Finance

A Swedish Tiger sets down its paw in South Africa

africasc_admin — Sat, 05 Sep 2009 00:10:00 -0500

The Swedish niche fashion label Tiger of Sweden earlier this year became the first Swedish clothing chain store to open a shop in South Africa.

The decision is daring, the company sets up shop ahead of H&M, the largest Swedish international clothing chain store. It is a David and Goliath contrast though, as Tiger’s sales is SEK 600 million while H&M has well over SEK 100 billion in sales.

The company has a colourful past. Started in 1901 Tiger of Sweden’s suites were cut out for bankers and the likes for almost 100 years. But after a complete make over in 1993 Tiger of to day is an almost avant-garde, youthful but elegant fashion label for both men and women. The first collection for females was released in 1996 and the company even started to sell jeans in 2000.

David Thunmarker, the 31-year-old CEO, explains in an interview with a fashion magazine that the company’s strength lies in offering a combination of solid craftsmanship and quality that gives the client a good fit.

The company’s line of cloths and accessories is sold in 21 countries. Sweden is the largest market by far, 35 %, followed by other Nordic countries. There is quite a mix of “mature, middle mature and new markets”.

Tiger’ hasn’t shied away from far away markets like Japan, Canada and now South Africa.

Rottneros strugges to finalise deal in South Africa

africasc_admin — Fri, 04 Sep 2009 23:32:00 -0500

Swedish pulp specialist Rottneros continues to struggle with its future direction and funding thereof. The company’s plans to move the Utansjö pulp factory to South Africa, first announced in 2007, has not yet managed to wrap up funding for the SEK 2.5 billion project where Rottneros is expected to become a minority shareholder.

The company did however announce earlier this year that the JV in South Africa, Pulp United, have received confirmation that it has been allotted enough electricity from the state owned electricity utility ESKOM to be able to go ahead. South Africa has power shortages due to a fast growing economy over the past ten seven years.

ESKOM, writes Rottneros, has provided a written undertaking to supply the total power of 50 MW applied for. The energy price will be based on the government-regulated tariff system.

Rottneros expected back in March that a contract would soon be drawn up with the South African project partners NCT Forestry Products as well as with Swedish State owned private equity fund Swedfund as well as with the South African development bank IDC.

The deal has however not yet been consummated and the planned building of the factory has not stared during the first half of this year as anticipated.

It is therefore not clear if and when the Utansjö Mill, which was closed a year ago, will finally be sold and transported to Pulp United. The reason to close Utansjö was that eucalyptus would replace aspen and that way, together with cheaper electricity would make CTMP production more viable and therefore competitive.

Rottneros states that it plans a SEK 200 million share issue but failed to clarify if this was needed for the South African project to go ahead.

Swedish Match choose to cash in instead of investing more in South Africa

africasc_admin — Tue, 01 Sep 2009 07:18:35 -0500

Swedish Match has become the first Swedish multinational company to disinvest from South Africa since 1994 by selling its assets in the country to Philip Morris in July. The purchase value, $ 222 million means that Swedish Match makes a nice net profit but it also means that the company leaves a fast growing emerging market to a global competitor in the Other Tobacco Segment (OTS).
It also appears as Swedish Match's global strategy goes up in smoke, as it seem to give up the ambition to become the world leader on high end tobacco, including pipe tobacco, cigars and Swedish style snuff.
Swedish Match became the market leader in South Africa when it purchased a local family owned empire less than ten years ago. It has put a fair amount of work into rationalising the factories and clean them up.
The reward was a solid market share in South Africa, an estimated 31 percent, despite that Swedish Match South Africa (SMSA) did not even sell cigarettes - a business the company has disinvested from in a conscious move to distance itself from the anti-tobacco lobby worldwide.
One reason for the company's disinvestment from South Africa may be that it showed very difficult to introduce its pet product, Swedish snuff in the country, which left the company with a portfolio of products that was local and sold at the low end of the market.
South Africa forbids tobacco marketing which did not exactly made it easier for the company's executives to find way's to get South Africans to stuff their upper lips with those Swedish goodies.
SMSA is the market leader in the South African pipe tobacco and snuff categories, which represent an estimated 31% of total tobacco consumption. In 2008, SMSA reported net revenues of ZAR 687 million. Its principal brands include Boxer, Best Blend and Taxi.
"This financially attractive acquisition represents an excellent strategic fit for our business in South Africa," said Jean-Claude Kunz, President of PMI`s Eastern Europe, Middle East & Africa Region. "We firmly believe that merging the two businesses will provide us with the talent, infrastructure and expertise to further build and grow our portfolio of strong brands in this important market."
Swedish Match says that the transaction is subject to approval by the South African regulatory authorities, including the country’s competition commission- and tribunal. These regulatory bodies are by no means any pushovers and the outcome should not be taken for granted. The process is expected to take until the end of 2009.

Commission to create African jobs

africasc_admin — Wed, 27 May 2009 08:00:00 -0500

JOHANNESBURG. The Africa Commission – launched by the Prime Minister of Denmark in 2008 ‘to help Africa benefit more from globalization’ - has delivered its final set of recommendations. The commission also presents a multi-faceted and ambitious job-creation plan for Africa’s youth.

The Commission is proposing a new consensus for international development cooperation with Africa. Focus should be directed towards private sector-led growth, which creates jobs. The Commission also decided to launch five initiatives aimed at creating job opportunities for Africa’s youth:

EAC wants SIDA's help on climate plan

africasc_admin — Fri, 15 May 2009 02:48:24 -0500

JOHANNESBURG. The Secretary General of the East African Community held talks with the Swedish International Development Cooperation Agency (SIDA) – calling on Sweden to support EAC’s Climate Change Master Plan, the EAC announced.

The Secretary General of the EAC, Ambassador Juma Mwapachu met a delegation from the SIDA led by the Assistant Director General Operations, Magnus Lindell, who called on him at his office in Arusha, Tanzania.

The Swedish government has engaged SIDA to prepare a new strategy for regional development cooperation in the Sub-Saharan Africa during the year 2009 and as part of this process high-level meetings are scheduled with the Regional Economic Communities, including the East African Community, the Southern Africa Development Community and the African Union.

Is Lundin dumping Sudan?

africasc_admin — Thu, 07 May 2009 03:49:14 -0500

JOHANNESBURG. Is Swedish Lundin Petroleum also pulling out of prospective oil-drilling in Sudan? The question begs to be asked after a partner in the investment there reportedly is pulling out. Also Lundin Petroleum’s own President earlier this year said the reason it was divesting other African assets was because the company’s oil-drilling in Sudan was unsuccessful.

International Petroleum Company of India (ONGC) is quitting prospective oil-drilling in Sudan, and writing off about $90 million in investments, according to news reports.

Foreign investors watch Zuma selects

africasc_admin — Tue, 05 May 2009 09:35:43 -0500

JOHANNESBURG. With the African National Congress' (ANC) Jacob Zuma to take office as South Africa’s new president on Saturday, in the wake of the country’s elections on April 22 – what’s in store for foreign investors, Nordic and Swedish companies here?

While Zuma is still deliberating his choices for parliament posts – the appointments are imminent.

One of the most important posts – from the foreign investor’s perspective - is the head of the Finance Ministry, currently held by respected Trevor Manuel, says Mikael Edholm, Senior Project Leader, at the Swedish Trade Council.

Lundin completes Ethiopia sale

africasc_admin — Thu, 30 Apr 2009 05:45:32 -0500

JOHANNESBURG. Swedish Lundin Petroleum AB has completed the sale of its wholly-owned subsidiaries, Lundin East Africa BV and Lundin Kenya BV, to Africa Oil Corp.

Lundin East Africa holds interests in and operatorship of production sharing contracts (PSCs) covering Blocks 2, 6, 7 and 8 in the Ogaden Basin region in the south of Ethiopia and covering the Adigala Area in northern Ethiopia.

Lundin Kenya holds an operated interest in the PSC for Block 10A and a non-operated interest in the PSC for Block 9 in the Anza Basin region in the northwest of the Republic of Kenya. Following the completion of this transaction, Lundin Petroleum no longer has any interests in Ethiopia or Kenya.

Africa Oil paid Lundin Petroleum about USD 23.7 million, which has been funded through a loan from Lundin Petroleum to Africa Oil maturing 31 December 2011 and bearing interest at USD six-month LIBOR plus 3 percent. This loan will be convertible into shares of Africa Oil on the basis of CAD 0.90 per share. The closing share price on 28 April 2009 was CAD 1.45.

Africa Oil is listed on the Toronto Stock Exchange Venture (Symbol: AOI) and has recently announced a private placement equity offering of up to CAD 35.5 million, the proceeds of which will be used to finance the ongoing operations of its portfolio of East African oil exploration projects.

Sida demands Aids support back

africasc_admin — Fri, 27 Mar 2009 06:56:02 -0500

JOHANNESBURG. Sida, The Swedish Development Agency, is demanding that an Aids organization in Southern Africa pay back hundreds of thousands of SEK in aid because the head of the organization dipped into the pot for private use.

Sub-Saharan Africa still growth area

africasc_admin — Thu, 26 Mar 2009 03:20:40 -0500

JOHANNESBURG. For a number of years, Sub-Saharan Africa has been a high-growth area attracting many Nordic investments, ranging from the household investors' retirement funds to higher-risk private investments in countries like Angola and Nigeria. With the waves of the global financial crisis waiting in the wings, what’s in store for Africa?, Africascan asks the Swedish Trade Council in Johannesburg.

”Recession, decreased export, that is happening here right now,” says Mikael Edholm, Senior Project Leader, at the Swedish Trade Council, at the Johannesburg office, which oversees the council’s activities in the Sub-Saharan region.

”We used to think that Sub-Saharan Africa was relatively independent of the other markets,” he says. But, ”the crisis that has affected the rest of the world is coming here – with a delay of about six to nine months.”