UK firm in Sh3bn buyout of Kenyan oil logistics dealer

A London Stock Exchange-listed company has filed a notice for the acquisition of a Kenyan firm in a transaction valued at Sh3.6 billion.

The British firm, Anglo African Agriculture (AAA), is set to acquire a Kenyan marine logistics company, Comarco Group.

Comarco operates a 16.45-acre private port facility in Mombasa, providing warehousing, transportation and logistics services mainly to oil and gas companies working in the Eastern Africa region.

In regulatory filings made yesterday, AAA said the deal will see its shareholders take up no more than five percent in the new combined entity, which effectively means that Comarco shareholders will end up holding a majority stake in the entity in what is known as a reverse takeover.

The straight equity buyout is valued at Sh3 billion ($30 million), with AAA also set to advance Comarco Sh600 million ($6 million) to settle existing debts and pay capital gains tax.

Comarco‘s existing owners will be issued with new shares valued at 0.5 pence (Sh0.64) each in the deal.

“Large-scale infrastructure improvements (such as the SGR) only add to Mombasa’s strategic importance in the region,” said AAA Chairman David Lenigas in a statement.

Comarco’s port facility will also host the 11,000 metric tonne LPG import and storage facility that is being built by international gas firm, Petredec Group, and local firm Rift Gas.

One of its main lines of business is the provision of a supply base for multinational oil firms carrying out offshore drilling projects, including Apache, Anadarko and BG Group.

In addition to Kenya, Comarco has been operating in Tanzania, Somalia, Mozambique, South Africa, Comoros, Reunion Island and Mauritius.

“We have further been encouraged by the recent oil and gas transactional activity in the region and the ongoing liquefied natural gas focused work in Mozambique, all of which bode well for Comarco Group’s marine logistics focused business,” said AAA in the statement.

The combined entity that will be listed at the LSE, riding on AAA’s listed status, will change its name to Agulhas Group Africa plc. Comarco CEO Simon Phillips will take up the CEO role in Agulhas.

AAA added that the new entity will also look to raise Sh1.5 billion ($15 million) through an equity issue to fund working capital and growth.

In November 2018, AAA had advanced Comarco a two-year loan of Sh101 million ($1 million) to be used for debt repayment and working capital.

The LSE filings show that Comarco held total assets worth Sh7.76 billion ($76.7 million) in its financial year ending September 2018.

Its equity (total assets minus total liabilities) stood at Sh3.6 billion, meaning that Anglo African is pricing the buyout at book value.

The firm’s revenue for the year stood at Sh750 million ($7.4 million), with a net profit of Sh90.3 million ($891,000).

Comarco was established in 1971 as Diving Contractors Limited in Mombasa, which offered commercial diving services at the port. The firm expanded over the years, adding the regional logistics and storage business after bagging contracts in the oil and gas sector from Italian oil firm Agip and US firm Esso. The group now owns five subsidiaries; Consolidated Marine Contractors, Comarco Properties, Kenya Marine Contractors, Touchwood Investments and Comarco Supply Base.