Among the 20 companies interested in bidding for Ethiopia’s eight state-owned sugar factories slated for privatization are cement giant Dangote and beverage corporation Coca-Cola, sources reveal.
The list of local firms seeking to acquire the sugar plants also includes Ethio Sugar, the conglomerate Abyssinia Group and investment firm 54 Capital, insiders disclosed.
After the Ministry of Finance and Ethiopian Investment Holding (EIH) announced tender for the sugar factories in August 2022, around 20 local and international corporations expressed initial interest, the Ministry announced last week.
The Reporter learned nearly half of the companies keen to enter the sugar business by acquiring the state assets were local.
“We have already identified three potential sugar factories that we can acquire. We will decide which one we should acquire before the deadline,” says Daryl Wilson, Managing Director of Coca- Cola Beverages Africa (CCBA) Ethiopia, adding that the company has a plan to seek equity investors to partner in the acquisition process.
Earlier this week, the Ministry together with the EIH, made an official request for the interested companies to submit their proposals for the privatization of the companies. Labeled a “critical milestone” in the government’s project of privatizing the sector, the Ministry and EIH issued the Request for Proposal (RFP) beginning May 23, 2023.
The eight factories up for privatization are Arjo Dedessa, Kessem, Omo Kuraz 1, Omo Kuraz 2, Omo Kuraz 3, Omo Kuraz 5, Tana Beles and Tendaho.
While presenting his Ministry’s nine-month performance for the current fiscal year, Minister Ahmed Shide told Members of Parliament (MPs) last week that his office has been preparing to transfer ownership of the eight selected sugar factories to private investors.
Ahmed revealed that the valuations of the factories had been finalized.
“The government has already made huge investments in the sugar factories. It is believed that the business would be more efficient in the private sector given the current macroeconomic situation of the country,” he told the MPs.
He expressed hopes that once in private hands, the industry would operate with peak agility and precision, leveraging corporations’ vast corporate know-how and financial muscle to upgrade and expand sugar operations.
Hinjat Shamil, senior economic reform advisor at the Ministry says various investors have approached the Ministry, indicating the number of companies that formally registered preliminary interest don’t represent all interested firms.
“Even firms that did not officially express interest may still submit formal proposals, ” she told The Reporter.
The investors will have a two-month window to conduct due diligence, Hinjat explained. Visiting the factories and studying the market will be important works for investors before they make their offers.
When asked for the names of firms that’ve submitted expression of interest and are engaging with the Ministry now, the senior advisor refused to disclose due to “confidentiality,” but confirmed that nearly half of the firms that have showed interest so far are local.
Management at one of the companies vying for one of the factories told The Reporter the factories are “extremely overvalued,” potentially reducing firms’ appetite for the bids.
“If the government does not sell them at a lower value even after spending huge sums, I don’t think many companies will commit to the value being set,” the manager said.