Companies

Mauritius’ Seruji buys 60pc stake in Savannah Cement

SAVANNA

Savannah Cement plant in Athi River. PHOTO | EVANS HABIL

Mauritian firm Seruji has acquired a 60 per cent stake in Savannah Cement following approval from the Competition Authority of Kenya (CA), giving it the lion’s share of the Athi River-based firm.

Seruji completed the buyout from Chinese firms Wan Ho International which held 40 per cent and Acme Wanji which owned 20 per cent of the cement manufacturer. The move leaves Savannah Heights the minority stake in the firm.

The shareholding shakeup makes the company Kenya’s first cement producer fully owned by locals, as both Seruji and Savannah are owned by Savannah Cement founder Benson Ndeta and other Kenyan partners.

In a statement released on Sunday, Seruji spokesman Alfred Ng’ang’a said: ‘‘Following the acquisition of the 60 per cent stake by Seruji Ltd, Savannah Cement now becomes Kenya’s first, wholly locally owned cement manufacturing firm. The firm will now be a 100 per cent owned by Seruji Limited and Savannah Heights, entities which are wholly owned by indigenous Kenyan entrepreneurs.’’

The buyout was completed in November last year. It comes ahead of a planned $250 million (Sh23 billion) clinker plant construction in Athi River by the manufacturer, which aims to reduce its operating costs by eliminating importation of the key raw material.

The Competition Authority of Kenya (CAK) on Friday published a notice giving its approval for the acquisition.

“It is notified for general information that the Competition Authority of Kenya has approved the proposed acquisition of 60 per cent of the shareholdings of Savannah Cement Limited of Seruji Limited,” the gazette notice reads.

Bamburi, East African Portland Cement, National Cement, Mombasa Cement and ARM Cement make the list of Kenya’s main cement producers.

Savannah’s new plant is also expected to help increase its production capacity which currently stands at 1.5 million tonnes annually.

Demand for cement has risen steeply over the past two years in tandem with a host of several multi-billion shilling projects in both the public and private sectors.

The Sh174 billion Lamu coal power plant and the Sh300 billion standard gauge railway are among the projects that have pushed up demand for the key construction material.

Cement consumption grew by nearly a fifth to hit a record five million tonnes last year, driven mainly by robust growth in property development.

Fierce competition and a drop in the cost of energy have seen cost of the commodity drop to about Sh575 per 50kg bag, from more than Sh600.

Firms have been producing more cement than the market can absorb, with statistics showing that production stood at 5.7 million tonnes last year, up from 5.05 million tonnes the previous year.

Standard Investment Bank, in its latest report on the sector, says production will rise to 6.3 million tonnes this year and 6.7 million tonnes next year.

Savannah last year announced that it has bagged tenders worth $250 million (Sh23 billion) for the supply of cement to several projects, in both infrastructure and real estate markets.

The firm has won contracts to supply cement for government projects including construction of Terminal 4 at the Jomo Kenyatta International Airport (JKIA), the ongoing building of the Sh55.6 billion JKIA greenfield terminal and the Sh4.5 billion Ruiru Sewerage plant.

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