Archive for the 'Manufacturing' Category
August 10th, 2011 by Tom Minney
Ethiopia’s Privatization and Public Enterprises Supervising Agency (PPESA – www.ppesa.gov.et) 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).
November 5th, 2010 by Tom Minney
The Nigerian Stock Exchange (www.nigerianstockexchange.com) 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 (www.stockmarketnigeria.com).
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 (www.dangote-group.com) 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.”
October 21st, 2010 by Tom Minney
Global asset manager Silk Invest (www.silkinvest.com) 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.
July 15th, 2010 by Tom Minney
Leading African private equity house Citadel Capital (www.citadelcapital.com) 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.
May 13th, 2010 by Tom Minney
Rwanda Investment Group S.A. (www.rig.co.rw) has temporarily suspended plans to issue a bond with a value of RWF 23.1 billion (US$40 million) to RWF 28.9 bln ($50 mln), in order to to finance a new cement factory. The group says costs may be high, due to low liquidity and high interest rates, according to a report in the local New Times (www.newtimes.co.rw) newspaper.
RIG was set up in 2006 by 41 shareholders, comprising of 6 institutional investors, 4 mid-sized private companies, and 31 individuals, mainly Rwandese entrepreneurs. They contributed US$ 25.1 mln as start-up capital to capitalise the group.
The bond had been intended to finance the construction of the new cement factory for Cimerwa, in which RIG has a controlling stake. Earlier RIG had announced that it had signed an agreement with a Chinese manufacturer, Pengfei, to upgrade the fuel-fired plant into one that burns peat and to increase production from 100,000 metric tons to 600,000 metric tons. RIG Director General Fiacré Birasa was reported in the newspaper as saying the group will contribute 30% of the funding to build a $70m cement plant in Cyangugu. The rest is to be raised from other equity investors and other channels.
M. Birasa was reported as saying that RIG has put the plans on hold as they wait for better market conditions: “The market has high interest rates and as investors we should closely watch the trend, see the growth possibilities of having slightly low rates.” He also reportedly said the the $50m bond could be too much for local market capacity and that RIG was considering partnerships with regional and international stakeholders. “We are still holding because the market is not responding. RIG’s equity is $25m which is bigger than local banks’ liquidity.”
The Central Bank recently lowered its key repo rate (at which it lends to commercial banks) by 0.5 percentage points from 7.5% to 7% to boost liquidity.
Rwanda is set to hold presidential elections in August.