State eyes billions from Kwal stake sale

Kenya Wine Agencies Limited (Kwal) Managing Director Lina Githuka during the groundbreaking ceremony for its factory at Tatu City in Kiambu County on February 12, 2021. PHOTO | FRANCIS NDERITU | NMG

The government has invited bids for its 43.77 percent stake in wines and spirits firm Kwal Holdings East Africa Limited (KHEAL), which it valued at Sh4.1 billion in the year ended June 2022 according to the latest available disclosures.

The value of the stake, which was raised from Sh3.4 billion in the prior year, is held via Kenya Development Corporation.

The government is also selling its 0.1 percent shareholding in Kenya Wine Agencies Limited (KWAL), the operating subsidiary that is owned by KHEAL.

The Privatisation Authority has invited local as well as foreign investors to bid for the stakes. This has opened the transaction beyond the government’s partner in the business –Heineken Beverages— which holds the majority stake. Heineken Beverages was formed last year following Heineken’s buyout of South Africa’s Distell Group which last reported a much lower valuation of KHEAL compared to KDC’s disclosures.

Distell in 2019 said its 55.4 per cent ownership in KHEAL was worth 223.6 million Rand (Sh1.6 billion at current exchange rates), indicating that the government’s stake was worth Sh1.2 billion.

KHEAL makes and distributes several brands of spirits, wines, ciders and fruit juice. These include Kibao Vodka, Hunter’s Choice, Viceroy, Amarula, Drostdy-Hof, Savanna and Yatta.

The Privatisation Authority has opened the transaction to all sorts of bidders including high-net-worth individuals who may want to hold the stake as a passive financial investment.

“Interested bidders must provide information that meets the following eligibility criteria … Evidence that the bidder or, in the case of a consortium, the consortium leader, is legally registered or incorporated,” the Privatisation Authority said in a notice.

“In the case of individuals, copies of certified national identification cards, or passports for international bidders.”

A bidder is required to demonstrate financial capacity to close the deal and will be required to provide a bid security of Sh10 million or its equivalent in US dollars and which will be valid for 180 days from the tender opening date. Expressions of interest close on April 5. Kwal started operations as a 100 per cent parastatal owned by KDC before a divestiture process which begun with the 2014 sale of an initial 26 per cent stake to Distell Group.

The sale of the government’s stake in the wines and spirits manufacturer is part of plans to raise funds through divestiture in multiple firms where the State has substantial or full ownership.

The government has also announced the sale of its stakes in Kenya Safari Lodges, Mt Elgon Lodge Limited, Golf Hotel Limited, Sunset Hotel and Kabarnet Hotel.

The government through KDC holds 5.2 million units of shares in the five hotels whose value rounded off to Sh671.9 million as of June 2022.

The five hotels and the Development Bank of Kenya were last month added to a list of 11 other entities set for sale by the government.

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