Logistics firm set for Sh900m expansion

Kenyan logistics firm, Atlas Development, plans to spend Sh916 million ($10 million) in the expansion of its business across west and north Africa.

Atlas Development chief executive officer, Mr Carl Esprey, said the aim is to increase profit margins through its business in Kenya and new acquisitions.

“Opportunities to add services are being sought primarily via acquisition and a number of complementary opportunities are currently being evaluated that would provide additional revenue,” said Mr Esprey.

The firm, whose focus is mining, oil and gas industry, is eyeing robust growth having successfully expanded from Kenya and Ethiopia into Mozambique, Tanzania and Djibouti.

At the moment, Atlas is preparing to take its staff to north Africa after it won a contract with an oil and gas company in the region. The company is set to provide engineering, security and risk advisory in western Sahara.

“We operate across a number of sectors, oil and gas, mining, geothermal and infrastructure and I believe Atlas Development is ideally positioned to implement consolidation in the sector and region, targeting long-term visible revenues and stable margins,” said Mr Esprey last week.

STRONG HISTORY

Atlas Development, formerly known as Africa Oilfields Logistics Company,  is listed on the Nairobi Securities Exchange and the London Stock Exchange.  The cross-listing makes Atlas a very attractive counter to both local and international investors.

Last year, Atlas started the construction of a Sh180 million ($2 million) logistics centre in oil-rich Lokichar, in Turkana County.

The centre, based in an oil extraction region, would help companies and the government operate more efficiently across Turkana basin.

In the past year, Atlas has invested about Sh1.4 billion ($15 million) in Kenya and it plans to pump more than Sh4.5 billion ($ 50 million) in the region over the next five years.

Atlas Development first entered  Kenya through the acquisition of a 49 per cent stake in Ardan Risk and Support Services for $4 million (about Sh356 million) in August 2013.

Ardan Risk and Support Services had been operating in Kenya since 2008, servicing big explorers — Tullow Oil and Africa Oil — which have a strong history and success rate in drilling.

African Oilfield Logistics bought in October the remaining 51 per cent stake in Ardan for an undisclosed amount, and the shareholders later agreed to rebrand to Atlas and then list on the Nairobi bourse.

Atlas says it chose to have a base in Kenya because the country is the business centre of East Africa.

“East Africa is one of the fastest growing regions in the world.

Some estimate that there is up to $68 billion (about Sh6 trillion) worth of projects under construction in the region ranging from civil engineering and infrastructure to resource development,” said Mr Esprey.

COMPETITIVE FORCES

Currently, the company has 1,000 employees, 700 of whom work in Kenya. Out of these, 670 are Kenyans, with four holding managerial positions. The rest of its workforce is spread in Ethiopia, Djibouti, Mozambique and Tanzania.

Companies have been trooping into the country confident that the oil, gas and mining industries bear handsome returns, although exploration is at the early stages.

Atlas expects competitors to enter into the profitable business but it notes that its listing on the Nairobi bourse gives it a head start.

“Any world-class industry will always be subject to competitive forces. We believe our first mover advantage coupled with our commitment to international standards provide a key differentiator for us,” said the CEO.

Other local companies involved in exploration are TransCentury and KK Securities, which have benefited from servicing oil and gas firms.

TransCentury constructs access roads and other infrastructure for Tullow Oil through its subsidiary, Civicon, while KK Securities provides personnel.