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Surface’s oil production capacity tripled after a $6 million investment by the new investor

Business Reporter
A MAURITIAN registered investor, with a balance sheet valued at $40 billion, has snapped up 16 percent of Industrial Development Corporation’s stake in Chitungwiza-based cooking oil processor Surface Investments.
IDC spokesman Mr Derek Sibanda confirmed yesterday saying the deal was concluded in July this year and was meant to raise funding to finance IDC’s debts, but would not discuss the exact identity of the investor

Mr Sibanda said the investor brought in $18 million for the shareholding and $6 million for working capital that tripled Surface Investments’ oil production capacity.

“The investor has brought in fresh funding to finance the $14 million (matured) bond plus other bank facilities. For that to happen, we had to dispose shareholding to the (Mauritian registered) company,” he said.

IDC held 26 percent in the Chitungwiza oil processing company while the Midex Group of India owned the balance of 74 percent, prior to disposal of the 16 percent.

In 2012, IDC raised $13,5 million, through CBZ, by way of a Diaspora bond for the upgrade of Surface Investments plants, intending to repay once it was done with retooling of the company.

IDC earlier said that it intended to clear the debt by end of April this year.

Mr Sibanda said the fresh capital injected to expand Surface Investment’s production, enabled the firm to ramp up processing capacity from 150 tonnes to 450 tonnes a day.

“The transaction was completed in July this year and the investor has (also) put in $6 million into the refinery and bottling plants. The company is now producing 4 million litres of cooking oil a month,” Mr Sibanda said.

IDC exports crude oil to Malawi, cotton linters and hulls to South Africa and Europe.

Mr Sibanda pointed out that IDC’s other fast moving consumer goods producer, Olivine Industries, which also manufactures cooking oil, was now getting raw materials on credit for cooking oil processing, from the investor.

However, the process to obtain all relevant statutory approvals from the Zimbabwe Revenue Authority, Competitions and Tariff Commission, indigenisation and exchange control authorities, took a lengthy 176 days.

“That process took 176 days from the day of expression of interest to the day approvals were obtained from the statutory institutions,” Mr Sibanda said, yet the investor was buying from a Government entity.

Other countries that Zimbabwe competes against for foreign direct investment in Africa, such as Rwanda, facilitate all relevant regulatory approvals in a matter of hours.

Surface Investments was, prior to investment by the Mauritian firm, a joint venture between the Midex Group of India and State-owned IDC to manufacture edible oils.

The company started operations in 2006. Its infrastructure includes a world-class multi-oilseed processing plant, a state-of-the-art oil refinery, a PET bottling plant, an automatic packaging plant for edible oil and its derivatives among other products it produces.

Surface is the largest producer of cooking oil in Zimbabwe, and its brands include pure drop, cota gold and golden glow. It enjoys the largest market share.

It also enjoys a strong distribution network and associations with super store chains such as OK, TM and SPAR.

The divestiture comes as a time Government is in the process of refocusing IDC to concentrate on its role at inception, of mobilising and providing development finance.

IDC has partnerships with investors from across the world in a wide spectrum of the Zimbabwe economy including textiles, mining, vehicle and tractor assembly, real estate and metal production among others.