Kenya’s National Cement Company, part of the Devki Group conglomerate, has completed the buyout of a 99.94 percent stake in Rwanda’s Cimerwa Plc in an $84.3 million (Sh13.6 billion) deal that expands its cement operations in East Africa.
The firm paid $0.12 (Sh19.4) for each of the 702.7 million shares of Cimerwa, which is listed on the Rwanda Stock Exchange. The acquired firm is set to be delisted from the bourse.
“On January 25, 2024, I led Kenya’s National Cement Company Limited under Devki Group in formalizing the acquisition of Cimerwa,” Devki’s chairman Narendra Raval said in a statement posted on social media.
“We will be heavily investing in the business and transforming Rwanda to a self-sustaining country in terms of all cement-related products.”
Cimerwa has an annual production capacity of 600,000 metric tonnes of cement per annum, making it the dominant player. Kigali Cement used to be a significant cement manufacturer in Rwanda but collapsed after its parent firm –Kenya’s ARM Cement— went under in August 2018.
Kigali Cement’s assets were sold to help settle the debt of its parent firm whose Kenyan assets were also acquired by National Cement. The latest deal is expected to make Devki the leading cement group in the East African market by total production.
The conglomerate’s Kenyan rival, Bamburi Cement, is currently in the process of selling its 70 percent stake in Uganda-based Hima Cement for $84 million (Sh13.6 billion at current exchange rates).
Previous disclosures by Cimerwa indicate that Rwanda has a cement supply gap, with a demand of about 700,000 tonnes per annum against a domestic supply of 420,000 tonnes per annum.
“Rwanda is the one country in EAC to boast of strong demand growth and a supply gap while neighbouring countries like Kenya, Uganda and Tanzania struggle with overcapacity amid slowed demand,” Cimerwa said in the disclosures.
“The Rwandan market is highly contested as an export market by players in Tanzania and Uganda, with Uganda taking the majority share. However, the border issue between Uganda and Rwanda has reduced cement imports from Uganda but these have been replaced by imports from Tanzania.”
Demand for cement in Rwanda, driven by the public and private sectors, is projected to keep rising with population growth and urbanisation.
Cimerwa’s sales and earnings have been rising steadily over the years, pointing to the health of the business.
The company reported a net profit equivalent to Sh1.68 billion (at current exchange rates) in the year ended September 2022, tripling from Sh525.8 million a year earlier on the back of higher sales and lower finance costs. Revenue in the period rose 36.7 percent to Sh11.7 billion.
Devki bought the Cimerwa shares from a group of retail and institutional investors including PPC International Holdings Proprietary Limited (PPCIH) which held the controlling stake of 51 percent.
