Why UK-listed Firm Atlas Is Eyeing Kenya

UK-listed oil, gas and mining services provider Atlas will later this month list 40 million shares at the Nairobi Securities Exchange (NSE), its management has said.

Atlas Logistics chief executive officer Carl Esprey. PHOTO | DIANA NGILA

Atlas Logistics chief executive officer Carl Esprey. PHOTO | DIANA NGILA

Atlas Logistics chief executive officer Carl Esprey told the Business Daily that the company is using Kenya as an operation base from where it plans to consolidate its regional business in the competitive oil and gas services.

If successful, Atlas will become the first upstream oil company to go public with the listing on the NSE’s Growth and Enterprise Market Segment (GEMS).

The listing by introduction has been preceded by an ongoing private placement. The 40 million shares earmarked for listing are equivalent to 10 per cent of the company’s share capital.

Atlas Logistics is also poised to make history as the first company to be cross-listed on the NSE and the London Stock Exchange (LSE) AIMS segment when it enters the Kenyan bourse later this month.

Mr Esprey reckons that Kenya is at the centre of Atlas’ operations and that the listing on the LSE in June 2013 was merely for purposes of raising capital.

“The listing itself is not for purposes of raising additional money, but rather to open up the company to Kenyan ownership. We are not a London company with a regional office in Kenya but rather a Kenyan company that is headquartered in Nairobi,” he said, adding that market forces should determine how much of the company is eventually owned by Kenyans.

Mr Esprey said Atlas was forced to go to London to raise capital –$30 million (Sh2.7 billion) because of low appetite for funding new startups in Kenya.

“We knew we could only list in Kenya upon delivering a profitable company. The idea was to raise money, find a target, and use that as a starting point for a regional support services function,” he said.

Atlas last month concluded the takeover of its subsidiary Ardan Risk and Support Services Limited that houses its entire operation.

The company plans to appoint at least two Kenyans to its board upon listing and is currently in discussions with a number of potential candidates, the management said.

Atlas’ balance sheet for the year ended June 2014 shows that it has total assets worth $19.3 million (Sh1.74 billion) and returned a $1.42 million (Sh128 million) loss for the year.

The income generated by its subsidiary, Ardan, stood at $20.6 million (Sh1.85 billion) in the six months to June 2014.

The company offers civil engineering and construction, workforce accommodation, procurement, warehousing, equipment transportation, fuel distribution, fleet maintenance, catering and laundry services, medical and risk management services. Atlas’ list of clients in Kenya includes Tullow Oil, which has been prospecting for oil in Turkana.

“We have invested $20 million so far, and are tentatively planning to invest another $80 million over the next three years as we move into regional operations,” said Mr Esprey.

He said Atlas will be looking to expand in eastern Africa through acquisition of existing companies as well as bidding for new jobs in sectors such as mining and geothermal development in Kenya, Ethiopia, Tanzania, Mozambique and Djibouti.

In Kenya, Atlas is working with the Geothermal Development Company (GDC) in the provision of civil engineering services.

On Wednesday, the company announced that an international oil company had awarded it the first support services contract in Mozambique.

“Each country will have own mix of services. In Kenya it will be geothermal and oil, in Ethiopia geothermal and fertiliser production while in Tanzania and Mozambique it will be in mining and oil,” said Mr Esprey.

More recently, however, there have been concerns over the possible effect that falling global prices could have on new investment in the nascent oil sector and its ultimate impact on service providers such as Atlas.

Security concerns have also arisen in some areas such as Turkana and Lamu where authorities are grappling with a combination of banditry and terrorism threats.

Mr Esprey said big companies see the investments as 15 to 20 year decisions that are little influenced by month- on- month oil price movement.

– Business Daily