Bamburi Cement's Bold Divestment Strategy
In a strategic maneuver, Bamburi Cement is poised to divest its 70 percent stake in Ugandan subsidiary Hima Cement for a substantial $84 million (Sh12.7 billion). This pivotal decision not only fortifies Bamburi's financial standing but also aligns with the broader strategy of its parent company, Holcim, to consolidate its presence in key markets and optimize its portfolio.
Boosting Cash Flows: The Multi-Million Dollar Deal
Bamburi Cement is set to part ways with its Ugandan venture, selling its majority stake to a consortium comprising Sarrai Group and Rwimi Holdings. Simultaneously, Hima Cement's minority shareholder, Cementia Holding AG, is joining this divestment, contributing its 30 percent stake for $36 million (Sh5.4 billion). The collective deal value stands at an impressive $120 million (Sh18.2 billion), subject to adjustments post-transaction completion.
Bamburi's Share Price Surge
Bamburi's strategic move has already reverberated in the market, with its share price witnessing an 11 percent surge on the day of the announcement. Closing at Sh25, this surge reflects investor confidence and underscores the positive impact of the divestment strategy.
Holcim's divestment strategy, of which Bamburi's move is a part, aims to exit fragmented markets and concentrate efforts where it holds a significant market presence. The global building solutions leader is concurrently divesting its 65 percent stake in Tanzanian subsidiary Mbeya Cement Company to Amsons Group, marking a shift towards a more streamlined and impactful market footprint.
Unlocking Capital: Bamburi's Focus on Profitable Ventures
For Bamburi, divesting from Hima Cement is a strategic move to unlock capital and streamline its focus on the more lucrative Kenyan market. The Kenyan business segment, reporting a net profit of Sh258 million in the year ended December 2022 with revenue of Sh20.5 billion, has outshone its Ugandan counterpart.
While Uganda's Hima Cement reported sales close to Sh18.4 billion, it posted a net loss of Sh77 million in the same period. The consolidation of financials indicates that Ugandan operations were exerting downward pressure on the group's earnings, emphasizing the financial prudence behind Bamburi's decision.
Strategic Partnerships: Paving the Way Forward
With the Sarrai Group and Rwimi Holdings stepping in as strategic partners, Holcim envisions a long-term development trajectory for Hima Cement. Martin Kriegner, Holcim's Regional Head of Asia, Middle East & Africa, stated that these divestments align with the broader strategy of consolidating leadership in core markets, fostering innovation, and championing sustainable building solutions.