The billionaire Rai family is among eight high-profile investors seeking a lease deal for the Sh15 billion assets of the ailing Mumias Sugar Company, Miller’s steward-grantee revealed.
The disclosure of Rai’s offer underscores months of heated behind-the-scenes struggle for control of the once top miller by wealthy investors, including steel magnate Narendra Raval, who has since retired from the race.
Raval, who planned to inject 5 billion shillings to modernize the miller by winning the tender, cited political interests after western Kenyan politicians questioned the process.
The chairman of Devki Group said he made the decision to protect his business name and reputation from being muddied in politics. Only Mr. Raval had publicly declared his commitment to Mumias.
“I have withdrawn my interest in investing in Mumias through a lease plan due to political interests that have arisen. “I have officially informed KCB of my withdrawal,” Raval said. Business Daily in an interview last week.
Others on the short list of investors looking to Mumias are Kibos Sugar, Catalysis Group, Russia, Kruman Associates of France, Premier JV (India), Third Gate Capital Management, and Kisumu-based Godavari Enterprises of India.
The Rai group made an offer for Mumias through its Ugandan subsidiary Sarrai Group, which, among other facilities, owns a sugar and plywood business in Uganda and Malawi. The company also operates Nyanza-based Rai Cement.
A successful offer from the Rai family would allow it to further strengthen its control over the Kenyan sugar market, where it already owns three millers: West Kenya, Sukari Industries and Olepito Sugar.
As of June 2020, data from the Sugar Directorate showed that the three companies owned by the Rai family controlled 45 percent of total product sales in the country, an increase from the market share of 41 percent. they had in the corresponding period of 2019.
The Rai family is also among the 29 investors who last year submitted offers for lease agreements for the five state-owned sugar factories – Chemelil, Sony, Nzoia, Miwani and Muhoroni as part of reforms aimed at reviving the sector in crisis. Two of the millers are in reception.
The list of bidders for the five state millers includes West Kenya and Sukari Industries linked to tycoon Jaswant Rai.
Others are China CAMC Engineering Company Limited, Shenzhen Start Instruments, Mheta Group, Kibos Sugar, Butali Sugar Mills, Mini Bakeries, and Kuguru Food Complex.
PVR Rao, administrator and recipient of Mumias, told Parliament last week that the leasing process had not been completed, raising hope for other bidders even after Raval withdrew.
Mumias, which used to be Kenya’s top producer with more than 250,000 tonnes a year, was beset by mismanagement, heavy debts and years of mounting losses, leading to its closure.
The miller was placed on hold by KCB Group #ticker in September 2019: KCB to protect its assets and maintain its operations.
KCB has been prohibited from auctioning the plant to secure assets used as collateral for other loans, prompting it to resort to the lease option.
Under the lease agreement, the successful company will manage the plant on behalf of KCB after it defaulted on loans of 545 million shillings owed to the lender, successfully pushing the process through the courts.
Mumias Sugar owes Proparco Sh1.84 billion guaranteed with the electricity generation plant, Ecobank Sh1.77 billion in the ethanol plant and Sh2.83 billion owed to the Treasury.
Other banks he owes more than Sh3 billion include KCB Group, NCBA #ticker: NCBA, and Stanbic Bank #ticker: SBIC.