eBusiness Weekly
Funding needed for expansion, research Investment to help thwart growing competition
Golden Sibanda
SeedCO, the leading seed producer in Southern Africa, intends to raise $30 million to finance growth by listing its external operations across Africa and counter growing completion in regional market.
The seed producing giant has external operations in 12 countries including Zambia, Malawi, Mozambique, Botswana, South Africa, Tanzania, Kenya and Nigeria. The group also has a footprint in the Democratic Republic of Congo, Swaziland, Ethiopia and Angola.
Chief executive officer Morgan Nzwere, confirmed the plans saying SeedCo intended to raise $30 million to fund expansion, build regional offices and investment in research.
Mr Nzwere said significant progress has been registered in this regard. The group is reportedly now only awaiting fulfilment of conditions precedent.
“We want to expand in most of our regional markets. We are operating from rented premises so we want to build our own factories and be spending a bit more money on research to come up with products relevant for those external markets and we are looking for about $30 million,” Nzwere said.
SeedCo has 11 research centres across the African Continent for testing and breeding for different ecological climates. Zimbabwe, however, has SeedCo’s biggest business operations, including contribution to group revenue, which stands at about 37 percent.
Mr Nzwere would not discuss where the external business would be listed, as the group had not yet been given the permission by Zimbabwe Stock Exchange, but speculation in the market suggests that SeedCo wants to list the business in Botswana.
Botswana also happens to be the headquarters of SeedCo Holdings, which holds 100 percent stake of SeedCo International, an arm of SeedCo Group with predominantly controlling interests in its operations across Southern and Western Africa.
“I am not allowed to reveal those details at the moment until we have had the annual general meeting and informed all the shareholders,”
“We are still doing the conditions precedent and as you know there are various applications; stock exchange applications, exchange control applications and such other kind of things. So we are still working on the transaction, Nzwere said.”
The regional expansion, he said, comes as SeedCo said the performance of the external operations showed strong potential for further growth opportunities, but also had palpable signs of competition hotting up.
“If you look at business performance this year, it did very well and we are seeing further growth opportunities, particularly in the region. What we are also seeing is competition hotting up so we need to be investing more to make sure that we protect our markets against this competition,” the SeedCo CEO said.
SeedCo International registered strong performance in 2017 with turnover of $14m, which was 40 and 54 percent higher than budget and prior year respectively.
In its last set of results, SeedCo achieved turnover growth of 40 percent to $135m compared to last year. Profit after tax grew by 41 percent to $20,7m driven by strong demand for and superior performance of its products.
