The Privatization & Public Enterprise Supervising Agency (PPESA) has finally decided to award Ethiopian Crown Cork & Can Manufacturing Industry S.C. (ECCCMI) to Fairfax Africa Fund, LLC, a company that offered 206.2 million Br to purchase 75pc of the state owned enterprise.
On March 5, 2015, the agency made an opening for three companies, ECCCMI, Agricultural Mechanisation Services Enterprise, and Bilito Siraro Farm. Moreover, two companies, Bahir Dar Textile S.C and Kombolcha Textile S.C were made available by the Agency for interested buyers for negotiated acquisition. But except for ECCCMI none of the other companies attracted any bidders.
Only Fairfax was interested in buying ECCCMI from the PPESA. Fairfax is a U.S. based investment firm which invests in emerging economies with high growth potential. They have investments in Africa, the Middle East and other locations. Their total worldwide investment portfolio exceeds 150 million dollars.
As per the offer, the Agency had evaluated the proposal submitted by Fairfax, said Aseb Kebede, vice head of public relations office at PPESA. Fairfax had submitted a request to the Agency in order to be considered as a local company when it paid the money offered.
As far as the transfer of public enterprises is concerned, the Agency has a precondition for domestic and foreign bidders. For local companies, PPESA requires 35pc down payment with the remaining sum to be paid within five years, while foreign companies are expected to pay a 50pc down payment, and the rest within three years.
The board of PPESA, which is chaired by Aster Mamo, Minister of Civil Service and Cluster Coordinator for Good Governance & Reform with the rank of Deputy Prime Minister, evaluated and finally approved it. The board is a collection of members from PPESA, represented by its Director General, Beyene Gebremeskel, and other representatives from the Ethiopian Workers Association Corporation.
The board of PPESA usually evaluates the business plan of each interested buyers, their record of investment and their management and the kind of technology they propose to bring, stated Asebe.
According to this approval, Fairfax will pay 35pc of the down payment and the remaining sum in the next five years.
“Our bid for Crown Cork includes a group of Ethiopians as partners and therefore we submitted the bid as a joint foreign Fairfax and Ethiopian investors’ partnership with Fairfax as the main bidder,” stated David Johns, director of Fairfax African Fund, in a statement that was sent to Fortune via email on March 6, 2015.
The company will spend up to 500 million Br, including the offered price to expand and re-establish the company.
To pay the remaining 65pc, re-auditing and registration of ECCCMI assets has to be made jointly by the agency and Fairfax in order to make sure that there is no error of counting, he added.
Looking at the fiscal year so far, it was reported that PPESA already lost the expected revenue of 1.3 billion Br from the transfer of enterprises to private holders though the period was marked with a 398.4 million Br profit from 27 public enterprises that are under its administration.
The Agency made 7.6 billion Br from the sale of goods and services from the 27 enterprises that it manages, down from a target of 8.6 billion Br. In addition, it has managed to make 17.3 million dollars from the exports of the five enterprises under it.