Kenyan tech tycoon Julius Mwale has placed the highest bid of Ksh27.6 billion ($249.31 million) in a leasing tender to control and revive Mumias Sugar over a 15-year period.
The bid puts him ahead of Kenyan businessmen such as steel tycoon Narendra Raval and Rai Group Chairman Jaswant Rai, who both expressed an interest in reviving the financially distressed sugar company.
According to a report, the receiver-manager, Ponangipali Rao, disclosed that Mwale’s bid was the highest from among the eight bidders seeking to take control of the company.
He noted that Devki Group owner Raval offered Ksh8.4 billion ($75.9 million), while Rai offered KSh3.5 billion ($31.61 million). Other bidders included Pandhal Industries with Ksh9.7 billion ($87.62 million) and Kibos Sugar with Ksh8.8 billion ($79.5 million).
After months of work and behind-the-scenes negotiations, the deal will set the winning bidder on course to run the plant and offset financial obligations for 15 years.
The offers received following the tender period will be subjected to technical and financial evaluation to pick the firm to lease Mumias Sugar.
Mumias Sugar, a Kenya-based integrated sugar company founded in 1971, was once the largest sugar manufacturer in Kenya, producing as much as 250,000 metric tonnes of sugar per annum.
In 2012, the company ran into a financial crisis. A forensic audit conducted by the audit firm KPMG revealed procedural and financial irregularities in its books, leading to a loss of millions of dollars.
Following the management’s misappropriation of the company’s books, it was suspended from the Nairobi bourse. Since then, it has continued to struggle despite being bailed out by the Kenyan government in the past.
To revive the sugar producer and protect its assets, Kenya Commercial Bank Group (KCB) placed the company under receivership on Sept. 24, 2019.
The company faces a stiff debt crisis. It owed over Ksh11.6 billion ( $107 million) to its creditors, including Kenya’s National Treasury, the Kenya Sugar Board and NCBA Bank Kenya.
Mwale, the president and CEO of SBA Technologies, a New York-based company founded in 2003, has unveiled his strategy to revive the sugar company.
The businessman is also the lead investor in Mwale Medical and Technology City (MMTC), a $2-billion community-owned sustainable metropolis with an extensive medical and technology complex located in Butere Sub-County Kakamega, Kenya.
MMTC also contains a shopping and residential complex, a golf resort and a convention center.