Cabinet approves KWAL’s privatisation

November 17, 2011

, NAIROBI, Kenya Nov 17 – The Cabinet has approved the proposed privatisation of the Kenya Wine Agencies Ltd. (KWAL) to enable it compete favourably in the cut throat liquor industry.

A Cabinet memo sent to newsrooms indicates that the decision authorised the ICDC to restructure the shareholding of the Agency in which 26 percent of the shareholding will be taken up by a strategic investor.

Four percent stake will be reserved for employees of the agency while the rest will be made available to institutional and individual investors. It is however not clear whether this will be done through an Initial Public Offer at the Nairobi Securities Exchange.

KWAL was cushioned from competition for years with its monopoly status on the wines and spirits business, and has been hard-hit by liberalisation of the liquor industry in the early 1990s. Since then, KWAL has lost market share to private sector players such as East African Breweries spirits division UDV, Wines of the World/Africa Spirits, and London Distillers.

The agency distributes wine and spirit brands from over 20 countries including 11 from South African alcohol beverage company Distell, which account for close to half of the company’s turnover. Its international brands include Viceroy, and Drosty-Hof, while local offerings are Papaya wine, Simba Cane spirit and Kibao vodka.

Its privatisation is seen as breathing a new lease of life into KWAL giving it financial muscle to launch an onslaught into the alcoholic beverages market.

The Treasury has plans to divest its stake in at least 26 state firms. The Cabinet in August approved the sale of its shares in the Intercontinental Hotel and the Hilton Hotel.

The State is also planning to divest itself of its 70 percent stake in the public power generator KenGen and its stake in sugar firms Chemelil, Nzoia, Sony, Miwani and Muhoroni.

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