Shreeji Chemicals owner to enter cement business

Shreeji Chemicals owner to enter cement business

Delta International FZE, the owner of multiple businesses including Shreeji Chemicals, is set to enter Kenya’s highly competitive cement business.

Ahead of the construction of a cement plant, the company is spending Sh83 million to acquire an 84 percent stake in Nairobi Securities Exchange-listed Nairobi Business Ventures (NBV) whose shoe retailing business has collapsed.

This will give the cement business an automatic status as a publicly-traded firm in a process technically known as a reverse takeover.

Existing shareholders of NBV will be squeezed into a 16 percent stake in the company which will change its business to cement manufacturing and other industrial undertakings.

As a subsidiary of Delta, NBV’s listing status will give it visibility besides making it easier to access capital.

“Delta International has considered entry into capital markets as a strategic move to maximise its expansion and diversification plans in Africa,” the shoe retailer said in a circular to shareholders.

“Once acquired by Delta, NBV shall commence importation of clinker (raw material for cement manufacturing) and progress towards clinker and cement manufacturing with an annual capacity of one million tonnes per annum. Another possible area of expansion shall be glass manufacturing.

A total of 415 million shares will be offered to Delta in the deal expected to be signed on November 7, a day after the annual general meeting.

NBV will become the third NSE-listed cement manufacturer after Bamburi Cement and East African Portland Cement Company.

ARM Cement, which collapsed under a load of debt, is expected to be delisted from the Nairobi bourse as its administrators PricewaterhouseCoopers (PwC) sell its assets to various buyers.

Cement manufacturers have continued to expand their production capacity despite increasing glut in the market that has made it difficult to raise prices even as costs rise.For Delta, cement will mark an expansion and diversification of its manufacturing portfolio.The company, incorporated in the United Arab Emirates, is owned by Haresh Vrajlal Damodardas Soni. Its local and regional subsidiaries include Delta Holdings Kenya (real estate), Shreeji Glass Uganda (chemical manufacturing) and Shreeji Chemicals Kenya, which has an annual Sodium Silicate production capacity of about 180,000 metric tonnes.

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