23 June 2008
Nairobi — Fresh details have emerged about the identity of Alcazar Capital Ltd - the Dubai-based private equity fund at the centre of a row in parliament caused by allegations by the chairman of the Public Accounts Committee, Dr Bonny Khalwale, that it improperly acquired shares of mobile company Safaricom Ltd during the latter's recent initial public offer.
The Dubai-based equity fund has been on the spot, with Dr Khalwale mounting a sustained campaign to have its role in the Safaricom IPO discussed by the 11-member watchdog committee he chairs.
Last week, he claimed the equity fund had purchased a disproportionate chunk of the Safaricom IPO and said it was involved in manipulating secondary trading of the shares at the Nairobi Stock Exchange.
The Safaricom IPO, the largest in Kenya's privatisation history, closed last month, kicking off in its wake a raging debate about the role of foreign private equity funds in the ownership of privatised companies.
But Dr Khalwale's claims in parliament are attracting public interest because they are being made against the backdrop of loud murmurs about the small sizes of share allocations to ordinary retail investors from the IPO - amid widely held suspicions that some of the foreign equity funds who participated in the IPO merely served as conduits for well-connected local investors to corner large share allocations.
Who exactly is Alcazar Capital Partners Ltd? It first came into the limelight in November 2007 during the opening of the technical bids for the sale of 51 per cent of the shares of Telkom Kenya, where it was one of the eight companies who put in bids.
As it turned out, Alcazar Capital was to drop out in the second stage, choosing instead to partner with France Telecom in the consortium that won the deal, having put in a bid of $390 million.
The Dubai-based fund paid 15 per cent of the amount, giving it an equivalent percentage in Orange East Africa, the company that assumed 51 per cent of Kenya's oldest telecommunications company.
What this implies is that Alcazar owns 7.65 per cent shares of Telkom Kenya.
Documents seen by The EastAfrican show that Alcazar Capital is related to Public Warehouse Company, a logistics company listed on the Kuwait Stock Exchange, trading under the brand name Agility.
The group's private equity business is conducted by an entity known as Alcazar Capital Partners Fund 1, a Cayman Islands partnership.
Initially, the investment in Orange East Africa was to be made by Alcazar Fund 1 through a new entity that was to be set up in Dubai under the name Alcazar Capital LLC, or Alcazar Dubai.
But it is understood that at the time the group was signing the shareholders agreement with Orange East Africa, it decided to use another existing group company by the name Agility GILL LLC.
As a result, Agility Dubai is the signatory of the Orange East Africa shareholders agreement and, therefore, the owner of the shares in Orange East Africa.
At the time of consummation of the Telkom Kenya deal in December last year, the government consented to this arrangement on the grounds that it made no difference to the ultimate ownership and control of the investment in Orange East Africa or the nature of the partnership in Orange East Africa and France Telecom.
Following the takeover of the management of Telkom Kenya, Orange East Africa appointed the CEO and five new directors out of a total of nine.
They are Chaboul Abou Jaoude of Dubai, the chairman and CEO, Michael Barre, Marc Barnard, Olivier Froissart and Bruno Bourgin. The managing director is Dominique Saint-Jean.
In March, the company wrote to the government requesting a loan of Ksh6.3 billion ($100 million) to be released in three tranches.
Last week, Dr Khalwale said the PAC should investigate the Safaricom initial public offer, claiming that Alcazar was allowed to buy its shares fraudulently.
He further claimed in the House that the company was launched in Kenya just a few weeks before the closure of the Safaricom IPO.
The MP said that said searches at the Immigration Department had revealed that the directors of Alcazar never visited Kenya, and the company is based in Dubai.
The government raised Ksh51 billion ($809.5 million) from the IPO, which attracted about 800,000 investors.
Be the first to Write a Comment!
Copyright © 2008 The East African. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.
AllAfrica aggregates and indexes content from over 125 African news organizations, plus more than 200 other sources, who are responsible for their own reporting and views. Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica.
