McLeod acquires Rwandan firm

McLeod Russel, flagship of the B M Khaitan group, said its unit Borelli Tea Holdings UK will buy 75% in US-based investment company Olyana Holdings for $2.75 million (about Rs 13 crore).

Olyana has a share sale agreement with the Rwanda government for buying 60% in Gisovu Tea Company and has a tea processing factory that produces about 1.7 million kg of tea annually, McLeod said in statement to BSE.

The deal will give McLeod, which had made an acquisition in Vietnam 10 months back, a foothold in Rwanda and chances for expansion.

DNA had on August 17, 2009 reported that the company was actively scouting for acquisitions in Africa. Aditya Khaitan, managing director McLeod Russel, had said, “We are scouting for properties in Africa and, in the next 5 years, about 30-40% of our exposure should be outside India”.

K K Baheti, director, McLeod Russel, said, “The government of Rwanda is encouraging privatisation of tea gardens, and Gisovu is one of the best tea estates and is known as the Darjeeling of Rwanda. Starting off with 1.7 million tea production from this estate, we hope to make 4-5 million kg of tea from Rwanda in 3-4 years. This would be like the strategy being followed in Vietnam, where we are expanding following the acquisition of Phu Ben Tea Company.”

According to Baheti, Olyana has given a business plan to the government of Rwanda and will explore possibilities of processing and marketing of teas of Gisovu by adding value.

As per the agreement in Africa, the acquisition of the controlling stake in Gisovu by Olyana is on a long term basis and its objective is to develop plantation, manufacturing and marketing activities to make Gisovu globally competitive with the support from the Rwanda government.

Olyana also plans to negotiate for joint ventures with the Government of Rwanda for the Karongi Tea Project, development of Gitesi (Karongi) Tea Factory and block industrial estates.