CIMERWA cement is Rwanda’s 10th listing

CIMERWA, the only integrated cement producer in Rwanda, is also helping build the capital market by providing the tenth listing on the Rwanda Stock Exchange. It listed by introduction on 3 August, without a public share offer, however, the shareholders of 49% of its 703.2m shares will make them available for buying by the public to form a “free float”.

The shares are offered at RWF120 (12.67 US cents) each, according to an article on Rwanda’s KT Press website, giving a total value (market capitalization) of RWF84.4bn ($87.3m). The shares offered for buyers and traders are owned by:

  • AGDF Corporate Trust on behalf of the Government of Rwanda (16% of the total)
  • Rwanda Social Security Board (RSSB – 20%)
  • Rwanda Investment Group (RIG – 11%)
  • Sonarwa Holdings Ltd.

CIMERWA is also creating an employee stock ownership plan (ESOP).

CIMERWA is 51% owned by South Africa’s Pretoria Portland Cement. It has a production plant in Bugarama, in south-western Rwanda, with capacity to produce 600,000 tonnes per year but currently producing at up to 80% of capacity (480,000 tonnes). Prospects are good as Government of Rwanda steps up construction, including plans by the Ministry of Education to build 22,500 school classrooms by September, in a programme partly financed by the World Bank.

in the year to September 2019 it had revenues of $64.4m and net income of $3.5m, according to the prospectus. It has enjoyed revenue growth of 40% a year and has been profitable since 2016 with 31% EBITDA margin (a measure of cash generated by operations compared to turnover) and 64% gross profit growth.

Albert Sigei, CIMERWA CEO  since May, said: “We have been part and parcel of Rwanda’s growth story with contribution to the society on many fronts. This will be an opportunity for investors to gain exposure into the attractive cement industry with solid growth potential.”

CIMERWA was established in 1984 as Ciments dur Rwanda as a government parastatal in a cooperation project with China. It was privatized in 2007 with RSSB taking 37%, Government 30% and RIG 21% and other investors the rest. In April 2020 it became a private company and PPC International Holdings had 51%.

CIMERWA chairman Regis Rugemanshuro added: “This transaction will create opportunities for the private investors, and the government will become a neutral player in a sector whose potential is yet to be fully exploited. There could not be a better avenue of achieving this objective than listing at the RSE. With Rwanda having about 57kg per capita cement consumption annually, we have just but only scratched the surface on the huge long-term potential in the cement industry.”

Clare Akamanzi, chief executive of Rwanda Development Board, said: “If you look at Rwanda’s economic recovery plan, we expect CIMERWA to play a big role both in terms of building the economy through the indirect contribution but also directly contributing to the rebuilding and reconstruction of our economy post Covid-19.”

Demand for cement is estimated at 700,000 tonnes a year and there is considerable urbanisation as well as other big government projects such as Bugesera International Airport, model villages and transport projects. Although Rwanda’s economy is only expected to grow by 2% in 2020, due to the health pandemic, stronger growth of 6.3% is forecast for 2021 and 8% for 2022.

It is the fifth local company on the Rwanda bourse. South African health investor RH Bophelo was the ninth listing on 1 June.

However, trading in shares on the exchange for the first six months of 2020 was just under $400,000, down 85% compared to $2.6m in the six months to June 2019, according to an article in Rwanda’s New Times, particularly as trading slowed dramatically once the health crisis hit in March. Trading in bonds more than doubled, from $6.2m to $12.7m.

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