CDC injects Sh14bn into Kenya’s ARM

Cement manufacturer ARM Cement Limited has agreed to a Sh14 billion (US$140 million) equity investment from CDC Group – touted to be one of the largest Foreign Direct Investments (FDI) into Kenya.

The investment by CDC, the UK government-owned development finance institution of US$140m will be used to retire some of ARM’s debt and strengthen its balance sheet. CDC will support ARM to be a regional cement industry leader with world class operating and environmental standards that is focused on creating shareholder value.

“This is a significant milestone for in ARM’s journey. We chose CDC as an investor and partner to help us achieve a shared vision of creating the leading and lowest-cost East African Cement business. Together we will focus on shareholder value creation and on positive developmental impacts for our communities and stakeholders.” said Pradeep Paunrana, ARM’s Managing Director.

CDC’s Managing Director, Equity Investments, Mark Pay added “The company has demonstrated strategic leadership in cement, a robust management team and the highest level of ethics and community values. We are proud to back a founder-led frontrunner in East African manufacturing.

CDC’s investment in ARM Cement can provide the building blocks for the growth of infrastructure and housing in East Africa. This investment will strengthen a company making a difference to the local economy, bringing jobs and lower cost raw materials to a region traditionally dependent on imports.

ARM has the potential to become one of sub-Saharan Africa’s most successful companies, providing a platform to expand into neighbouring countries while bringing world-class environmental standards and highly efficient plant – an approach that is central to CDC’s investment strategy”.

CDC will work closely with ARM to improve standards in areas such as energy efficiency, health and safety and its engagement with local communities, in particular supporting the company’s excellent provision of health, education and environmental services to local communities through the Rhino Cement Foundation.

CDC will also support the company’s move to membership of the World Business Council’s Cement Sustainability Initiative – a first for an African cement manufacturer.  This will result in reduced energy costs, lower greenhouse gas and dust emissions and improved water conservation and recycling. This is CDC’s first direct investment in the cement industry in Africa since the launch of its new investment strategy in 2012.

Ketso Gordhan, CDC Regional Director, will represent the investor on the ARM board and bring extensive Pan-African cement industry expertise. CDC has a long history of backing the industry dating back to one of its first investments, Chilanga Cement in Zambia, in 1948. This is CDC’s second investment in Kenya in as many weeks following the announcement of its acquisition of a 10.7 per cent equity stake in the Nairobi-headquartered banking group I&M Holdings.

Completion of the transaction is subject to conditions, including shareholder approval and regulatory and competition clearances.