Flour Mills of Nigeria Plc, the nation’s largest miller, plans to spend as much as $1 billion over the next four years to expand its facilities and restructure after its majority shareholder offered to take it private.
The new funding is about “doubling down on investment in Nigeria,” Chairman John Coumantaros said in an interview on Tuesday.
The investment will be a boost to President Bola Tinubu’s reform efforts at a time when some firms like Diageo Plc and Unilever Plc are exiting or reducing their exposure to the West African nation. Since coming to power in May 2023, he has unleashed a series of reforms, from free floating the naira to scaling back on fuel subsidies, to make the country more attractive to investors and pull it back from the brink of fiscal collapse.
Flour Mills plans to invest at least $500 million in its sugar operations in Niger state to increase production to more than 400,000 tons a year, from 100,000 tons currently, Coumantaros said. Another $100 million will be used to build a cassava-processing factory to end imports of the starch form of the tuber into the country, while its breakfast cereal offerings will be expanded, he said.
The 64-year-old company will be reorganized after Excelsior Shipping Company Ltd. last month offered to buy out minorities at 70 naira a share.
The company wants to restructure its more than 22 units into five individual companies, Coumantaros said. “We want to be able to attract partners — technical and financial partners — to help us grow our sugar operations and our food business. We have a lot of ambitious plans for investment and expansion.”
Internally Sourced
Most of the funding will be sourced internally, according to Coumantaros. “The requirement for capital is going to be very, very large. And of course we will be backing the majority of that,” he said.
Still, he urged the government to consider supporting local investment and development with lower interest rates. “We understand the high interest rates are necessary at this point in time, but it’s very difficult to build industries and invest in new things if interest rates are 30%,” he said.
The central bank has more than doubled the key rate to 27.25% in just over two years to crush inflation that remains sticky at 32.7%.
Flour Mills is looking to expand across the continent, starting in West Africa, and will leverage on the African Continental Free Trade Area — which when fully operational will be the largest single market by area since the formation of the World Trade Organization.
“With the inception of the AfCFTA, we believe strongly that we shouldn’t be just looking at the Nigerian market,” the chairman said. “Our dream is to have a pan-African food business that is headquartered in Nigeria. We’ll take advantage of the AfCFTA so that we can expand our footprint into those regions.”
Coumantaros sees the company relisting after it repositions.
“It’s our aspiration that we come back,” and “we list in Nigeria, perhaps a dual listing as a pan-African food business or a pan-African agro-allied business,” he said. “We do believe there’s a critical role for the Nigerian Stock Exchange to play in our future, but we need to reorganize, retool, recapitalize, refocus so that we’re in that position.”
The stock was unchanged at 62 naira per share at close in Lagos on Thursday. It has risen by 87.6% this year, compared to a 31.2% gain by the 151-member NGX All Share Index.
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