Inyange Industries, the country’s leading food processing company, is in talks with five foreign investors who are seeking to buy 51 per cent of its shares and help it expand operations in the East African region.
Crystal Ventures Ltd, the investment arm of ruling political party Rwanda Patriotic Front (RPF), owns 100 per cent of Inyange.
Crystal Ventures is keen to raise over $120 million from the sale.
Two undisclosed Kenyan companies and others from Asia, Europe and the United States have expressed interest in investing in Inyange, which might happen mid this year.
Inyange Industries is engaged in three main production lines which include milk, water and juice.
It hopes to spread its production advantage to other parts of the region since it is one of the few companies in East Africa manufacturing the three products in one place.
Crystal Ventures, with a financial outlay of up to $70 million in Inyange Industries, will lose the decision making priority when it becomes the minority shareholder but the board says that with 49 per cent and opportunity to expand in the region, it will be more profitable.
“We want to bring in investors in order to build capacity in terms of expertise and financial resources to expand into the region” said Prof Manasseh Nshuti, the chairman of Crystal Ventures Ltd.
Rwanda’s regional import bill is high thus, the need to increase exports to the regional countries through Inyange.
However, Inyange would prefer to attract regional investors to take over the factory because they understand the business climate and environment better.
“The profitability of a company is determined by the cash flow. Our cash flow has been improving over time and we are definitely getting above the book value,” added Prof Nshuti.
Prof Nshuti also said that holding 100 per cent in an enclosed market is not more profitable than retaining 49 per cent minority and expanding to other markets in which returns on investment are much higher.
The food processor intends to reinvest the proceeds in diversification of products to make a variety available on the market.
The diversification will mostly target mineral water products, which will see the introduction of different types like table water, carbonated water and flavoured water.
Inyange is currently producing below capacity and with more capital investment they expect to reach 70 per cent.
The industry has been on the market for barely two and a half years and it is yet to break even, thus lacking the requirement to go to the stock exchange to raise money and give Rwandans an opportunity to invest in the company.
Inyange products on the domestic market are facing stiff competition from imported regional products from Kenya and Uganda.
On the Rwandan market, imported mineral water, milk and juice is cheaper than the locally manufactured products.