29 August 2014

Kenya: KWAL Privatisation Process Concludes

Nairobi — The privatisation of Kenya Wine Agencies Limited (KWAL) has finally come to conclusion with the sale of Industrial and Commercial Development Corporation 26 percent stake to South Africa wines, spirit and brandies firm, Distell Group.

Distell bought the 26 percent shares from ICDC at a cost of Sh860million.

The deal which was signed on Friday now leaves the state firm ICDC with 42.65 percent stake in KWAL from an earlier 72.65pc.

"The transactions have taken quite long because the process under the privatisation law is rigorous because it involves the Cabinet approval, right to Parliament approval and preparing the transactions for closure. These processes take long unlike before when we were operating under some legal arrangements which were not rigorous," Treasury Cabinet Secretary Henry Rotich said while presiding over the signing ceremony.

The deal has now provided for an indefinite long-term supply and distribution agreements between Distell and KWAL with a minimum lock-in period of five years, long-term production and bottling agreement as well as modalities to extend exclusively to other countries in the region.

Another shareholder of KWAL is local investment firm Centum, which holds a 26 percent stake.

"There is nothing wrong with government becoming a partner with private sector. As long as that business does not fall into bureaucratic management. There are things managing Director of KWAL could not do because it was a parastatal," Centum Chairman Dr Chris Kirubi said.

The government has also approved that 4 percent of the shareholding goes to the members of staff of KWAL while 1 percent is owned by the distributers.

The deal is a culmination of over 16 years' business relationship between the two companies, during which KWAL has been distributing several Distell brands including Amarula Cellar Cask wines, and Drostdy Hof wines.

In the time, KWAL has also been producing, bottling and distributing Distell brands, including Viceroy Brandy, Clubman Mint Punch and Castle Brand Aperitif.

Currently, KWAL operates five distribution centres in Kenya including Nairobi, Mombasa, Nakuru, Kisumu and Nyeri, another in Uganda and a wholly-owned subsidiary in Rwanda.

Other companies to privatised by the government through the privatisation commission is the sugar companies, three hotels and two banks a process.

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