A nephew of industrialist Manu Chandaria is set to acquire an 80 per cent stake in therapeutic foods manufacturer Insta Products, buying out his partners in the Kenyan company.
The transaction was authorised by the Competition Authority of Kenya (CAK) which says the deal will not affect competition negatively.
“In exercise of the powers conferred by section 42(1) of the Competition Act, 2010, the Competition Authority of Kenya excludes the proposed acquisition of 80 per cent shares in Insta Products Limited by Dhiren Chandaria from Part IV of the Act,” reads a legal notice published by the regulator.
The CAK filing shows Insta had a turnover of Sh342.7 million last year, a level which is below the required threshold for mandatory notification as contained in the Merger Threshold Guidelines.
The transaction will give Mr Chandaria control of the company and he could own it fully if he already held the other 20 per cent.
He had earlier said he owned 100 per cent of the company, with the CAK filing indicating he could have made the announcement having anticipated buying out the other shareholders.
He had not responded to our queries by the time of going to press. His move to take control of the company comes at a time when the International Finance Corporation (IFC) is lending Sh1.4 billion to the food maker to fund its expansion.
IFC, the World Bank’s private sector lending arm, approved the investment earlier this year. The loan matures in six years.
Insta, located in Athi River’s Export Processing Zone, produces food supplements for malnourished people for worldwide supply.
The loan will see Insta expand its capacity from 3,000 metric tonnes per year to 25,000 metric tonnes, enabling it supply the ready-to-use therapeutic foods to people facing starvation.
Insta’s therapeutic foods are a high calorie combination of peanut paste, sugar, oil and milk powder which is fortified with 23 vitamins and minerals.
Severely malnourished people, who cannot digest solid food portions or receive supplements intravenously, feed on the supplement for six weeks before progressing to other foods.
Children who are fed on the food supplements reportedly begin showing signs of improvement after a week and are healthy after about two months.
IFC says its funding will support timely delivery of the food items to about 350,000 more acutely malnourished people around the world as well as reduce stockouts during emergencies.
The capacity expansion project is expected to grow the company’s revenues significantly from the current levels.
Insta Products is a 13-year-old firm. Its products are distributed regionally but they are also shipped to needy individuals in countries such as Afghanistan, Syria, Pakistan and Yemen among others places.
The firm’s main clients are agencies such as United Nations Children’s Fund, US Agency for International Development and the African Medical and Research Foundation, among others.
Besides Insta, Mr Chandaria also has an interest in Orbit Chemical where he is the chief executive officer.
Orbit supplies industrial chemicals to several companies but also manufactures soaps, petroleum jelly, hand gels and detergents.