The Government Institutions Pension Fund (GIPF) has received an unsolicited proposal from one its asset managers seeking financial backing for its plans to acquire Schwenk Namibia (Pty) Ltd, the company which owns and operates the Ohorongo Cement factory.
The cement company is now back on the market after the Namibia Competition Commission (NaCC) this month blocked West China Cement Limited from acquiring the business for N$1.5 billion citing the proposed acquisition could be uncompetitive since West China Cement Limited is a majority shareholder in Cheetah Cement, a move which could enable possible collusion and price fixing to the detriment of consumers.
The move by the asset manager to acquire the cement maker backed by the cash rich fund manager could, however, face hurdles as the acquisition does not fall within its investment mandate.
“The Government Institution Pension Fund (GIPF) received a request from one of its Asset Managers expressing an interest to invest in the acquisition of Ohorongo Cement. However, considering that the GIPF is governed subject to NAMFISA regulations, we have advised the said Asset Manager to observe the applicable provisions of the regulations,” GIPF Chief Executive Officer, David Nuyoma said.
The fund, without ruling out its interest in the investment said, “the GIPF remains committed to invest in viable ventures within its investment policy and in accordance with the relevant legislative and regulatory framework. Furthermore, business transactions will only be considered after well-researched business cases have been presented. All the necessary due processes will also have to be followed.”
The interest by local buyers to acquire Ohorongo comes as the Industrial Development Corporation of South Africa Ltd (IDC) which holds a 14.27 percent stake in the cement maker confirmed to the Windhoek Observer its intention to exit the business.
“IDC remains a willing seller of its shares in Ohorongo at a fair market price, which will be acceptable,” IDC spokesperson, Chimwemwe Mwanza told the Windhoek Observer.
Quizzed if the organization had supported the recent efforts to dispose the company to West China Cement, he said, “IDC remains committed to Ohorongo. Further to this and in support of Namibia’s indigenisation program, it is our view that the locals (Namibians) should hold a considerable shareholding in Ohorongo. IDC, in consultation with other minority shareholders, have always explored opportunities aimed at achieving this objective. Given the current economic climate in Namibia and the value and size of the of the Scwhenk Namibia shares in Ohorongo, it has proven difficult to procure a local (Namibian) sale of these shares. This has resulted in outside/foreign interests taking up this space.”
This comes as it emerged companies such as Stimulus Investments and government owned Epangelo Mining had previously shown interest in acquiring the business two years ago but withdrew their offers.
“That was not part of the current transaction but some years back when the IDC of South Africa wanted to sell its shares in the business and offered us to buy their shares. We could not get audited financial statements from Ohorongo and that’s why we did not proceed with the arrangement,” CEO of Epangelo Mining, Eliphas Hawala said.
Asked if the company will be interested in the business now that it’s back on the market, he said, “that’s something for the board to decide.”
Ohorongo Cement Spokesperson, Frankleen Alberts said the NaCC decision will not impact the operations of the company.
“At Ohorongo, it will remain business as usual. Our focus remains on product quality and excellent service delivery,” she said.
On whether an appeal will be lodged against the NaCC decision she said, “Ohorongo cannot comment on behalf of the buyer and seller and can only refer you to Schwenk Zement International and West China Cement in this regard.”