UGANDA – HMH Rainbow Ltd, a producer of fresh and frozen chicken in East Africa under the brand name Yo Kuku, is eyeing financial backing from the private-sector investment arm of the World Bank, International Finance Corporation (IFC) to support its expansion plan.
HMH Rainbow headquartered in Uganda is a joint venture between Ugandan businessman Alykhan Hudani (66.5% stake) and Rainbow Farms Investments Proprietary Ltd (33.5% shareholding).
Rainbow Farms is a wholly owned subsidiary of RCL Foods Ltd, a publicly listed South African food manufacturer.
The poultry company seeks to undertake a US$12 million capacity expansion programme that seeks to construct temperature-controlled broiler houses, improve abattoir operations, and establish grain silos as well as bulk feed-dispatch systems in Kampala, Uganda.
According to reports by The Capital Quest, IFC is looking to invest as much as US$7 million the project, comprising of a convertible loan of up to US$5 million and an additional debt of US$2 million.
HMH has 12 broiler farms with a capacity of over 1 million birds a year and output of around half a million a month.
The company with operations in Uganda and Kenya sells raw chicken as well as semi-processed items like burger patties via supermarket chains as well as exclusive Kuku shops.
As part of its broad product offering, HMH also manufacturers feeds, a special blend of chicken feed that is mixed and packed in Semuto and distributed to various customers in Uganda and some parts of East Africa.
It sells the products under the Enkoko brand as well as Yo Kuku!
For IFC, this is the second deal it has undertaken in the poultry industry in the region this year.
In February, it disclosed plans to lend around US$10 million to EthioChicken Group, a producer of day-old-chick and poultry feed in Ethiopia that focuses on selling these input products to farmers.
EthioChicken will use the money to construct two new breeding farms with a capacity of 60,000 birds each and one new hatchery facility, expected to cost US$16.2 million.
It will also use the funds to purchase parent stock birds and to partially refinance an existing long-term loan.
In another similar deal, Rwanda-based poultry firm Uzima Chicken Ltd bagged US$3 million in follow-on mezzanine debt funding from existing backer AgDevCo, a specialist investor in African agriculture.
The East African poultry farm produces and distributes Sasso breed chickens with the aim to create value for rural households by providing better quality meat and eggs for consumption and sale in Rwanda and Uganda.
The recent investment will provide Uzima with further capital to expand its production capacity, vertically integrate into poultry feed and widen its already significant impact reach across the Great Lakes region.
This is a second boost from AgDevCo who in 2017 injected US$3m of debt to support Uzima’s inaugural establishment in Rwanda.
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