Kenya’s Billionaire Narendra Buys Rwanda’s Cement Manufacturer

Kenya’s billionaire and Chairman of Devki Group Narendra Raval has bought Rwanda’s oldest cement manufacturer, CIMERWA Plc.

Kenya’s billionaire and Chairman of Devki Group Narendra Raval has bought Rwanda’s oldest cement manufacturer, CIMERWA Plc, promising to invest $60 million in the first year of the takeover.

Narendra’s cement subsidiary, National Cement Holdings Ltd, completed the acquisition of CIMERWA Plc on January 25, 2024 at a tune of $85 million, becoming a majority shareholder with 99.943 per cent holding.

“We believe in the potential for this business and its people and are excited by the opportunity to support infrastructure development in the region in line with our strategic expansion ambitions,” Narendra said in a press statement.

Narendra Raval speaks at the signing of the handover ceremony in Kigali. Courtesy.

The acquisition enables Narendra to expand his diverse portfolio, which already boasts of manufacturing businesses in cement, steel, roofing materials, fertilizers, and packaging materials.

National Cement operates an integrated cement plant, a clinker plant, and multiple grinding plants in Kenya. It also operates a cement grinding plant in Eastern Uganda.

With the acquisition of CIMERWA, perhaps the business magnet hopes to expand and grow his business empire beyond Kenya and Uganda. Indeed, the acquisition adds to his growing portfolio and gives him edge in the region whose demand for cement has been growing rapidly, driven by manufacturing growth.

When I spoke to the billionaire industrialist last year after opening his new steel factory in Kenya, he seemed to express strong appetite in Kenya and the East African market.

“Our main aim is to make Kenya and East Africa self sustainable, self independent without importation from these first world orders or second world countries, and stop exportation of our jobs,” he noted then.

CIMERWA has been operating in the Rwandan market for 40 years now, but the company has been struggling to compete with in a market where imported cement sale at competitive prices.

South Africa based cement producer Pretoria Portland Cement (PPC) was the majority owner in CIMERWA, controlling 51 per cent shareholding.

“This represents the final step in PPC’s execution of its revised strategy to focus on core Southern African markets and exit its Central and East African assets,” Roland van Wijnen, CEO of PPC Ltd noted.

The rest of the shareholding of CIMERWA was spread among minority shareholders with Rwanda’s pension fund Rwanda Social Security Board (RSSB) holding a 20.236 per cent stake in the company while the country’s sovereign wealth fund Agaciro Development Fund had 16.488 per cent shareholding.

The rest of the shareholding was owned by Rwanda Investment Group Ltd (11.455 per cent) and SONARWA General Insurance company at 0.764 per cent.

The company’s struggle to win the competition was frustrated by the government’s decision to divest from the company as well as the entry of Prime Cement, another major cement manufacturer in Rwanda.

The Rwandan Government started divesting from CIMERWA when it floated its 49 per cent stake on the Rwanda Stock Exchange in 2020.

The view of Cimerwa factory in Rusizi. Courtesy.

Ability To Turn Around Cimerwa

CIMERWA has had two different CEOs in a span of less than four years, since the exit of Bheki Mthembu in December 2019 after leading the company for three years, which to a certain extent reflects the firm’s struggle to retain leaders.

However, Narendra has the opportunity to turn around CIMERWA, which last year generated Rwf15.6 billion in net earnings and grew its revenue by 12 per cent to Rwf103 billion, using his company’s past experience in Kenya and Uganda, and tap into the rising demand of cement.

Already, the company grew its revenues by compound annual growth rate (CAGR) of 40 per cent between 2016 and 2019. The Company also exhibited growing earnings before interest, taxes, depreciation and amortization (EBITDA) margins in the same period.

In the years that followed, CIMERWA grew its top and bottom lines with revenues growing from Rwf67.4 billion in 2021 to Rwf92 billion in 2022 and net profit growing from Rwf4 billion to Rwf13 billion during the same period.

Narendra has a leverage. Rwanda’s cement industry has a supply gap compared to other East African countries that are mostly struggling with overcapacity due to a concentration of many manufacturers.

Cement supply demand in Rwanda currently stands at about 0.7 million tones per annum against domestic supply of 0.42 million tones per annum. The country’s demand for cement has been growing by about 8.4 per cent year on year driven by both public and private sector.

CIMERWA also has a good market in Eastern Democratic Republic of Congo (Bukavu and Goma) where it supplies 40 per cent of its cement.

 

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