Kenyan-based holding company with investments in flour milling and manufacturing of human nutrition products and animal feeds, Unga Group, is seeking shareholder approval to transfer part of the assets in two of its subsidiaries to the newly formed joint ventures with Nutreco International.
In August, the milling giant forged an investment agreement with the Netherlands based feeds manufacturer to establish JV companies in Kenya and Uganda through its subsidiaries Unga Farm Care and Unga Millers.
After the transfer, the company says its two subsidiaries — Unga Farm Care and Unga Millers — will then own the new joint ventures on a 50/50 basis with Nutreco International B.V.
Under the deal, Nutreco and Unga Farm Care will invest in and establish an aquafeed joint venture in Kenya as it targets to get a bigger share of the aquatic food market at a time when Kenya has increased focus on the blue economy.
The human and animal feed manufacturer said Unga Farmcare, the company’s aquafeed business represents a small part of the company portfolio and will continue operations without change despite the joint venture.
Meanwhile in Uganda, the multinational and Unga Millers will form an animal feed and nutrition joint venture.
The new entity will see Unga Millers, the Uganda subsidiary transfer animal feeds, nutrition business and certain assets to the joint venture company.
“Following the completion of the conditional investment agreements that were entered to between Nutreco International B.V. and each of Unga Farmcare and Unga Millers…The shareholders are requested to ratify the following resolutions as an ordinary resolution,” the firm said in a notice seen by Business Daily.
Unga Group expects to get Sh284.5 million from the transaction together with the sale of its bakery business.
Further restructuring its operations, Unga recently sold its bakery unit Ennsvalley to a newly formed food production company in the country, SimpliFine, through its cold-chain operations BigCold.
In the year ended June 2021, Unga Group saw its profit grow by three-fold to Ksh.293.5 million (US$2.66m) from Ksh.66.2 million (US$599,000) attained the previous corresponding period.
The 344% rise in earnings, is largely anchored on a 24.8% decline in finance costs to Ksh.150.6 million (US$1.36m) following a restructure of its bank facilities.
At the same time, the processing company received payment for grain supplied in support of the government-led subsidy program in 2017.
Unga’s turnover in the period remained largely unchanged at Ksh.17.8 billion (US$161.09m) from Ksh.17.6 billion (US$159.28m) in 2020, show casing a marginal growth of 1%.