Wanted: investors with money to spare
In the latest round of privatisations, Pierre Castel did not get lucky. Two state-owned breweries, Harar Brewery and Bedele Brewery, went to Heineken for a reported USD 163 million. Now Mr Castel’s local unit BGI Ethiopia has secured a deal its managers believe will help them conquer the northern market.
BGI’s managers, on 1 July 2011, signed a memorandum of understanding with the founders of Raya Brewery, claiming 25 percent of a EUR 10 million greenfield brewery project in the northern town of Maichew, Tigray Regional State. The Ethiopian founders will have 49 percent and Jobst Meyer zu Biesen, CEO of Brewtech, Hamburg, 26 percent. Brewtech, which has been involved in the construction and management of breweries around the world for several decades will build and run the brewery. The plant, the first to be installed in the northern part of the country, will have a capacity of 300,000 hl.
The reason for Brewtech agreeing to be sandwiched between BGI and the founders of Raya is that the Ethiopian partners did not want to give more than 25 percent to BGI.
BGI Ethiopia happens to be the country’s major brewer with three breweries and a market share of about 50 percent. It recently opened a plant in Hawassa, 300 km south of the capital Addis Ababa, with a capacity of 400,000 hl.
Ethiopia is Africa’s second most populated country with 85 million people, a fast growing population and high dynamics in the private sector. Beer and non-alcoholic malt consumption in Ethiopia was 4 litres per capita per annum in 2010.
Despite Raya’s success in securing a vast plot of land with proven ground water, success in mobilising cash from the public has proven elusive. The Ethiopian investors have only collected about 32 percent of the share capital to date, it was reported.
Now the race is on to find other investors willing to jump in on the project before 31 July 2011.
Raya’s founders have pledged that their brewery will be up and running in one and a half years. Which will not be too soon.
On 1 July 2011 the Ethiopian privatisation agency PPESA floated a new tender for the full acquisition of Meta Abo Brewery after cancelling the first tender which had put the brewery on the auction block in a joint venture.
Meta Abo is the last remaining state-owned brewery with a beer market share of 16 percent. Its current annual production is 500,000 hl beer.
The proposed joint-venture sale of Meta Abo had already attracted significant international attention from the industry’s biggest names, including SABMiller and Diageo. However, after reportedly receiving offers of USD 100 million to USD 200 million for Meta Abo, the government announced that it would sell the brewery outright and no longer wished to be in on a joint venture.
The delays and cancellation will frustrate investors but the new option of buying 100 percent of Meta Abo will make it an even more attractive proposition.
