Mauritian multinational Alteo has increased its stake in Transmara Sugar Company Limited from 51 percent to 69.2 percent at a cost of Sh973 million ahead of a proposed restructuring of the ownership structure of the miller.
The additional stake, whose purchase price values the miller at Sh5.27 billion, was acquired from Kenyan private investors who co-own the firm with Alteo, the firm disclosed in an information memorandum (IM) to shareholders detailing the proposed reorganisation.
The multinational currently holds its stake in the Kilgoris-based miller through a cascade of two investment vehicles— Sucrière des Mascareignes Limited and Transmara Investment Limited.
“In quarter three 2022 (January-March), Transmara Investment Limited increased its stake in Transmara Sugar Company Limited from 51 percent in financial year 2021 to 69.23 percent during the course of financial year 2022,” said Alteo in the IM.
“The total consideration for the acquisition of this additional stake was $8.2 million (Sh973 million). The acquisition of the additional stake was funded by cash available and a debt of $5.05 million (Sh599.2 million) contracted by Sucrière des Mascareignes Limited.”
Transmara Sugar, which was established in 2011, produced 92,375 tonnes of sugar in the 12 months to June 2021, up from 72,549 tonnes in the preceding year, driven by favourable weather conditions in the cane-growing areas.
The unit thus cut its net loss for the period to Sh82.6 million from Sh274.4 million in the year to June 2020. Revenue rose to Sh7.25 billion from Sh5.07 billion previously.
Alteo took the controlling stake in Transmara Sugar in 2015, adding it to a portfolio of sugar firms in Mauritius and Tanzania, where it operates TPC Limited with an effective stake of 45 percent.
Its shareholders, who include Mauritian conglomerates CIEL Agro Limited and IBL Ltd, now want to move the Kenya and Tanzania sugar production operations from the umbrella of Alteo and into their direct control under a new investment vehicle known as Miwa Sugar Limited, which was incorporated earlier this year.
Alteo will thereafter concentrate on real estate development in Mauritius, according to the regulatory filings, with Miwa taking over its sugar production subsidiaries. Alteo is the largest landowner in Mauritius, with land assets under management totalling over 15,000 hectares.
“One of the objectives of the restructuring is to better prepare Alteo to realise its property value creation strategy by setting up a governance and management structure which is more focused on land management and development, and enhancing the visibility on the contribution of the property cluster of Alteo to the return generated from the group’s assets,” said the firm in the IM.
It added that moving the sugar operators to Miwa will result in a governance and management structure focused on optimising the millers’ operations and their development, and improve their access to capital by targeting investors focused on the growth potential in Africa.
Alteo’s shareholders are expected to meet next month to ratify the restructuring process, with Miwa expected to start trading at the Mauritian exchange in November.