Kenyan firm's sale of Uganda-based Hima cement poised to spark investor excitement, drive growth

By Guardian Reporter , The Guardian
Published at 05:09 PM Mar 15 2024
An unidentified Hima Cement worker is seen observing the Kasese plant in Uganda.
Photo: Courtesy of Hima.
An unidentified Hima Cement worker is seen observing the Kasese plant in Uganda.

IN a bold and calculated strategic maneuver, Bamburi Cement PLC, a prominent figure in Kenya's construction sector, has achieved a significant milestone by successfully concluding the sale of its subsidiary, Hima Cement, in Uganda, for a substantial sum of US$84 million.

This historic transaction, which successfully navigated through the rigorous approval processes of regulatory bodies and garnered overwhelming support from shareholders, reached its culmination in early March 2024, as detailed in an exclusive report by the Business Daily Africa.

With foresight and determination, Bamburi Cement made the pivotal decision back in November 2023 to divest from Hima Cement.

This strategic move has now led to a pivotal shift in ownership, with Holcim and Cementia Holding relinquishing their respective stakes to a consortium spearheaded by Sarrai Group and Rwimi Holding, marking a significant turning point for the future of Hima Cement, which is one of the leading cement producers in Uganda. 

The reported transfer of ownership heralds a fresh dawn for Hima Cement, ushering in a new era under the guidance of its new proprietors, marking a historic transition that promises to bring transformative changes and innovative strategies to reshape the company's trajectory and solidify its position in the market.

With the sale finalized to great acclaim, as reported, investors are now eagerly poised for the potential announcement of a special dividend from Hima Cement, a development that is anticipated to not only reward stakeholders but also signify the beginning of a promising new chapter for the company, aligning with its vision for sustainable growth and enhanced shareholder value.

As the financial windfall from the sale enriches Bamburi's balance sheet, the company is in contemplation of bestowing its steadfast shareholders with a special dividend, subject to ratification as a pivotal component of its strategic capital allocation plan.

Shareholders have been assured that the board and management will meticulously review the company's dividend plans, with Bamburi stating, "The influx of proceeds from this transaction empowers us to potentially issue a special dividend to our valued shareholders, contingent upon adherence to Bamburi's robust dividend strategy and attainment of requisite approvals."

The prospect of a special dividend has ignited a fervor among investors, propelling Bamburi's share price to approximately KSh42.5, approaching its peak of KSh43.4 over the past year.

Financial analysts are of the view that the prospect of a potential payout is a beacon of hope for Bamburi investors, particularly in the wake of a substantial dividend cut last year following a downturn in net profit. This promising development signifies a potential turnaround in fortunes for shareholders.

The divestment from Hima cement not only promises a profitable return on investment for Bamburi but also unlocks the opportunity for the company to redirect its resources and investments towards nurturing its core operations in Kenya, reinforcing its commitment to growth and success.

The Business Daily Africa has highlighted that as Bamburi strategically divests from Hima Cement, it not only secures a profitable return on investment but also strategically realigns its focus and resources to bolster its core operations in Kenya.

This strategic decision underscores Bamburi's commitment to fostering sustainable growth and prosperity, demonstrating its proactive stance in optimizing its business portfolio for long-term success and sustainability amidst a constantly evolving market environment.

Hima Cement was established in 1994 following the privatization of Uganda Cement Industries by the government. In 1999, it was acquired by Lafarge as a subsidiary of the Bamburi Cement Group in Kenya.

With operations at two plants in Uganda - the Hima Plant in Kasese and the Tororo Grinding Station in Tororo, Hima Cement boasts a total annual cement production capacity of 1.7 million tons.