Africa’s Biggest Sisal Producer Mulls Move Into Kenya PowerCharles Wachira
REA Trading Ltd., the biggest investor in Africa’s largest sisal producer, is considering expanding into the energy industry.
The company, which is buying out the rest of REA Vipingo Plantations Ltd., plans to use waste from sisal to make methane that can generate electricity, Director Richard Robinow said in an interview Tuesday in Nairobi, Kenya’s capital. It may then sell that power into the country’s national grid, he said.
“The problem we have today with the current business is its limit on its growth,” he said. “It’s a good business, but it can only grow to a certain level.”
The government of the country with East Africa’s biggest economy has a program to add 5,000 megawatts to Kenya’s current capacity of 1,664 megawatts by 2017. REA Vipingo operates two sisal estates in Kenya that produce about 12,000 metric tons a year of the fiber, which is used to make rope and dartboards.
REA Trading, which owns 57 percent of REA Vipingo, was until March 26 in a dispute with Centum Investments Ltd., Kenya’s biggest publicly traded investment group, about taking over the producer.
The two settled their disagreement, with Centum withdrawing its offer to buy the sisal company and acquiring 9,646 acres (3,904 hectares) of land in the coastal district of Vipingo as well as REA Vipingo’s subsidiary Vipingo Estates Ltd. for 2.1 billion shillings ($23 million).
The RVP Minority Shareholders Association, which has 5,863 members, is “disturbed by the preferential treatment of Centum Investments in the acquisition of RVP by REA Trading,” Moses Mandu, the general secretary of the body, said in an e-mailed response to questions March 30.
The association wants REA Trading to raise its offer price to 500 shillings a share from 85 shillings now, and will refuse to pass resolutions at the April 28 annual general meeting, he said.
The REA Trading deal is “fair,” Robinow said.
“Its not in my view detrimental to minority shareholders,” he said. “We are selling land to Centum at what I believe is a very fair price and I own 57 percent of the company. I have the most to lose if I sell below the market price, and I have no intention of doing so.”
REA Vipingo shares have been suspended since Nov. 13, 2013, when REA Trading first offered to buy remaining investors’ holdings.