Silo Foods seeks strategic partners

Source: Silo Foods seeks strategic partners | The Herald 30 APR, 2019

Silo Foods seeks strategic partners

Kudakwashe Mhundwa and  Kumbirai Tarusarira
Silo Foods Industries (SFI) is seeking strategic partners to inject US$55 million and RTGS$40 million to boost its operations following the unbundling of the Grain Marketing Board (GMB), according to the company’s managing director Daniel Maregedze.

SFI begun operating as a fully-fledged commercial business unit on April 1 this year after the GMB was unbundled into two units, which also include a Strategic Grain Reserve.

The move falls under Government’s plans to restructure State-owned enterprises (SOEs), within which 41 entities are lined-up for privatisation, departmentalisation or listing on the Zimbabwe Stock Exchange.

In an interview with The Herald Business, Mr Maregedze said the agro-processor was looking for fresh capital to boost production and also modernise operations.

“What we are looking for is US$55million and RTGS 40million to boost our manufacturing facilities both in terms of our production output and modernisation to improve on our efficiencies so that we can be able to deliver a cheaper and better priced product because when you are inefficient you tend to charge more.

“Government is very clear that this entity has been setup to operate profitably at all the times. We are not going to be going to treasury all the time to get funding. We have got a very clear five year strategic plan and part of it talks about our capital equipment plan were we are going to invest.

“As part of Cabinet resolutions made on March 27,  2019, Government will own a minimum of 26 percent equity in Silo Foods and will partner with private investors.

“We are now in the process of trying to engage with private investors. Part of the process involves us getting on board the services of a qualified and Government approved financial advisor. We have started that process and we will conclude that process by May 3, 2019,” said Mr Maregedze.

Prior to the de-merger, seven local and foreign investors had expressed interest in SFI.

“The financial advisor will help us in setting up a data room, an investor information map, facilitating cite visits and helping the investor set up due diligence for both parties so once this company is selected we are in full motion.

“Previously, the financial advisor who worked with GMB on the de-merger transaction had already started some ground work on the investors,” said Mr Maregedze.

“There are about seven entities; five of them local and two of them international that had already showed interest in Silo Food Industries, but because the contract was between GMB and that financial advisor, it could not be transferred to Silo.

After its demerger from GMB, Silo Foods inherited $70 million in core manufacturing assets including Belmont Depot, Cleveland Depot, Mutare deport and Norton Stock Feeds processing plant as well as working capital support in the form of raw materials form the Government.

Current Silo products that are on the market include:  Silo mealie meal, beans, rice, coffee, salt, and samp and it is the consumers’ hope that they should expand into bread, cooking oil and flour among other products.