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Ibuka

Globetrotter Books First Ibuka Deal

Globetrotter Agency, a local tours and travel firm, has raised Sh21.4 million through the Nairobi Securities Exchange’s (NSE) incubation platform Ibuka.

The firm sold shares to investors for a stake that is yet to be determined, with the money realised being used as working capital in seeking preferential terms with hotels and airlines.

Globetrotter Agency will pay the deal arrangers Sh1.17 million for the exercise, according to the Kenya Association of Stockbrokers and Investment banks.

The capital raised is to be converted into ordinary shares via call option before March 21, 2021 or as agreed on a pre-determined conversion formula.

Initial projections indicate that the new investors would be granted a stake of between 8.4 per cent and 12.2 per cent of the four-year-old company.

The return on investment for the equity investors shall be 1.1 per cent per month with a future dividend yield of nine per cent.

Tina Patel, the chairperson of Globetrotter Agency, said the capital injection through the convertible shares was a safe means to grow the firm while offering investors an opportunity to unlock equity value upon redemption.

“We were greatly surprised at what our tremendous forward equity valuation could be based on parameters we meticulously learnt under Ibuka,” she said.

Emerging enterprises

Amish Gupta, the Ibuka Implementation Committee chair and an investment banker, said the new development raised hope for more capital raising initiatives through Ibuka.

“More and larger capital raise calls are expected in the coming weeks and months. Ibuka Programme is the new ecosystem that shall lead to volume tradings and listings for the public,” said Gupta.

The Ibuka Programme is designed to provide visibility and understating of the capital markets for emerging enterprises.

Visibility is the optimal degree to which a hostee of the programme such as Globetrotters may attract prominence and publicity through strategies offered by NSE.

RentCo East Africa joined the Ibuka Programme in September this year as the 17th firm.

MySpace and Tuskys are the other mentees on the incubation initiative.

 

As reported on The Standard October 9 2019

Globetrotter Set for NSE Incubation ahead of Listing

Tour and travel firm, Globetrotter Agency Limited, has been entered into the Nairobi bourse-listing incubation programme for nurturing into an investor-ready company ahead of actual listing early next year.

The incubation process, also called Ibuka in Kiswahili, takes between six to 12 months and involves improving financial, technical and other business support.

This is followed by the acceleration stage in which firms raise capital ahead of listing once the NSE, the Capital Markets Authority and the Kenya Association of Stockbrokers and Investment Banks, approve a firm’s status as fit for elevation.

Globetrotter’s chairlady Tina Patel said the company decided to go public to raise funds for expansion for the family-owned business as well as gain more visibility for faster growth.

“We launched operations four years ago and in 2017 realised a turnover of Sh142 million which we feel would have been higher if we had adequate funds to take up new opportunities arising from our operations,” she said.

The firm mainly deals in tour and travel bookings targeting corporate executives and high- net-worth individuals as well as walk-in clients.

Globetrotter is the second firm to be enlisted on the Ibuka programme after Jambo tea maker, APT Commodities Limited, came on board last February 1.

The Ibuka programme helps companies to streamline operations on bookkeeping, management structures, operations and company policies, among other business aspects, with the main aim of enhancing their corporate governance structures ahead of listing.

NSE chief executive Geoffrey Odundo said successful Small and Medium Enterprises(SMEs) shying away from listing on the Nairobi Securities Exchange (NSE) were denying themselves access to over Sh1.2 trillion in total that is available to fund their expansions.

Profitable Companies

The NSE boss said pensions, insurance, saccos and high-net-worth individuals, among other investors, have the cash but were looking for profitable local companies to invest in and needed assurance of a company’s adherence to ethical business that benefits people, the environment as well as makes profits for shareholders.

“We need to reduce reliance on bank loans and private equity funds that come with conditions, making it difficult for companies to realise their full potential.

The capital generated from the market has no conditions and timelines for repayments but creates shared value for both the company owners and the shareholders,” said Mr Odundo.

“Private equity partners expect returns for their investments with a risk of ceding part of your shareholding to them in case of default and bank loans are costly, with many conditions attached to them.

“Money via sale of shares has no conditions and returns expected come from the business where no one penalises you in case of a drop in profits,” he said.

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