Archive for the 'Manufacturing' Category

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.

Private Equity Africa ranks top 10 deals in 2014

Leading website and magazine Private Equity Africa lists the top 10 Africa private equity deals from 2014. They use data from Preqin.

1. Helios Investment Partners – Helios Towers Africa – $630m
This is the second year that Helios Investment Partners took the top slot when it led a consortium to inject $630m of growth capital into telecommunications service provider Helios Towers Africa (HTA) in July. It was US-based private equity investor Providence Equity Partners’ first deal in Africa. The IFC’s African, Latin American and Caribbean Fund also invested for the first time in HTA. Existing investors Quantum Strategic Partners, Albright Capital Management and RIT Capital Partners also backed the tranche. (Helios’ big deal in 2013 was to partner with BTG Pactual and Indorama to bring $1.5bn investment into Nigeria-based oil and gas exploration company, Petrobras Africa.)

2. Emerging Capital Partners leads consortium – IHS – $490m
Emerging Capital Partners (ECP) led the consortium that invested $490m in Nigeria-based telecommunications towers company IHS. The latest 2014 funding round brought in Goldman Sachs was a new investor and the IFC Global Infrastructure Fund and African Infrastructure Investment Managers (AIIM) were also in. IHS is part-owned by Investec Asset Management, the first private equity investor to fund its expansion. Other existing investors are ECP, Wendel, sovereign wealth fund Korea Investment Corporation (KIC) and the Netherlands Development Finance Company (FMO). KIC first backed IHS when it joined Investec and ECP in a $1bn financing round in 2013. Standard Chartered Bank contributed $70m in senior debt specifically set apart to finance expansion into Zambia as part of the capital package

3. Abraaj – Liberty Star – confidential
South Africa’s Liberty Star Consumer Holdings (Libstar) manufacture and distributes food. It sells private-label products to retailers, own-brand products and third-party packaging and ingredients to the food industry. Abraaj acquired a majority stake in the company through a secondary buyout from Metier, Old Mutual Private Equity, Development Partners International and Lereko – which have all exited the company. Libstar management took a minority stake in the buyout. The deal value is confidential.

4. Atlas Merchant Capital – Union Bank of Nigeria – $270m
The investment was channelled through Atlas Mara Co-Nvest, its $325m investment vehicle listed on the London Stock Exchange. Atlas Merchant previously held 9.05% in Union Bank, inherited when it took over ADC African Development Corporation in early 2014. It committed the capital by exercising an option to acquire 20.89% of the financial services company.

5. IFC-Asset Management Compan & Temasek – Seven Energy – $255m
More sovereign wealth fund action in April, when Singapore’s Temasek partners with IFC Asset Management Company (IFC-AMC) to invest $255m in Nigeria’s Seven Energy, an oil and gas exploration and production company. Temasek contributed $150m for a 25% stake. Previous investors in Seven Energy include Actis, Investec Asset Management, Africa Finance Corporation, Capital International Private Equity and Standard Chartered Private Equity. Seven Energy’s $600m capital-raising round included $335m in debt of which the IFC African, Latin American, and Caribbean Fund contributed $30m.

6. Kohlberg Kravis Roberts – Afriflora – $200m
KKR’s first deal for Africa, in July, was approximately $200m in Afriflora, an Ethiopia-focused agriculture production company that cultivates, produces and sells roses based on Fairtrade standards. The company operates as Sher Ethiopia. The investment is part of KKR’s $6.2bn European Fund III.

7. Carlyle – Tiger Automotive – confidential
It was fast-moving Carlyle’s third deal of the year from its maiden $698m Africa-focused fund, closed earlier in 2014. It bought South Africa’s vehicle accessories distributor Tiger Automotive (TiAuto) in November. It partnered with Old Mutual Private Equity (OMPE) to buy the company from Ethos Private Equity. TiAuto operates through 7 divisions, including Tiger Wheel & Tyre, Tyres & More, YSA and Treads Unlimited and primarily distributes branded tyres such as Continental, Yokohama, Michelin, Pirelli, Goodyear, Achilles, GT Radial and Hankook.

8. Stanchart – Sphinx Glass – $180m
Standard Chartered Private Equity backed a deal and partnered with Saudi Arabia’s Construction Products Holding to buy Egypt-based industrial production company Sphinx Glass from Qalaa Holdings (formerly Citadel Capital) in May for $180m. Sphinx Glass operates under license from US-based PPG Industries, a specialist float glass technology provider. Qalaa sold it as part of a strategy to shed non-core assets.

9. Rocket & Kinnevik – Jumia – $148m
Hotshot tech investors Rocket Internet and Kinnevik put another $148m into their consumer shopping platform Jumia in December. US-based private equity investor Summit Partners owns part of Jumia and JP Morgan Asset Management has also previously invested. Jumia owns consumer shopping websites offering branded consumer products as Internet shopping starts to take Africa by storm. Rocket Internet has previously backed Groupon, eBay, Facebook, LinkedIn and Zynga. Watch this space.

10. Carlyle Diamond Bank – $147m
Carlyle’s fourth deal was into Nigeria-based financial services company Diamond Bank, which is a Tier II bank, covering corporate, retail and public sector banking with subsidiaries offering custodian, mortgage, securities and insurance products and services. Kunoch Holdings, the Africa-focused investment platform of entrepreneur and investor Pascal Dozie, raised its holding in the bank from 5.86% to 20.65% in August, buying the additional stake from Actis and CDC Group.

*Rankings based on Preqin data and Private Equity Africa research.

Ethiopia lures manufacturing with cheap power and labour costs a tenth of China’s

Low-cost manufacturing is shifting from China to Ethiopia, lured by cheap electricity and labour costs that are a tenth of China’s. Ethiopia is building a name for producing clothes, shoes and other basic goods, while also tackling transport bottlenecks. Trade and Industry minister Tadesse Haile says he wants Ethiopia to export $1.5 billion of textiles a year in 5 years, from $100 million now.
Bureaucracy and slow and poor transport links means that costs are not as low as they should be, according to an excellent report by Reuters (see “Garment-making finds new low-cost home in Ethiopia”). Ongoing power cuts and sometimes poor telecommunications, both still state monopolies, could be added to the list.

Credit: Ethiopian Radio and Television Agency (ERTA)

Credit: Ethiopian Radio and Television Agency (ERTA)

Credit: China Daily

Credit: China Daily

Reuters journalist Aaron Maasho points to Government and foreign investors building factory zones. Companies from China, India, Turkey and the Gulf are setting up manufacturing. He quotes Nara Zhou, spokeswoman for Huajian Group, a Chinese company that makes over 300,000 pairs of boots and sandals a month for retailers such as Guess from a factory near the capital: “We have to move because of manufacturing’s development in China, due to the high increase in wages and in raw materials.. Ethiopia enjoys stability, the Government is eager to industrialize and there is also the low labour cost here – a tenth compared to China.”
Ethiopia is one of Africa’s – and the world’s – fastest-growing economies. Despite the government’s socialist roots, there is no minimum wage, letting firms such as Huajian pay salaries of $50-$70 a month – still higher than the average per capita income. Desta, one of 7,500 employees at Ayka Addis Textile and Investment Group, a Turkish-owned factory 20 kilometres west of Addis Abeba, told Maasho:”Almost every young person in this locality now works here…We all struggled to make ends meet beforehand. We can now afford proper healthcare or sending a child to school.”
Ethiopia’s electricity grid offers electricity at US$0.05 per kilowatt hour, compared with $0.24 cents in neighbouring Kenya and the country is investing heavily in hydropower generation. According to Minister Tadesse: “The availability of power and the cost is cheaper than any other country in the world. We are providing power, land and labour all very cheaply.” Kenya and Uganda are also chasing investment into textiles but cannot compete on input costs against Ethiopia, where wages are 60% lower than the regional average, according to Jaswinder Bedi, Kenya-based chairman of the 27-nation African Cotton and Textile Industries Federation: “Ethiopia is a new player…They are growing and they are growing rapidly.”
The Government projects gross domestic product (GDP) growth at 11% a year, and even the 8.5% forecast for the current year 2014/5 by the International Monetary Fund is impressive. The Government is keen to attract labour-intensive investment and jobs for the 90m Ethiopians – Africa’s second biggest population – with another 2-3m born every year and population growth forecast to continue over 2% a year until 2030.
The Government says it has introduced incentives such as tax holidays and subsidized loans to investors with interest rates as low as 8%. Cheap loans are attractive as inflation is often considerably higher (it has been up to 60%), and the currency has seen steady and managed devaluation, boosting exporters and manufacturers who substitute imports.
Transport remains a bottleneck, it takes on average 44 days to import or export a container, compared to 26 for Rwanda. Amare Teklemariam, chief executive of Ayka Addis, told Reuters: “Our logistics costs are second to inputs. It affects the competitiveness of the company”. Ethiopia is 141 on a 2013 World Bank trade logistics index.
The Government says it investing an amount equivalent to two thirds of GDP into new infrastructure every year, expanding the road network to 136,000 km by next year, from just 50,000 km in 2010 and it is already working on grand plans to build 5,000 km of railway lines by 2020 from less than 800 km at the moment.
For more background see the excellent Reuters report here.

Churchill Avenue, Addis Abeba (

Churchill Avenue, Addis Abeba (

Ethiopia gets credit ratings from S&P and Fitch, plans Eurobond

Ethiopia, Africa’s fifth biggest economy, is thinking of a debut Eurobond, after it received its first international credit ratings on 9 May. With a population of some 90 million it is second-most populous country in Africa, after Nigeria. Growth has been some 10% a year, making it the fastest-growing economy and this growth has been sustained through infrastructure investment rather than resources.

Fitch rating agency assigned a long-term foreign and local currency Issuer Default Debt Rating (IDR) of “B” with stable outlook. This matches Fitch’s ratings for Kenya and Uganda, according to Reuters. Standard & Poor’s (S&P) assigned “B/B” foreign and local currency ratings and also said the outlook was stable, reflecting the view that strong growth will be maintained over the next year and the current account deficit will not rise.

According to a press release from Fitch: “With an average real GDP growth of 10.9% over the past five years, Ethiopia has outperformed regional peers due to significant public investments in infrastructure as well as growth in the large agricultural and services sectors. Despite a track record of high and volatile inflation, it declined significantly in 2013, reflecting lower food prices and the authorities’ commitment to moderate central bank financing of the government.

“Fitch expects real GDP growth of 9% in 2014 and 8% in 2015. Ethiopia’s growth over the medium-term can be sustained by large, untapped resources, including large hydro-electric potential. However, the private sector’s weakness, reflecting the country’s fairly recent transition to a market economy, and its inadequate access to domestic credit, could limit growth potential over the medium-term as public investment slows.”

According to S&P press release: “The ratings are constrained by Ethiopia’s low GDP per capita, our estimate of large public-sector contingent liabilities, and a lack of monetary policy flexibility. The ratings are supported by strong government effectiveness, which has halved poverty rates over the past decade or so, moderate fiscal debt after debt relief, and moderate external deficits. Ethiopia’s brisk economic growth–far exceeding that of peers–also underpins the ratings.” S&P forecasts GDP growth at 9.1% in 2014, 9.2% in 2015 and 2016 and 9.3% in 2017. IMF estimates in the World Economic Outlook database are lower, at a still very creditable 7.5% for 2014 and 2015 and 7.0% for 2016 and 2017.

“Ethiopia’s economic growth has consistently well outpaced the average for peers in Sub-Saharan Africa, averaging at least 9% real GDP growth over the past decade, partly due to significant government spending in public sector infrastructure. We estimate that real GDP per capita growth will average 6.5% over 2014-2017. The government has primarily invested in transport infrastructure (roads and rail) and energy (power generation through hydro). Agriculture has also been a key growth driver.

“We estimate GDP per capita at a low $630 in 2014. However, strong economic growth has translated into significant poverty reduction and fairly homogeneous wealth levels. According to International Monetary Fund (IMF) data, poverty declined to about 30% in 2011 from 60% in 1995.

According to S&P: “We expect current account deficits to average 6% of GDP over 2014-2017, driven by rising imports of capital goods and fuel. Ethiopia has a services account surplus, predominantly due to Ethiopian Airlines’ revenues, and large current account transfers mostly made up of remittances that we estimate at about 10% of GDP. Over 2014-2017, we project that gross external financing needs should average 118% of current account receipts and reserves.”

Ethiopian Prime Minister Hailemariam Desalegn had told Reuters in October (see also below) that it planned a debut Eurobond once it had secured a credit rating, though he gave no time frame.

The state and state-owned companies continue to dominate the economy and key sectors such as banking, telecoms and retail are closed to foreign ownership, with state monopolies still dominating telecoms, power and other services and state-owned banks still predominant in banking despite many private banks existing. S&P says there could be room for an upgrade “if we saw more transparency on the financial accounts of Ethiopia’s public sector contingent liabilities and their links with the central government. We might also consider a positive rating action if we observed that monetary policy credibility was improving, either through better transmission mechanisms or relaxed foreign exchange restrictions on the current account.”

In December Reuters reported that Ethiopia had hired French investment bank and asset manager Lazard Ltd in a bid to select rating companies and secure its first credit rating

IMF director warns of risks to sustaining growth

In a presentation last November by Jan Mikkelsen, IMF Resident Representative for Ethiopia titled “Regional Economic Outlook for Sub-Saharan Africa & Macroeconomic Issues for Ethiopia” he praises solid growth and price stabilization but warns about a large fiscal deficit, an appreciating real exchange rate, declining competitiveness and increasing trade deficit. In his powerpoint presentation, he says there is a “Large fiscal deficit without appropriate financing options. This leads to: large domestic borrowing; crowding out of credit to private sector; risk of debt distress; large exposure of banking system to public enterprises; and inflation concerns. He is concerned about the “Non-functioning FX market, FX shortage, and competitiveness,” as well as “Failure to develop financial sector and markets”. (NOTE: The Ethiopian Government has resisted setting up an organized and regulated securities exchange, even for locals only, and this has led to a plethora of unregulated IPOs and problems for investors). Mikkelsen adds that Ethiopia is “Missing out on private sector dynamics – opening up! Tap into FDI flows!”

He warns that the Growth and Transformation Plan (2009/10-2014/15) had estimated to invest $36 billion in public-sector financing and had achieved $11.2bn of investment in the first 3 years, leaving $22bn to be invested in identified projects in the last two years, which would be 19.7% of GDP, of which 9.9% could be domestic financing and 9.8% external. He pointed out that this meant less credit to the private sector, with banks cutting back their credit growth to non-government and giving 83% of this “non-government” share to state-owned enterprises and only 17% to the private sector.

His policy recommendations included enhancing competitiveness via exchange-rate flexibility and cutting logistic costs for trade, phasing out the forced 27% bill holding restriction on banks by the National Bank of Ethiopia, developing a securities market and making interest rates flexible and that putting the private sector in the driving seat is the only way to create sustainable employment opportunities.

Bloomberg cited Finance Minister Sufian Ahmed in December saying: “The main challenge is investment financing needs. We know it’s huge.” He said funding targets would be met by increased domestic financing and borrowing as much as $1bn a year on non-concessional terms from China, India and Turkey and key projects will also be prioritized, he said. According to that report, the Government planned to spend ETB 105.2bn ($5.5bn) on infrastructure and industry including hydropower dams and sugar plants in the 12 months ended 7 Jul 2014 and ETB 70.7bn in the year to July 2015, according to the GTP that ends in mid-2015.

Ethiopia’s PM explains economic policy

The Reuters interview with Prime Minister Hailemariam Dessalegn gives good insight into the Government’s rationale for maintaining control. It is worth reading. He said other bonds could come from the rating.

The Government aims to move from a largely agrarian economy into manufacturing, including textiles. Hailemariam said this was no time for a change of tack, either by selling monopoly Ethio Telecom or opening up the banking industry – now dominated by 3 state banks – to foreigners. “Why does the government engage in infrastructure development? It is simply to make the private sector competitive because in Africa the lack of infrastructure is the main bottleneck. From where do we get this financing? We get this from government banks,” he said. “We engage ourselves in railway construction simply because we get revenues from telecoms.”

He said neighbouring countries which have opened up their banking industry to foreigners had lost a source of funds. “They have handed over their banks to the private sector and the private sector is not giving them loans for infrastructure development.”

He added that the Government was channelling loans to business, while income for the state from selling licences or taxes could not match Ethio Telecom’s annual revenue of ETB 6bn ($318m).

Silk African Food Fund munches into Ethiopian biscuits

The Silk African Food Fund, run by UK regulated specialist asset manager Silk Invest Ltd (, has acquired a significant minority equity stake in NAS Foods Ltd., a biscuit maker in Ethiopia. The private equity fund, launched in 2010, targets African food and beverages companies, based on growth expectations for African consumer markets.

NAS Foods was established in 1999 in Addis Abeba. Silk’s injection of capital is to help the Company to upgrade and build more infrastructure for its products and to boost the Company’s plans to develop new product lines.

Waseem Khan, Managing Director of Private Equity, commented in a press release: “With strong macroeconomic fundamentals and a dedication to structural reform within the country Ethiopia presents itself as one of the most compelling investment opportunities in Africa. Silk believes this investment reflects the potential of the Ethiopian confectionary sector, which is expected to grow in line with Ethiopia’s anticipated strong GDP growth over the next 5 years. The fund’s investment in NAS Foods aligns perfectly with its focus of investing in African companies across the food value chain, particularly those servicing the domestic consumer. With robust growth forecast for Ethiopia we anticipate strong internal demand for the company’s products going forward”.

Patrick Landi, Investment Director, said: “NAS has built capacity to take advantage of the growth opportunities that exist within Ethiopia, positioning it to become one of the leading food manufacturing companies in the country. With a strong, committed management team NAS is poised to reap the benefits of the dynamics underpinning Ethiopia’s anticipated growth. This investment reflects our commitment to grow the business and create value for the shareholders, clients, employees and other stakeholders of the company. We believe the biscuit market in Ethiopia has significant potential and that the Company’s strong track record attests to its capacity to deliver a credible strategy and capture a large share of the growth opportunities in this sector.”

CDC ( is a leading investor into a $100m private equity fund created for Ethiopia by Schulze Global Investments (

Duet and Vasari invest private equity in Ethiopia’s Dashen Brewery

London-based alternative asset manager Duet Group and Vasari, a company with a track record of growing businesses including beverage businesses, announced recently in a press release (covered here, for instance) they had made the largest private equity investment in Ethiopia so far. However, the release does not indicate the size of the deal but says Duet has have injected equity into newly-formed Duet Beverages Africa Ltd with Vasari as “industrial partner” to make “a significant investment” into Dashen Brewery Pvt Ltd Co.
In the Dashen transaction they have joined forces with TIRET Group, a local endowment fund with political links, to expand Dashen’s capacity and distribution facilities. They claim the brewery has 20% market share. Ethiopia has Africa’s second biggest population at nearly 90 million, increasing by 2.5m people a year. According to the release, brewing has been growing by 25% a year for the last 5 years. It is set to be one of hte fastest-growing economies in Africa in coming years after many years of fast growth.
Duet had also tried to bid in previous brewery deals as foreign investors snapped up privatizing breweries at premium prices. Heineken and Diageo have both made large brewery investments, while Castell Group is doing well with the St George brand and SABMiller (South African Breweries) had bought into a popular mineral water company.
Henry Gabay, co-founder and co-chairman of Duet Group, said: “The economic performance of Ethiopia over the last eight years has been nothing short of outstanding. We are very excited about consumer-driven businesses in the country. We have been very impressed by what has been achieved at Dashen. We believe Duet and Vasari will add tremendous value for the next growth phase of the Company. We are also proud of having the TIRET Group as a partner, with whom we will evaluate other opportunities in various sectors.”
The deal was led by Saad Aouad, CIO of Duet Africa Private Equity, Demissie A. Demissie, Managing Director of Duet Ethiopia, Afsane Jetha, Director at Duet Africa Private Equity and Neil J. Everitt, Managing Partner at Duet Beverages Africa. Norton Rose LLP and PwC have also advised on this transaction.
Bereket Simon, Board Chairman of the TIRET Group and head of the Government Communications Affairs Office (GCAO) or government spokesperson, commented: “In the last 8 years, Ethiopia has successfully enacted 5-year plans designed to foster a business environment in which businesses are able to successfully operate; Dashen’s ability to attract, Duet Group and Vasari demonstrates this. This transaction marks only the beginning of Ethiopia’s bright future in terms of attracting more FDIs”.
Duet Group describes itself as “a UK-based asset management firm with over $2.7 billion of assets under management” ( The release describes Vasari, led by Vivian Imerman, as having “a long track record of growing and transforming businesses in a wide range of situations and environments. Vivian began by building corporations in South Africa, and later broadened his geographical focus to Europe, Asia and South America. Vivian’s achievements include the transformation of Del Monte and Whyte & Mackay.”

Ethiopia to sell 18 more state-owned enterprises

Ethiopia’s Privatization and Public Enterprises Supervising Agency (PPESA – has privatised 287 enterprises since 1995, according to a news report in the local Fortune newspaper. The agency plans to sell 18 companies in direct sales and 5 companies in joint ventures, estimating to collect Birr 1bn ($59 million) during the fiscal year to 7 July 2012.
During the 2009/10 fiscal year, PPESA sold 18 enterprises, an improvement of nearly 50% on the previous year.
Companies to be auctioned in the current year include Agriculture Mechanisation Service Enterprise, Coffee Technology Development & Engineering Enterprise, Kality Metal Products Factory, Bole Printing Enterprise and Coffee Processing & Warehouse Enterprise and it will offer joint ventures on Caustic Soda SC, Ghion Hotel in Addis Abeba, Ethiopian Mineral Development SC, Adola Gold Development, and Limu Coffee Plantation .
The privatization programme is likely to increase in the year to July 2013 and then tail off, according to the report.
The agency is also stepping up its own activities, according to its plan for the 2011/12 fiscal year. It will launch new projects for rubber trees, a coal-phosphate fertiliser complex, hydrogen peroxide and cement. It is communicating with 6 consultants tendering to supply 10,000 tonnes of clinker. The new plans are planned eventually to produce 5,000tn of hydrogen peroxide, 12tn of acrylic, 4,500tn of polyester, 300,000tn of urea fertiliser and 20,000tn of methanol. The rubber tyre plant could process up to 6,000tn of tyre sheets annually.
Last year it made Birr 3.9 bn ($229.5 m) from selling 24 companies (it received Birr 1.4 bn from down-payments and delayed payments) including: Adama Ras Hotel, Harar Ras Hotel, Errer Gota Farm, Ethiopian Hard and Soft Board Factory, Ethiopian Iron and Steel Factory, Bricks Products Processing SC, Abebo Agriculture Development Co, Anbessa Shoe Factory, Tabor Ceramic Production Services, Residential Houses Construction Co, and a number of textile factories.
The agency aims to support Government’s plan to boost industry’s contribution to GDP from the current 13% to 20% and plans to boost its own pretax profits from Birr 2 bn to Birr 5.2 bn in 2015, and increasing export earnings from its companies from Birr 645 million to Birr 1.8 bn (it made Birr 72 m in the fiscal year to July 2011).

Dangote Cement listing boosts Nigerian SE

The Nigerian Stock Exchange ( saw its capitalization boosted by the Naira 2.1 trillion ($14 billion) listing of Dangote Cement on 26 October. The company (DANGCEM.LG) listed 15.5 bn shares at N135 each (US 90 cents) after a merger in October with local rival Benue Cement. It is the country’s leading cement maker and the biggest listing on the NSE.
According to a company press release, Dangote Cement executives said the firm plans to sell a further 20% of its shares, worth $2.8 bln based on the listing price, in a global offer over the next 18 months, probably in London. Listing broker Afrinvest said 25% percent of the shares were theoretically on offer in Nigeria but the local market, whose capitalisation was just over N6 trillion before the listing, was unlikely to have the capacity to buy that amount. The regulator in Nigeria requires a 25% free float.
According to the press release, Afrinvest Chief Executive Godwin Obaseki said: “Because the market is not likely to absorb all of that quantity, the (stock exchange) council has given a special dispensation to sell the remainder over the next two years,”
Holding company Dangote Industries Limited had held majority stakes in both Benue and Dangote Cement and the free float was initially only 4.1%. The owner of Dangote Industries is Nigerian industrialist Alhaji Aliko Dangote, ranked by Forbes the richest man in Nigeria and one of the richest in sub-Saharan Africa. Dangote sold $154 million worth of shares to bring the free float to 5.2%. Dangote’s business interests include listed flour and sugar companies.
He said of the listing that he wanted “to create an African champion that can compete with the largest cement companies in the world”. He said the transaction is taking place “at a crucial moment in the history of cement demand and supply, and at a crucial moment in terms of Dangote’s pan-African ambitions.”
He is setting up cement plants and import terminals around Africa including in Ethiopia, Ghana, Ivory Coast, Senegal and Zambia, and aims to produce 46 million tonnes of cement a year in Africa by 2015, of which 30 million will be made in Nigeria. Dangote told reporters he plans to transfer all his cement assets outside Nigeria — currently owned by Dangote Industries — into Dangote Cement by the first quarter of 2011.
The aim of the merger with Benue was to allow Dangote’s cement operations better access to financing, as well as consolidating supply and distribution chains, reducing costs and helping increase cement production more quickly.
Another press release announced that a deal was finalized on on 15 October through which Dangote Industries Limited upped its stake in Sephaku Cement (Pty) Limited, which is based in South Africa, from 19.76% to 64% with a R779 million ($115 million) investment into Sephaku. The press release says this is the largest foreign direct investment (FDI) by an African company into South Africa.
The deal was concluded at the shareholder general meeting of Sephaku Cement on 15 October 2010 and formally announced to the media and investor recently.
Many commentators are very positive about the listing, forecasting a higher price shortly. All concede that it is too big to ignore and anyone investing in Nigeria must take account of this, since it makes up 25% of market capitalization and is one of the most active stocks. However, some analysts wonder whether the ambitious growth targets are to be achieved and whether the share justifies its high rating compared to global cement companies such as Lafarge. The share price was given as N128.25 at the close of 4 November on this helpful website (
However, all seem to admire the way Dangote succeeds in difficult environments, building his own infrastructure including power, rail and other needs, if poor national infrastructure is blocking growth and supplying desperately needed inputs for Africa’s economic growth.
The group website ( says the company “is a fully integrated cement company and has projects and operations in Nigeria, Benin and Ghana; with total existing production and import capacity of 14 million tons per annum and new production projects in development with 11.1 million tons per annum additional capacity.
The Company operates the Obajana Cement Plant (OCP), the largest cement plant in sub-Saharan Africa. Aggressive growth plans target a strong pan-African presence as Dangote Cement evolves to become a truly multi-national corporation.
As part of this drive, Dangote Cement is committed to making Nigeria a net exporter of cement. The company owns four terminals, two in Lagos and two in Port Harcourt through which it currently imports cement. These operations will progressively be replaced and converted into export terminals as new production capacity comes online in Nigeria.”

Africa Food Fund – Euro 150 mln fund launched by Silk Invest

Global asset manager Silk Invest ( is launching the Africa Food Fund, a new Euro 150 million ($209 million) private equity fund focusing on the African food sector. The fund is domiciled in Luxembourg and will concentrate on value-adding, including food and beverages processing and distribution.
Silk Invest CEO Zin Bekkali says “(The) focus of the fund is to invest in companies across the food value chain, and we especially like the companies who are servicing the local African consumers. We firmly believe the food industry is one of the most attractive sectors in Africa, especially in the more populous countries where high demographic growth means growing demand for a more efficient and integrated food chain.
The firm says that millions of Africans are moving up the consumer value chain and this will fuel huge internal demand, as infrastructure improves and quality standards increase. Bekkali says: “We believe that consumption will continue to grow at a robust pace, underpinned by the high economic development across the continent, and that well managed companies operating in this space will benefit from exceptional returns,” he added.
Alexandre Cantacuzene, the director of the African Food Fund, has worked in the food industry for over 40 years, including managing Nestlé’s operations in some African and Middle Eastern countries. Bekkali told Reuters agency in April: “”Examples of target companies that we are analysing are (a) fast food chain which wants to accelerate the number of outlets that it has; a cocoa processing company which wants to sell more of its own branded products; a flavoured fizzy drinks producer which is building capacity in mineral water; and a biscuit maker which is importing currently 50% of the products it sells, but wants to replace it by its own goods.”
“Moving to packaged sugar, milk or flour is a big driver of growth. In most African countries, food is still pre-dominantly sold through non-branded items. (In) the last years we are seeing a dramatic change and African food companies are servicing the local need without increasing the cost of the product. Consumers are able to buy a higher quality branded food item for the same price.”
Much of the investment into African agriculture is still focused on food production and raw commodities. Several countries have seen Eastern and Middle Eastern investment agencies taking land and spending money to grow crops in Africa for shipment to their domestic markets to alleviate food insecurity in the Arab world.
Waseem Khan, director of private equity, said: “Silk Invest’s local presence in the key African countries in which we invest provides us with the key advantage.” Silk Invest is based in London. Its name comes from the “Silk Route”, the historic trade paths linking Europe and Asia.

Citadel Capital announces cement deals in Sudan and Egypt

Leading African private equity house Citadel Capital ( has this week announced 2 cement deals. Citadel was recently named “African Business of the Year” at a gala awards ceremony organized by “African Business” magazine. It is based in Cairo and listed on the Egyptian Stock Exchange (ticker CCAP.CA). It has been expanding into Africa and, according to a press release, has US$ 8.3 billion in investments covering 15 industries and spanning 14 countries.
On 15 July Citadel announced that ASEC Engineering and Management, a portfolio company of its investment platform company ASEC Holding, has signed a 3-year renewable contract to provide technical management services to Alsalam Cement Production Company (ACPC) to manage a cement plant near Atbara, Sudan.
The Atbara plant produces clinker, which is then ground with gypsum to make cement. The plant has a production capacity of approximately 2,000 tons of clinker per day. ASEC Engineering will receive a fixed fee for every ton of clinker produced in return for a guaranteed minimum annual production and a pledge to reduce the plant’s consumption of electrical power and fuel. ACPC was established in 2003 and is owned by the Ahmad Osman Abdulsalam Group. The plant near Atbara is currently ACPC’s sole operation, although it is in initial planning stages for the construction of a second plant.
According to a press release ASEC Engineering Chief Executive Officer Mohamed Galal Yakout says: “We look forward to developing a strategy that optimizes the efficiency of Alsalam’s production process.”
ASEC Engineering has long provided market-leading management and consultancy services in Egypt, where in 2009 the company managed 7 plants with a total production capacity of about 15 million tons per annum (MTPA), or more than 30% of total cement production capacity in the country. In 2010, the company has already delivered 3 major cement plant consultancy projects. In addition to its expansion into Sudan, ASEC Engineering played a vital role in the turnaround of the Zahana cement plant in Algeria and is currently exploring opportunities in other regional markets.
In related news, ASEC Engineering will also be responsible for the technical management of ASEC Cement’s nearby Takamol plant, which is in advanced stages of operational testing. Scheduled to open later this month, the plant will have a production capacity of 1.45 MTPA of clinker and 1.6 MTPA of cement, reducing Sudan’s national cement deficit of 3 MTPA by more than half.
Another subsidiary of ASEC Holding, called ASEC for Manufacturing and Industrial Projects (ARESCO), announced on 12 July that it has signed a US$ 130 million contract to construct a new cement plant for the Building Materials Industry Company (BMIC) in the Upper Egyptian governorate of Assiut. ARESCO is a turnkey contractor serving the cement, energy, petrochemicals, petroleum and general industrial sectors. According to the prss release, ARESCO has “state-of-the-art engineering, steel fabrication and construction units that fabricate quality products including boilers, cement mills, preheaters, tanks, condensers and pressure vessels. With over 4,000 employees, ARESCO is a rapidly growing business that has undertaken turnkey projects in Egypt, Iraq, Jordan, Qatar, Sudan, Algeria and Libya.”
ARESCO is to provide all the civil, electrical and mechanical works for the 1.5 MTPA cement plant, which is projected to be complete in 22 months. The company will also carry out all steel fabrication as well as testing and commissioning for BMIC on a turnkey lump sum basis.
Tarek Salah, a Managing Director at Citadel Capital, says in the press release: “The integration of ARESCO’s in-house design and manufacturing capabilities — which include its own workshops and fleet of cranes — have made the company a strong competitor in both the cement and general industrial sectors.”
Citadel Capital is also a lead investor in Rift Valley Railways which holds a 25-year concession to operate the Kenya-Uganda railway.