BEING A PRESENTATION BY REGIONAL SEALINK

Report
THE NEED FOR A DEDICATED SEALINK PROJECT FOR WEST AFRICA - AN
INVESTMENT OPPORTUNITY ( A MODIFIED INVESTMENT TEASER – FBN CAPITAL)
BEING A PRESENTATION BY REGIONAL SEALINK PROJECT
AT THE BORDELESS CONFERENCE
TH
26 – 28TH FEBRUARY 2014 LAGOS, NEGERIA
Overview of the Sealink Project
 Sealink Promotional Company Limited (“Sealink”) was formed in 2011 to
promote the establishment of a regional shipping line in West and Central
Africa
 The main objective of Sealink is to provide maritime inter-connections for the
West and Central African regions
 The Project is being promoted by NEXIM, FEWACCI and Transimex
 The Project will be entirely private-sector driven, but supported by the public
sector
 Port authorities and organisations across both regions have expressed
support for the Project
2
West and Central Africa is a massive economic bloc in Africa and
the World….
 Population of over 440 million people,
close to half of Africa’s population
 GDP of US$619 billion in 2012,
comparable to the economies of
Switzerland, Saudi Arabia and Sweden
 WCA is one of the fastest growing
regions in Africa, recording ~6% growth
since 2011
 The region consist of 25 countries,
including 6 oil exporters
 Land area of 12.6m square km, larger
than the landmass of United States
3
The region generates a large amount of trade and container traffic..
 West and Central Africa combined
generates the second largest amount
of regional trade in Sub-Saharan Africa
 However, trade is largely with the West;
intra-regional trade is only c.10% of
total
8,910
1,996
382
Export within the
regional blocks
US$’million
14,173
Source: IMF, Direction of Trade Statistics
 Trade within WCA is mostly by road,
only about 10% by sea
 About 3 million containers moved in
West Africa in 2011, with significant
upside potential
 Lack of adequate sea transport service
is the greatest barrier to free
interregional trade in the region
 Harnessing the maritime transport
opportunity in the region is expected to
drive massive growth in trade
4
Overview of Some Trade within Africa
Exports to the Rest of Africa
Imports from the Rest of Africa
Value USD’m
Country
Value USD’m
12,097
South Africa
7,060
Nigeria
7,599
Zambia
3,319
Cote D’Ivoire
3,663
Ghana
3,261
Egypt
2,897
Zimbabwe
2,860
Kenya
1,954
Cote D’Ivoire
2,564
Angola
1,803
Nigeria
2,404
Algeria
1,382
DRC
2,157
Zambia
1,369
Kenya
1,934
DRC
1,221
Mali
1,757
Morocco
1,060
Morocco
1,605
Country
South Africa
Top 10 Intra-African traders in 2010, IMF
West and Central African countries are in bold
5
SUMMARY OF SOME WORLD INTRA-REGIONAL TRADE..
IMPORT
EXPORT
AFRICA
9.6
8.7
DEVELOPING AMERICA
20.9
18.5
DEVELOPING ASIA
48.1
45.5
DEVELOPED AMERICA
23.3
39.8
DEVELOPED EUROPE
68.1
71.4
SOURCE: UNCTAD, 2008c
6
How cargoes currently move in WCA…
By Air
• Fast, safe, secure and reliable
• Very expensive and unaffordable – only 10% of Africans travel by air
• Limited capacity for cargo – there are limited dedicated air cargo services
By road
• Most popular with Africans because of affordability and lack of alternatives
• Attractive to African traders who prefer to personnaly travel with cargo
• Poor road network and high incidence of robbery and accidents
• Substantial cost and delay due to custom checks and tariifs
Potential opportunity for
Sealink to capture the
pent up demand for fast,
Po
reliable, safe, cheap and
barrier-free means to
move people and goods
By Sea
• Dominated by feeder services from global players
• Intra-regional cargo are transhipped to the closest hubs before being
returned to the destination, thus prologing cargo journey e.g. shipping a car
from Japan to Abidjan costs US$ 1,500, while shipping that same vehicle
from Addis Ababa to Abidjan costs US$ 5,000.
7
West and Central Africa Sea Trade – Current state assessment
 Africa has the lowest intra-continental trade in the world
 Transport sector remains underdeveloped relative to other developing
countries
 Very low participation in global seaborne trade – trade is largely by road and
subjected to delays due to frequent road blocks and border checks as well as
poor road infrastructure
 Slow turnaround at West and Central African sea ports
 High tariff and port charges are not commensurate with the poor services
offered
 Very few old ships plying the coast; high risk and low safety
8
West and Central African ports are predominantly small sized…
 Large number of small ports,
with capacity of less than 1
million TEUs resulting in deep
capacity shortage in West and
Central Africa
 In spite of these challenges,
Africa’s
inland
waterways
present an excellent opportunity
to connect cities and countries
 Africa has 5 major navigable
rivers and 3 regional lakes
which are currently significantly
underutilised
9
NUMBER OF SHIPS AROUND THE CONTINENT
(SAMSA 2013 Presentation excerpts)
http://www.worldportsource.com/ports/S
TP.php
Proposed coastal routes – still indicative
Route 1
Banjul
(Gambia)
Bissau
(Guinea)
Conakry
(Guinea)
 Multipurpose - Passengers and cargo
 Up to 350 passenger capacity
Dakar
(Senegal)
 Up to 20 containers, 35 cars and 10 trucks
capacity
Freetown
(Sierra Leone)
 Up to 5 round voyages per month
Banjul
(Gambia)
Bissau
(Guinea)
Conakry
(Guinea)
Selection of routes are based on existing demand, availability of shipping service and adequacy of berthing facilities –
more ports to be added as events unfold
12
Proposed coastal routes – still indicative
Route 2
Calabar
(Nigeria)
Douala
(Cameroun)
 Multipurpose - Passengers and
cargo
Cotonou
(Benin)
 Up to 500 passenger capacity
 Up to 20 containers, 35 cars and
10 trucks capacity
Libreville
(Congo)
 Up to 4 round voyages per month
Calabar
(Nigeria)
Douala
(Cameroun)
Selection of routes are based on existing demand, availability of shipping service and adequacy of berthing facilities –
more ports to be added as events unfold
13
Proposed coastal routes – still indicative
Route 3
Conakry
(Guinea)
Dakar (Senegal)
Monrovia
(Liberia)
Abidjan
Cote
d’Ivore
Tema
(Ghana)
Lome
(Togo)
 Cargo only
 Up to 40 containers and 40 cars
Lagos
Douala
(Nigeria) (Cameroun
Libreville
(Congo)
 1 round voyage per month
Conakry
Guinea
Monrovia
(Liberia)
ABIDJAN
Cote
d’Ivoire
Tema
(Ghana)
Lome
(Togo)
Lagos
Douala
(Nigeria) (Cameroun)
Selection of routes are based on existing demand, availability of shipping service and adequacy of berthing facilities –
more ports to be added as events unfold
14
Proposed Modus operandi
 Transnational company model – The Company will be owned by investors from
all member countries, headquartered in Nigeria with representative offices across
West and Central Africa
 Private sector driven: The Sealink Project will be entirely private sector driven,
though with support from the national and supranational bodies
 Technical partnership: The operational and technical aspect of the business will
be managed by an internationally recognised ship operator. Some potential
technical partners are currently being considered including Atlantik Shipping
(Turkey), ANEK Lines Group (Greece) and PSB & Co (Greece)
 Local content: The Project will ensure adequate representation of nationals from
all countries being considered, especially in running the local operations in the
various jurisdictions
 Priority berthing: Arrangement is being made for priority berthing for Sealink
ships at all ports of call. This is to avoid delays in loading and unloading of cargoes
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Roll –out plan
 Service to commence in 2014
Route 3
 To raise between 60 to 100 million
US Dollars in a ratio of 60% and 40%
in equity and debt respectively
 To commence service with 3-5
ships; one/two ship(s) per proposed
route – dependent on traffic / volume
 Add another ship for another route by
Year 3
16
Investments highlights – Unique investment opportunity
1. A sector poised for growth: Introducing a direct coastal link between the
two regions is expected to significantly increase regional trade activities for
both cargo and passengers. This would have a multiplier effect on rate of
economic growth in these regions thus providing adequate returns for
investors.
2. National and supranational support: The Sealink Project is a private sector
initiative which has gained the full support of various supranational bodies
across West and Central Africa including ECOWAS Commission, FEWACCI,
and the Maritime Organisation of Central Africa (MOWCA).
3. Diversification opportunity: The investment provides an opportunity to
enable investors without prior exposure to the maritime sector or to the West
and Central Africa region to diversify their portfolio. The investment offers
unique features and opportunities as it would grow with other sectors
including oil and gas, agriculture and mining which are currently witnessing
exponential growth in West and Central Africa.
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Unique investment opportunity (cont’d)
4. Large capacity for passengers and cargos: Sealink will be offering the
combination of passengers and cargo services, which is an attractive
proposition to women traders in West and Central Africa who are more
comfortable accompanying their cargoes
5. Strong economic fundamentals: The Sealink Project will enjoy a near
monopoly status with its connection of the West and Central African ports
which enhances the economics of the project. Sealink’s unique proposition
will ensures that the company is able to charge premium fare owing to its
offering of safe, secure, modern fleet with modern communication equipment
that guarantee passenger safety onboard
6. Technical expertise and experienced management: In addition to the
proposed management contract with an experienced management team,
Sealink would also co-opt an internationally recognized technical partner to
manage the routing, maintenance and other technical matters related to the
business
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Financial highlights
 Robust margins
 Attractive IRR
 Stable cash flows
 Steady dividends
Profitability ratios
Turnover growth
Gross margin
Opex to turnover
EBITDA margin
EBIT margin
PBT margin
PAT margin
Internal rate of return
NPV
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
n/a
8%
39%
7%
7%
19%
6%
37%
39%
51%
52%
57%
62%
63%
61%
60%
58%
33%
32%
33%
32%
33%
29%
32%
29%
31%
30%
5%
8%
18%
20%
24%
33%
31%
33%
29%
28%
-1%
2%
6%
9%
10%
22%
20%
22%
21%
20%
-1%
2%
6%
9%
10%
22%
20%
22%
21%
20%
-1%
2%
6%
9%
10%
18%
17%
18%
18%
17%
29%
$30,796,441
19
Largely mitigated risks….
Risk
Regulatory risk
Mitigating factors
- Sealink is being sponsored by quasi- government bodies
- Technical committee will liaise with regulatory authorities
- Concessions are being negotiated with regulatory authorities
- The project has received the support of major maritime authorities in West and
Central Africa including MOWCA
Market risk
- Extensive awareness campaign will be carried out
- Lobby for regulations limiting the movement of cargoes in excess of certain tonnage
by road
Operational risk
- Key managers will be recruited by AMSCO
- Experience technical partners will manage the Company’s operations
- Adequate insurance policies will be undertaken by Sealink
Currency risk
- Adequate hedging strategies to be employed to manage currency risk
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Corporate governance
 Sealink’s overall strategic management and
Route
direction will be the responsibility of its Board of
Directors, which will be composed of
representatives of institutional and individual
investors as well as the sponsors
 In order to assist the Board to navigate
complex regulatory terrain in shipping industry,
a technical committee, whose members include
captains of industry from the West and Central
African regions, has been formed to liaise
between the Company’s Board and the various
regulators
 Key members of the Company’s management
team will be recruited by the African
Management Services Company (AMSCO), an
arm of the United Nations
3
Sealink corporate governance framework
Board of Directors
Technical
Committee
Managing Director
Key Divisional Heads – Functional and
Geographical
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UP DATE
•
•
•
•
•
INFO MEMO TO BE FINALIZED WHEN ADVISORY
COMMITTEE IN PLACE
VIDEO PRODUCED IN FRENCH
OFFER OPENS IN MARCH WITH INCREASE OF CAPITAL
ROAD SHOW CENTRAL AFRICA SCHEDULED
MARCH20TH, 2014-DOUALA CAMEROON
ROAD SHOW WEST AFRICA IN APRIL 2014- ABIDJAN
(CI)
23

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