Rwanda's largest cement-producing factory (Cimerwa) has sold 51 per cent of its equity to Pretoria Portland Cement Co (PPC), a South Africa's largest cement firm.
The buyout is worth $69.4 million.
A Memorandum of Understanding sealing the deal was signed in Kigali, yesterday, by Pichette Kampeta Sayinzoga, Permanent Secretary, Ministry of Finance and Economic Planning, and Paul Stuiver, CEO, PPC.
Cimerwa, operational in Rwanda for almost 30 years, is jointly owned by the government and a consortium of local investors, including the Rwanda Social Security Board (RSSB) and Rwanda Investment Group (RIG).
The remaining shareholding will be split between RSSB (formerly the majority shareholder), government, RIG and Sonarwa, an insurance firm.
PPC, a leading supplier of cement, operates in southern Africa with manufacturing facilities and milling depots in South Africa, Botswana and Zimbabwe with capacity to produce 8 million tonnes of cement per year.
Speaking at the signing ceremony, Afrique Ramba, Board Chairman, Cimerwa, said, "We are excited with the PPC business relationship. This substantial equity investment is a sign of strong confidence in Rwanda's business environment and the social, economic and political progress we are making."
Ramba stated that Cimerwa current produces 100,000 tonnes per year, adding that production capacity will increase to 600,000 tonnes per year once a new plant is completed in 2014.
He said current supply does not meet the existing demand.
"This year the company will produce 150,000 tonnes yet the demand is 350,000 tonnes. The gap is still big," he said.
Ramba stated that the plant has not been producing cement to the required capacity because machines are old.
The cement company is in the process of finalising a $104 million loan to complete the expansion project.
He observed that PPC has the requisite experience in managing a cement plant which would help to improve Cimerwa.
In 2010, the South African cement plant celebrated its centenary as a company listed on the Johannesburg Stock Exchange.
"This transaction is a further step in our commitment to invest in the sub-Saharan Africa and we are very confident about Rwanda. The Cimerwa plant is located in a challenging but very strategic region - in east and central Africa - which currently lacks significant cement production capacity," said Stuiver.
He added: "Rwanda is a prime investment destination on the African continent and we want to be part of Rwanda's development vision."
Meanwhile, the Pretoria Portland Cement Co. also contributed $ 100,000 (about Rwf 63 million) towards the Agaciro Development Fund (AgDF).
A dummy cheque was handed over to Finance PS Kampeta.
Based on Rwandan and the Great Lakes Region's positive economic outlook, regional cement demand is projected to increase to 1 million tonnes during the next decade.
Kampeta hailed the South African firm for investing in Rwanda and contributing to the country's development. "We are looking forward to sign businesses with serious companies that are supporting our development agenda," she said.
The event was attended by the High Commissioner of Rwanda to South Africa, Vincent Karega, and his South African counterpart in Kigali, George Nkosinati Twala.
In October, the two countries signed a major investment framework to open up investment opportunities to each other's citizens.
PPC is the latest South African firm to join the Rwandan market, with the others including telecom giant MTN.