Stanlib braced to crack Nigeria

GOING VIA GHANA: Ben Kodisang, MD of Stanlib Africa

Stanlib is on the verge of announcing an acquisition in Nigeria after years of trying to gain entry into Africa's biggest economy.

However, the transaction, which will be announced at the beginning of next year, is not likely to give the fund manager full ownership of the Nigerian business. Ben Kodisang, MD of Stanlib Africa, said for this reason he was likely to service the new acquisition in Nigeria out of Ghana, where Stanlib has full ownership of its business.

Ghana is effectively Stanlib's West African hub. Ghana is very similar to South Africa from a regulatory and cultural point of view, whereas South Africa and Nigeria tend to bump heads quite frequently.

Stanlib's entry into Nigeria, which has been on the company's radar for years, will give it exposure to more than 10 African countries.

Getting a foot in the door in the most populous country in Africa has proved difficult for several South African companies.

Among the issues is that Nigeria's price to earnings ratio is too high - meaning if a company invests there, it will take years to realise earnings.

"You ... cannot do that for the sake of saying, 'I planted a seed'. It is an expensive way of planting a seed," said Kodisang.

So, instead of starting their businesses from scratch, most South African corporations have been trying to acquire established entities - but not without some false starts .

FirstRand had to walk away from acquiring Sterling Bank after negotiations collapsed at the last minute. Tiger Brands is still reeling from the pain of its R954-million write-off related to certain assets of Dangote Flour Mills. Telkom settled its long-running dispute with Blue Label only two weeks ago - and is estimated to have lost almost R10-billion in its failed Nigerian venture.

Kodisang said the asset manager had also walked away from deals because the pricing was wrong.

A former MD of Old Mutual Property and ex-president of the South African Property Owners Association, Kodisang spoke of being interested, too, in Lusophone and Francophone Africa. A ccording to the International Monetary Fund, seven of the 10 fastest growing economies in the next five years will be in Africa. Two of these are Portuguese-speaking Angola and Mozambique.

Stanlib's parent company Liberty Holdings' new strategy will prioritise growth in fast- growing and large markets in Africa, such as Nigeria and Kenya.

Liberty said other growth markets on the continent had been identified and future expansion plans would include countries where Standard Bank had a presence.