BUA Group set to list food businesses on Nigerian Exchange
BUA Group, Nigeria’s leading foods, infrastructure, mining and manufacturing conglomerate is at the verge of completing the processes to list the shares of its Food businesses –Flour & Pasta, Sugar, Edible Oils, and Rice –on the Nigerian Exchange Limited (NGX).
The planned listing of BUA Food businesses awaiting regulatory approvals will further provide for a more robust capital market as the company joins FMCG sector of the NGX.
“Earlier in the year, just as I promised the management of the Nigerian Exchange Limited (NGX) when we were seeking to list a few of our businesses, we have commenced the process of bringing our Food businesses to the stock exchange.
“I can confidently announce that this process if almost completed and will provide for a more robust capital market upon listing,” Abdul Samad Rabiu, Chairman of BUA Group said recently at NGX Capital Markets Conference.
According to him, “There is a school of thought that argues rightly or wrongly that the Nigeria capital market system is not deep enough both in terms of the value and breathe of it offerings. Whatever the case may be, we must acknowledge the current efforts of the NGX to deepen the system and keeping market participants abreast of new offerings, but they need to do more,” Rabiu further said.
“As a private sector operator, BUA Group has been actively involved in the capital market in one form or the other over the past three years with some of the largest successful Mergers & Acquisition (M&A), debt and equity transactions in Nigeria even during the pandemic. We believed in the capacity of the Nigerian capital market to handle those transactions regardless of the economic headwinds. For us at BUA, we have seen increased value –intrinsic and otherwise to our businesses,” he said.
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Rabiu noted that when BUA Group listed its Cement business (BUA Cement), they were looking at getting a valuation of about N1trillion to N1.2trillion, but they ended up getting a valuation of over that. Currently, BUA Cement is the fourth largest capitalized company on the NGX with total market capitalization of about N2.5trillion.
“BUA’s expression of interest to list its food business on the NGX is impressive, as it shows the strong philosophy of Abdulsamad Rabiu in institutionalizing the family empire and more importantly democratizing the investment opportunity offered by the family’s portfolio companies,” said Lizzie Kings-Wali, Chief Executive Officer of Blackstone Capital Limited.
According to her, “The reverse merge of BUA Cement and Cement Company of Northern Nigeria (CCNN) has proven to be positive for both the core shareholders and minorities and I believe listing of food business should also help to consolidate BUA Group’s strategic objectives of incubating companies and grooming them into large cap entities offering investment opportunities for both local and foreign investors. Interestingly, listing on the NGX also helps to enhance governance. It increase access to capital, and of course lowers the cost of capital to the entity”.
“With BUA Foods expected to join the FMCG sector of the NGX, it creates new opportunities for investors with appetite for investing in non-financials. Likewise, Ethical and Sharia-complaint investors would be excited at seeing another large-cap Food-based company being listed on the NGX, as it broadens the Basket if investable assets for these class of investors,” Kings-Wali further noted.
She noted that while the consumer goods sector index has not performed so well this year, losing some 5percent year-to-date (YtD), “the listing of new large-caps creates new opportunity for the sector. Interestingly, the actualisation of this expression of interest by BUA may also spur interest of other FMCG companies to join the train and list their shares on the NGX, as investors seek new listings to deepen the Nigeria capital market, especially as this helps to break the ice on the sparse primary market activity in the past 2 years.”
BUA IRS Flour has established a state-of-the-art plant in Port Harcourt, Nigeria to cater for the growing needs of its population. The market is expected to grow annually by 6.7percent (Compound annual growth rate CAGR 2020-2025).
Flour is one of the staple foods contributing to the development of Nigeria. Currently, the shares of wheat flour for bread, semolina, pasta and others, are estimated at 60 percent, 20 percent,10 percent, and 10 percent, respectively. The base raw material for bread flour, confectionery flour and noodle flour, semolina, and pasta production is wheat, and 99 percent of the 5.67 million metric tons is imported.
All the sugar and allied investments of BUA Group are set up to take advantage of the entire sugar production value chain. These include investments in sugar estates as well as refining capabilities.
The Group currently has 2 ultra-modern and automated mega sugar refineries (BUA Sugar Refinery, Lagos and Eastern Sugar Refinery, Port Harcourt) that utilize state-of-art equipment to refine high quality products for consumption and industrial uses. The Sugar refineries have a total combined installed refining capacity of 1,500,000 metric tonnes. BUA is the only sugar refiner to have refining capabilities outside Lagos, Nigeria.
BUA Group had in response to Nigeria’s backward integration policy in the Sugar Industry, invested in large scale estates within the country to deepen local sugar production through the acquisition of the Lafiagi Sugar Company Ltd (LASUCO) in Kwara state in 2008 and also the establishment of the Bassa Sugar Company in Kogi State.
BUA Group has also acquired about 70,000ha of land in both locations for the purpose of setting up large-scale sugar plantations. Upon fully coming on stream, these initiatives will add significantly to the development of Nigeria’s local sugar industry. In 2001, BUA Group acquired Nigeria Oil Mills Limited which was established in 1951.
With two main facilities (Nigeria Oil Mills, Kano & BUA Oil Mills, Lagos), the company produces oil from groundnut and cotton seeds and also produces animal feeds and soap. BUA Oil Mills, established in 2008, produces high quality products including palm olein, stearin, Distilled Fatty Acid (DFA) amongst others.
BUA Group currently operates a mill in Kano as well as a rice plantation in Kano, Nigeria. The Group also operates a robust out-growers Scheme targeting about 100,000 rice farmers in Kano and Jigawa States, Nigeria. Rice is a staple food buoyed by strong domestic demand. The mill is the largest in Nigeria at 200,000 tonnes per annum and is currently being upgraded to 1million metric tonnes per annum. BUA Rice Plantation is estimated to cover a land mass of about 10,000hectares.