UK firm CDC injects ShSh14bn into ARM Cement
A worker at Athi River Mining Limited’s cement factory. A UK firm owned is set to inject $140 million into ARM Cement, a move set to make it the largest shareholder in the Kenyan company. PHOTO | FILE | NATION MEDIA GROUP
What you need to know:
This is the first direct investment by CDC in a cement firm in Africa since the launch of its new strategy in 2012.
CDC is owned by the UK’s Department for International Development (DfID).
ARM’s operation had been weighed down by expensive short term debts before the capital investment.
Development financier CDC is set to inject $140 million (Sh14.1 billion) into ARM Cement, a capital boost which will make the UK-based firm the single largest shareholder in the Kenyan company.
CDC, which is owned by the UK’s Department for International Development (DfID), has provided the equity injection at a time when ARM’s operation have been weighed down by expensive short term debts.
This is the first direct investment by CDC in a cement firm in Africa since the launch of its new strategy in 2012 and it comes two weeks after the financier acquired a 10.7 per cent stake in I&M Holdings.
“We are proud to back a founder-led frontrunner in East African manufacturing,” Mark Pay, CDC’s managing director for Equity Investments, said in a statement.
“This investment will strengthen a company making a difference to the local economy, bringing jobs and lower cost of raw materials to a region traditionally dependent on imports.”
The transaction is subject to regulatory and shareholder approvals.
LARGEST SHAREHOLDER
CDC will become the single-largest shareholders of ARM alongside the family of its CEO, Pradeep Paunrana, whose stake before the equity injection stood at approximately 51 per cent.
The firm says its investment will be used to improve the efficiency of ARM’s plants, fund expansion and help reduce energy costs and lower greenhouse gas at its operations.
The company in August last year announced plans to issue a Sh7 billion bond, which it later raised to Sh10.7 billion.
However, it has now opted to inject money into the business through an equity investor.
“We chose CDC as an investor and partner to help us achieve a shared vision of creating the leading and lowest-cost East African cement business,” Mr Paunrana said in a statement.
“Together we will focus on shareholder value creation and on positive developmental impacts for our communities and stakeholders. This is a significant milestone in ARM’s journey.”
CDC’s entry into the country’s cement industry comes at a time when manufactures, buoyed by the booming real estate sector, are producing above the market’s demand, keeping prices stable.
East African Portland Cement, Bamburi, Mombasa Cement, Savannah and National Cement are among ARM’s leading competitors in the sector.
ARM reported a net loss of Sh469 million in the nine months to September.
