UK-based development financier CDC is set to acquire a 40 per cent stake in ARM Cement after the firm injected $140 million (Sh14.1 billion) in the cement manufacturer.
The CDC funds will allow ARM to retire expensive short-term loans that have been weighing down the company’s earnings. The CDC is owned by the UK’s Department for International Development (DfID).
This will leave the family of ARM’s chief executive, Pradeep Paunrana, with a 30 per cent stake while the balance will remain in free float.
We are proud to back a founder-led frontrunner in East African manufacturing,” Mark Pay, CDC’s managing director for equity investments, said in a statement announcing the deal.
“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 will now channel about $110 million (Sh11.1 billion) of the fresh capital towards settling its expensive debt.
“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,” Mr Paunrana said in a statement.