A Mauritian firm is set to acquire a controlling stake in local cement producer Savannah Cement.
Barak Asset Recovery Limited has started the process of acquiring a 60 per cent stake in Savannah Cement that is owned by Seruji Ltd, a company associated with Kenyan businessman Benson Ndeta.
Barak Asset is registered in Mauritius and also has operations in Seychelles. In filings made at the Comesa Competition Commission as the firms seek regulatory approvals for the deal, the firm described its principal business as investment holding. Seruji is also registered in Mauritius.
The firm said it would give Savannah a new breath of life by restructuring the company that has recently posted poor financial performance and setting it again on a growth trajectory.
“The proposed transaction entails the acquisition of 100 per cent of the shares in Seruji by Barak Assets. The parties have submitted that Barak Assets hopes to restructure and grow the business of Savannah Cement which has experienced poor financial performance in the recent past,” said the CCC in a public notice. The competition watchdog is set to consider the application by the companies.
Savanah has reportedly been experiencing financial difficulties in the recent past. These were said to have seen the company halt production of cement at its Athi River plant for some time in the course of the second half of 2021.
The company, however, said the disruptions over the period were due to clinker shortage, whose imports had been affected by the hiccups in the global logistics experienced due to Covid-19. It added that the situation had normalised by the start of this year.
“Seruji owns 60 per cent of the issued share capital of Savannah Cement Limited (“Savannah Cement”), a private company limited by shares and incorporated under the laws of Kenya, which carries on the business of manufacturing and sale of cement in Kenya and which it also exports to other member states. In the Common Market, the target is active in the Democratic Republic of Congo, Kenya, and Mauritius,” said CCC.
Seruji emerged as the biggest shareholder in 2015 after it acquired a combined 60 per cent shareholding previously held by two Chinese firms at a $25 million (Sh3 billion at today’s exchange rate.
The two Chinese investors, Wanho International (owning 40 per cent) and ACME (20 per cent), were among the pioneer shareholders in Savannah Cement.
Savannah Heights, a firm owned by local businessmen, owns the remaining 40 per cent.
Seruji’s acquisition of the shareholding by Chinese firm set off ownership wrangles, with Savannah Heights then arguing that it had the right of first refusal and the Chinese investors were obligated to give Savannah the first opportunity to buy them out. The matter has been subject to a lengthy court case.
Savannah Cement started production in 2012 and has over the decade been able to claw market share from the old boys of Kenya’s cement production.