – Africa report:


Company Deal value (US$m) Country Firm

Tracker Network Ltd. 434 South Africa Actis Capital LLP, RMB Ventures Ltd.

Eaton Towers 150 Ghana Capital International, Inc

Universal Industries Corporation 184 South Africa Ethos Private Equity Ltd.

InterSwitch Ltd. 110 Nigeria Helios Investment Partners LLP, Adlevo Capital Managers LLC

Rift Valley Railways 110 Kenya Citadel Capital, African Agriculture Fund, IFC


Unsurprisingly the list is dominated by Southern and Western Africa countries. Kenya flying the baton for East Africa is not much of a surprise either. But is this really worth getting out of bed for? Carlyle Group certainly think so, setting up their Sub-Saharan Africa fund last year was a marker in the Sub-Saharan sand for the cautious larger investors. The question maybe we should be asking ourselves is not if, but rather when, should we all jump onto the back of the emerging market’s roaring lion?!

Private equity eyes Africa, lured by middle class

By Marietta Cauchi
-- Carlyle to raise $500 million for new fund focused on Africa

-- Demand for consumer-faced businesses far outstrips supply

-- Returns on investments can be 40% or more

LONDON (MarketWatch) -- Private equity is set to ramp up investment in Sub-Saharan Africa, as demand from a growing middle class for iPads, Nike sneakers and fast food adds to the region's traditional attraction as a continent of rich natural resources.

Africa has 10% of the world's oil, as much as 90% of its platinum group metals and 60% of the world's uncultivated arable land, but an emerging middle class with growing disposable income has grabbed the attention of a range of investors from global buyout giants such as Carlyle Group to rock star and humanitarian Bob Geldof.

Carlyle aims to raise $500 million for its first fund focused on the region, and Friday received a commitment of $50 million from the African Development Bank. Carlyle is the first large global private equity firm to raise a fund dedicated to the area and joins specialists such as Emerging Capital Partners and Helios, which have been investing across Africa for several years.

Carlyle is unlikely to invest in the extracting or primary manufacturing industries because of the long investment periods they involve. Instead, it will buy stakes in African companies that provide products and services to consumers--either nationally or across the continent--and which it will be able to sell after the three to five years that private equity firms typically need to turn a profit.

"There is a tremendous opportunity to invest in consumer-facing business because of the fast growing middle class," said Bryce Fort, a partner at Emerging Capital Partners, which has been investing exclusively in Africa for 12 years.

"The demand started with mobile phones and has now spread to other businesses such as retail, consumer-focused insurance and the like--and the demand far outstrips supply, which remains constrained," he added.

Investors in private equity funds now put African frontier markets such as Nigeria or Kenya ahead of frontier Asian and Latin American markets as offering the best opportunities, based on the tremendous growth prospects.

Funds with a dedicated focus on Sub-Saharan Africa remain small in number and size compared with those dedicated to other regions. For example, 10 funds raised an aggregated $2.3 billion for Sub-Sahara Africa in 2011, compared with the 29 funds that raised $14.2 billion for Latin America, or the $26.9 billion raised by 110 funds for Asia, according to data from research firm Preqin.

But compared with previous years--in 2010 just $600 million was raised for the region--interest in Sub-Sahara Africa has rocketed and is set to increase as consumers' disposable income rises.

"Ghana, for example, is likely to be the world's fastest-growing economy overall in 2011, expanding at an estimated 16.3%," Abu Dhabi-based asset manager Invest AD said in a recent study.

"As a result, all institutional investors expect to have some exposure to Africa by 2016, with one-third expecting to shift at least 5% of their fund value there," it added. At the moment 45% have less than 1%, if any, exposure to the continent.

Challenges remain, but these are the obstacles a dealmaker would face anywhere and are no longer dominated by concerns such as corruption and political uncertainty.

"It is very much business and commercial issues that are part of business anywhere and not the issues that people normally associate with Africa such as political instability and corruption etc.," said Fort. Experts cite market volatility, illiquidity and finding the right management to run the business among these issues.

Meanwhile, returns from investing in Africa can be as much as 40% or more, according to Henry Obi, who is chairman of the Emerging Markets Private Equity Association and chief operating officer of Helios, another Africa-focused private equity firm. Even on average, private equity returns are around 19% for the period since 2000--this compares with just 11% for the Morgan Stanley Composite Index, MSCI, he added.

Helios invests across all sectors and at every stage in a company's life--sometimes going in when the business is no more than a blank sheet of paper, at other times putting in growth capital or staging a full management buyout.

"The investment period tends to be longer than usual--between four and seven years instead of three to five years," Obi said. "All the operational initiatives take longer."

For example, the founders of Helios established Helios Towers Nigeria in January 2005 to capitalize on the extremely strong growth in mobile telephony in Nigeria and using the successful tower-leasing business model pioneered by U.S.-based companies such as Crown Castle International /quotes/zigman/230852/quotes/nls/cci CCI -0.21% . The investment was incorporated in the Helios fund the following year.

Helios' other investments include Continental Outdoor Media, which has operations in 13 Sub-Saharan Africa countries in addition to South Africa; Nairobi's Equity Bank , which provides banking services to a previously un-banked population; and Kenya-based Flamingo Holdings, which grows, processes, packages and distributes cut flowers and fresh vegetables.

The heightened interest in Sub-Saharan Africa as a money-making opportunity was further highlighted last week when rock star Geldof sought to galvanize the private equity industry into investing in the continent.

"Aid has stabilized the community and, given a stabilized community, you have an economy that private equity can capitalize on," he told a global private equity conference in Berlin.

Geldof himself has just closed his first private equity fund, which raised $200 million. The 8 Miles Fund, named after the shortest distance between Europe and Africa, will invest across the continent in projects and assets in a wide range of sectors.

"Our fund will make a lot of money but what we want to leave behind is firms, farms and factories," he said.

Ever the altruist, Geldof said he wasn't interested in the money--the buyout boys would probably beg to differ.

Nigeria's First Bank given go-ahead to restructure
Friday, 03 Aug 2012

Nigeria's First Bank said on Thursday it had won regulatory approval to transfer its subsidiaries into a newly-formed holding company, in line with regulatory requirements to separate core lending from other businesses.

The central bank two years ago scrapped the universal banking model and directed lenders in Africa's second-biggest economy to sell their stakes in non-banking subsidiaries or adopt a holding company structure.

Onche Ugbabe, chief strategy officer, said the lender had received a nod from the Securities and Exchange Commission to proceed with the new structure and was waiting for approval from the central bank and shareholders.

"We expect to conclude the implementation by the third quarter," Ugbabe told a conference call with analysts.

Rivals UBA and Stanbic IBTC Bank, the local unit of South Africa's Standard Bank, said recently they would form holding companies to retain their subsidiaries, including asset management operations.

First Bank, one of Nigeria's top tier lenders, said it had no need to boost the capital bases of its offshore units, following new rules from the central bank on how lenders use local funds abroad and as other African countries tighten requirements for foreign lenders.

The lender said its offshore units in the United Kingdom and Democratic Republic of Congo were adequately capitalized and that it had no concerns about the new central bank rule.

The central bank has issued a directive to lenders restricting them from recapitalizing offshore units from funds sourced at home, in order to avoid capital flight and save a weak naira which has lost 3 percent since April.

"In the unlikely event that we need to raise capital for subsidiaries there are many options we can explore ... we can also reduce dividend payments," Chief Executive Bisi Onasanya said, also on the conference call.

sked on the call how the central bank's directive would affect First Bank's expansion, Onasanya said the bank was not bullish on an African expansion strategy because it still wanted to strengthen its position at home.

Analysts say the new capital rules may hinder Nigerian banks' expansion plans across the continent.

Nigeria's central bank has said it wants to enforce better supervision of banks and their subsidiaries in order to avoid a repeat of the events that led to a $4 billion bailout of nine undercapitalised lenders in 2009.

Goldman’s Buyout Arm to Buy Interline Brands for $1.1 Billion

Interline Brands, a distributor of repair products for professional contractors, agreed on Tuesday to sell itself to the private equity arm of Goldman Sachs and P2 Capital Partners for about $1.1 billion, including debt.

Under the terms of the deal, the buyout firms will pay $25.50 a share in cash, a huge 42 percent premium to Interline’s closing price on Friday and a 31 percent premium to the company’s 30-day average closing price.

This agreement provides excellent value to shareholders,” Michael J. Grebe, Interline’s chairman and chief executive, said in a statement. “This is also an exciting new chapter for Interline, one that we believe will bring broad benefits to all of our stakeholders.”

Shares in Interline rose nearly 40 percent on Tuesday, though at $25.09, they remained below the offer price.

Interline, founded in 1978, is a direct marketer and distributor of products like janitorial equipment and air conditioner parts. The company reported $37.7 million in net income last year, its third straight annual increase, on revenue of $1.2 billion.

The deal is structured as a management buyout, with members of Interline’s executive team expected to invest alongside GS Capital Partners and P2 Capital Partners. The buyout firms have received committed debt financing from Goldman and Bank of America.

The deal allows Interline to look for higher bids until June 28, in what is known as a go-shop period. If no bids materialize, the transaction is expected to close by the end of September.

Interline was advised by Barclays and the law firm Paul, Weiss, Rifkind, Wharton & Garrison. GS Capital Partners was advised by Goldman and the law firm Fried, Frank, Harris, Shriver & Jacobson. P2 was counseled by Debevoise & Plimpton

Shareholders of London Metal Exchange Back $2.1 Billion Takeover

LONDON – Shareholders of the London Metal Exchange agreed on Wednesday to a £1.38 billion ($2.1 billion) takeover deal from Hong Kong Exchanges and Clearing.

The deal will allow the Asian company to control the world’s largest futures trading exchange for metals like aluminum, copper and zinc, as emerging market demand for commodities remains strong.

Hong Kong Exchanges, part owned by the local Hong Kong government, had announced its all-cash offer last month, outbidding several American rivals for control of the 135-year-old London exchange.

An overwhelming majority of London Metal Exchange’s shareholders approved the deal on Wednesday. The takeover required the backing of at least 50 percent of its shareholders; those shareholders must also represent more than 75 percent of the firm’s stock.

“I am delighted that our shareholders have overwhelmingly supported the board’s recommendation,” Martin Abbott, the London Metal Exchange’s chief executive, said in a statement.

The acquisition will provide a windfall for JPMorgan Chase and Goldman Sachs, which own a combined 20.4 percent of the metal exchange. The two banks are likely to earn more than a combined $430 million from the transaction.

Despite concerns that the Chinese economy may be slowing down, China and other emerging economies in the region are now the largest buyers of a number of commodities, including iron ore and coal.

The acquisition, whose price tag was higher than analysts’ estimates, will help the Hong Kong exchange take advantage of this demand.

“All the world’s leading exchanges have been fighting in this area,” Charles Li, chief executive of Hong Kong Exchanges, said in an interview last month. “This is about growth and conquering new markets.”

Total trading on the London Metal Exchange increased 22 percent last year from 2010, while the value of all traded contracts rose 33 percent, to $15.4 trillion.

In an interview last month, Romnesh Lamba, head of market development for Hong Kong Exchanges, said that after securing approval for the takeover, the strategy will center on increasing the number of Chinese participants on the London exchange.

Currently, less than a quarter of the London Metal Exchange’s customers hail from China, and Mr. Lamba said there were plans to create contracts denominated in renminbi, the Chinese currency, and to allow for clearing of trades in Asia to help increase the number of regional users. The changes would take place over the next three years, he added.

Hong Kong Exchanges also wants to gain Chinese government approval to use local warehouses to provide commodities for domestic customers. Chinese regulations currently do not allow foreign exchanges to operate mainland warehouses.

By securing control of the L.M.E., Hong Kong Exchanges has ended a battle that spanned more than nine months and pitted many of the world’s largest financial exchanges against each other.

NYSE Euronext and the CME Group made initial bids, but dropped out earlier this year, according to a person with direct knowledge of the matter.

InterContinental Exchange, based in Atlanta, also had proposed buying the London Metal Exchange, but was eventually outbid by Hong Kong Exchanges.

The takeover is expected to close by the end of the year.

Felda Raises $3.1 Billion in Asia’s Biggest I.P.O.

HONG KONG — Felda Global Ventures Holdings successfully raised $3.1 billion on Thursday by selling shares in Malaysia in the world’s second-largest initial public offering this year, after Facebook’s botched Nasdaq listing last month.

Felda, a palm oil producer, successfully priced Asia’s biggest deal this year at 4.55 ringgit per share, or $1.43, near the high end of its indicated price range of 4 ringgit to 4.65 ringgit, a person with direct knowledge of the matter said. The shares are scheduled to start trading in Kuala Lumpur on June 28.

The high-profile deal came after a recent series of I.P.O.’s in Asia and elsewhere were withdrawn or postponed because of slumping markets. Those included a planned $3 billion offering by Formula One in Singapore and a $1 billion Hong Kong share sale by Britain’s Graff Diamonds.

Felda, which is being privatized by the Malaysian government, was selling 1.92 billion shares to institutional investors at the offer price and 273 million shares to retail investors at a 2 percent discount, according to its prospectus.

Of the total I.P.O. proceeds of 9.93 billion ringgit, or $3.12 billion, about 55 percent will go to the government, which sold off a 33 percent stake, and about 45 percent will go to the company, mainly for the purchase of new plantations. Felda already has about 356,000 hectares, or 880,000 acres, of palm plantations in Malaysia.

The Felda offering is the brightest spot in a gloomy market for new listings in Asia this year. Prior to the deal, total money raised by I.P.O.’s in Asia, excluding Japan, had declined 68 percent, to $13.9 billion, this year from the period a year earlier, the weakest year-to-date performance since 2009, according to data from Dealogic.

Felda’s success was bolstered by cornerstone investors who bought nearly 20 percent of the I.P.O., the person with knowledge of the deal said. Those included the Qatar investment authority; AIA; Fidelity; Value Partners, a Hong Kong-based funds management firm; and several Malaysian state-affiliated pension funds.

A stake of about 11 percent will go to state governments in Malaysia, while about 13 percent will be offered to foreign and domestic institutional investors. The remaining 19 percent stake is being offered to domestic investors, employees and affiliates of the company, the person said.

CIMB, Maybank and Morgan Stanley are the joint bookrunners for the Felda I.P.O., while the same three plus Deutsche Bank and JPMorgan Chase are the underwriters for the retail offering.

Marubeni of Japan to Buy Gavilon for $3.6 Billion

TOKYO — Marubeni, the Japanese trading house, said on Tuesday that it would buy the American grain merchant Gavilon Group for $3.6 billion, as it looks to ship American agricultural products to fast-growing Asian markets.

Buoyed by a strong yen, Japanese companies have been spending billions of dollars in recent years to secure access to resources like minerals and natural gas, activity that has helped fuel a global commodities boom.

The Gavilon acquisition would allow Marubeni to become a top global player in grains, handling over 55 million tons annually, according to a statement from the Japanese company. The deal for Gavilon would also give Tokyo-based Marubeni far greater control of supply and distribution in the United States, the world’s largest agricultural exporter.

"As part of a larger trading organization, Gavilon will be well-positioned to more efficiently connect supply with growing global demand,” Greg Heckman, president and chief executive of Gavilon, said in a statement.

Gavilon, based in Omaha, Neb., is the third-biggest grain distributor and trader in the United States, behind Archer Daniels Midland and Cargill. The company has been expanding its global presence, acquiring the DeBruce Companies in 2011 to bolster assets in the United States and Mexico. In a separate statement, Orascom Construction Industries of Egypt said it was selling its 16.8 percent stake in Gavilon to Marubeni for $605 million.

With Gavilon, Marubeni gains critical exposure to American agriculture market, securing supplies for its home market.

Japan is the largest grain importer in the world, relying on imports for 60 percent of its food in terms of calories.

Marubeni also hopes to position itself to supply growing demand in Asia, especially in China. As it continues to industrialize, China also faces shrinking farmland and other production constraints.

“We expect world grain trade volume to continue to grow on the back of robust demand in China and other emerging countries,” Marubeni said in a statement.