Millenial Money

5 things people are talking about this week(January 15th 2018)

CORPORATE NEWS.

Softbank Considers IPO for Japan Wireless Unit, Seeking US $ 18 billion

SoftBank Group Corp (9984.T) said on Monday it was considering listing its Japanese wireless business, seeking to raise a reported $18 billion in a move that would accelerate the conglomerate’s transformation into one of the world’s biggest tech investors. A spin-off – potentially the biggest IPO by a Japanese company in nearly two decades – would also give the unit more autonomy as well as help investors with valuing the business and its parent.  SoftBank Group, which saw its shares climb 4 percent on the news, has a vast range of holdings including stakes in British chip designer ARM Holdings ARM.L, struggling U.S. wireless service provider Sprint Corp (S.N) as well as Alibaba Group Holding Ltd (BABA.N). It has with other investors also set up a $93 billion Vision Fund, which is investing in range of firms to capitalize on a tech future expected to be driven by artificial intelligence, robotics and interconnected devices. SoftBank Group plans to sell some 30 percent of SoftBank Corp, raising around 2 trillion yen ($18 billion) that would go towards investments in growth, such as buying into foreign information-technology companies, the Nikkei newspaper said without citing sources. It plans to seek approval from the Tokyo Stock Exchange as early as spring and aims to debut in Tokyo as well as overseas, possibly London, around autumn, the business daily said. SoftBank Group said in a statement that a listing of the business was one option for its capital strategy but that no such decision had been made.  A 2 trillion yen ($18 billion) IPO would be one of the biggest listings by a Japanese company, rivaling the 2.2 trillion yen 1986 offering of Nippon Telegraph and Telephone Corp (9432.T) as well as a 2.1 trillion yen listing by NTT DoCoMo Inc. (9437.T) a decade later.

Source, Reuters

VW to Invest US $ 3.3 b in Quest for U.S Relevance

VW AG, unveiling a version of the revamped Jetta sedan, said it’ll invest more than $3.3 billion in North America to help lift the brand out of irrelevance in the U.S. The spending through 2020 will mostly go toward new models, including two more planned sport utility vehicles designed to finally turn VW’s fortunes, after lingering at less than a 2 percent share in the world’s second-biggest car market. About $1.2 billion of spending will go to the U.S. directly, Volkswagen said Sunday in a statement ahead of the North American International Auto Show in Detroit. “At long last, we want to get it right,” Herbert Diess, head of the VW marque, told reporters after showing off the $18,545 vehicle that last year was the brand’s biggest seller in the U.S. “Last year, we’ve already significantly cut our losses” in North America, he said. The bread-and-butter sedan marks a pause in VW’s strategy of adding more popular SUVs to woo buyers, after its product line failed to crack the American market for years. Last year, the German carmaker started sales of a long-wheelbase version of the Tiguan and the large Atlas SUVs, pledging to more than double U.S. market share in the coming year to 5 percent in the years to come. It plans to break even on operating profit in North America by 2020.

Source, Bloomberg

Zimbabwe: Chat App Launches to Connect Zimbabweans in the World

Wangu, a new mobile chat app for Zimbabweans, has launched in the country. The unique platform is a social chat application that connects Zimbabweans in the country and millions of compatriots who are spread all over the world. Farai Mundangepfupfu, the creator and co-founder of Wangu, believes that the platform is poised to make a significant impact on the country’s digital front and open doors for many upcoming information technology startups locally in the region. Wangu (translates to “Mine” in the local Shona) was first initiated in 2014 with a vision to “establish an African benchmark in creating a Zimbabwean digital community with a mission to connect Zimbabweans who have similar interests and produce opportunities that benefit Zimbabweans,” according to Mundangepfupfu. Founded in Harare, Wangu has a data centre powered by government-owned TelOne. It has also teamed up with one of Zimbabwe’s telecommunication companies, NetOne, to deliver its impact. “Not only is Wangu focused on connecting Zimbabweans locally and internationally, Wangu ensures Zimbabwean brands reach Zimbabwean audiences in a familiar social environment,” said Mundangepfupfu. “Wangu also creates custom branded experiences for businesses in Zimbabwe, authentically connecting their brands with their markets, unlike global social media platforms that have become too big to effectively accommodate culturally unique markets,” he added.

Source, IT News Africa

Bundesbank to Include Yuan in Currency Reserves

Germany’s central bank has decided to include the Chinese yuan in its own currency reserves, Bundesbank board member Andreas Dombret said. “The renminbi is used increasingly as part of the central bank’s foreign exchange reserves for example the ECB included the RMB but also other European central banks did so,” Dombret said during a speech in Hong Kong Monday. “Clearly as the second largest economy in the world, policy initiatives in China are being felt around the world.” by the European Central Bank, of which the Bundesbank is a part. By including yuan in its own reserve pile, the German authority is pushing the currency further along the road to full internationalization that it started when it became a member of the International Monetary Fund’s currency basket in 2016. Dombret said he couldn’t comment on the amount that the Bundesbank would invest.

 Source, Bloomberg

 

POLICY AND MACRO ECONOMY.

Tunisia: Tunisians Rally Against Austerity Measures

Hundreds of Tunisians demonstrated Sunday in the capital, Tunis, demanding a repeal of painful austerity measures on the seventh anniversary of the revolt that sparked the Arab Spring. The cash-strapped government was unable to head off the rallies with its announcement late Saturday of an additional $70 million in aid for needy families. Tunisia’s main opposition parties have rejected the government’s overtures as insufficient. “Government actions are just painkillers and cannot deal with the situation,” Ahmed Nejib Chebbi, head of the opposition Democratic Movement, said in an interview on Sunday. “The Tunisian ship will sink” unless solutions are found, he said. Demonstrators mobilized in Tunis and other cities and towns in response to calls by the opposition Popular Front and the powerful UGTT labor union to peacefully “reclaim their revolution.” The rally in Tunis took place under heavy security after protests last week against spending cuts and new taxes contained in the 2018 budget turned violent. One protester has been killed and more than 700 have been arrested. The concessions announced Saturday were intended to cushion the impact of reforms the government has promised under its 2016 deal with the International Monetary Fund for a $2.9 billion loan.

 Source, Bloomberg

Kenya Takes up More than US $ 4.2 billion in Debt

Kenya has borrowed more than $4.2 billion in the first four months of the current financial year, with a huge chunk of it going into energy, water and education sectors. Treasury documents show that the larger part of this debt was picked up from eternal lenders, with $300 million sourced from domestic market. Local commercial banks recorded a drop in lending to government during this period, even though their lending increased by 40 per cent to $6.8 billion, compared with $4.3 billion in September 2016. The largest debt facility was a $750 million syndicated loan from Eastern and Southern Africa Trade and Development Bank (TDB) taken in second half of last year to pay one of the previous syndicated loan arrangers. A debt report submitted to parliament by Treasury shows that Kenya also took out a $521 million loan from Unicredit SPA, a private commercial bank headquartered in Italy for developing infrastructure at the Konza Techno City project. Its repayment will start in June 2020, in 20 instalments of $71.2 million each. China, through its Exim Bank, continues to be the country’s major financier, lending Nairobi $638.2 million to improve electricity transmission and a further $278.75 million to finance the underground electric power distribution network within Nairobi.

Source, The East African

Tanzania and Rwanda to Collaborate on the SGR

Tanzania and Rwanda have agreed to start the construction of the standard gauge railways (SGR) from Isaka to Kigali this year as part of efforts to connect Rwanda to the Dar es Salaam port. During a bilateral meeting between President John Magufuli and his Rwandan counterpart Paul Kagame at State House, Dar es Salaam, on Sunday, Magufuli said the 400-kilometre-long railways will be jointly financed by the two countries. “We want Foreign Ministers from the two countries to meet next week to start charting out the financing model. We the construction to start immediately because the feasibility studies and all other preparations are complete,” President Magufuli told journalists. “President Kagame and I want to unveil the foundation stone to usher the construction this year,” said President Magufuli. Tanzania has already started construction of the SGR, with the first phase consisting of a 205km electric railway line from the port city of Dar es Salaam to Morogoro in central Tanzania. The $1.2 billion line, being built by Turkish firm Yapi Merkezi and Portuguese firm Mota-Engil, is expected to be completed by October 2019. “Both President Magufuli and I, have said we are even ready to look for loans to speed up the construction,” Magufuli added.

Source, The East African

Togo: Energy Penetration Set to Increase

The newly approved Togo Energy Sector Support and Investment Project (TESSIP) has received a $35 million grant from the World Bank through the International Development Association (IDA) credit. The project is expected to help improve the operational performance of the power sector and increase access to electricity in the capital city, Lomé. Commenting on the development, Pierre Laporte, World Bank country director for Togo said: “TESSIP will help Togo in reaching its goals of increasing access to reliable and competitively priced electricity, which is essential for business development, job creation, income generation and international competitiveness. “Moreover, it will help create an environment likely to ensure the financial viability of the energy sector so that the private sector can engage in power generation and along the entire value chain.” Although Togo’s performance is improving in terms of energy access, the power system is still facing major issues on security of supply, reliability and efficiency. The main challenge of the sector is maintaining improved access and promoting national autonomy in supplying energy at reasonable cost, while diversifying sources, including in clean and renewable forms. The World Bank stated that TESSIP will finance the rehabilitation and reinforcement of the medium and low voltage systems in Lomé, and the expansion of the network with new connections. In addition, the new project will help reduce technical and commercial losses and promote improvements in the management of the national power utility, the Compagnie d’énergie électrique du Togo (CEET), while increasing its cash flow and financial performance by improving billing collection.

Source, ESI Africa

 

About 
Ekra Gituire is a corporate finance and investments professional based in Nairobi, Kenya. She has been in the investments sector for close to two years and is now working on her CFA qualification. Her other interests include writing and travelling.

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