By Emmanuel Abara Benson – Nairametrics
Strides Group has dropped billions of Naira to acquire the mortgaged assets of troubled Rivers Vegetable Oil Company Limited (RIVOC).
A consortium of four banks – United Bank for Africa (UBA) Plc, Guaranty Trust Bank GTBank) Plc, Diamond Bank Plc, and Zenith Bank Plc – were, over the weekend, led by UBA Capital Trustees during the signing of the deal.
Apparently, RIVOC took out loans from the above-named banks. It is, however, unclear whether the loans were used to acquire the “mortgaged assets”, or if the assets were used as collateral for the loan. But one thing is clear, and that is the fact that the company failed to repay the loan. This led to the seizure of the assets and eventual sale to Strides Group.
The deal is expected to help save about five hundred direct jobs for Nigerians, while also guaranteeing more than five thousand indirect jobs.
According to Moritz Abazie, Chairman of Strides Group, the newly-acquired manufacturing plant would commence production in two months. He described the plant as one of the biggest in the Nigerian fast-moving consumer goods (FMCG) sector.
The acquisition will also facilitate the company’s growth aspiration, Abazie said.
“We are leveraging our capital strength, talents and good reputation, to take advantage of identified opportunities in the food and other fast moving consumer goods, manufacturing and distribution sectors.
“In accordance with this diversification goal, we have acquired the entire production assets of Rivers Vegetable Oil Company Limited in a multi-billion naira transaction, as a fast route to actualizing our market entry strategy.” – Abazie
Once state-owned and a major player in Nigeria’s FMCG sector, RIVOC engaged in the processing of crude palm kernel to extract the oil and market to Nigerians. About five hundred people were engaged in its operations. Unfortunately, the company began to experience crisis by 2013, even as its main foreign investors divested their stakes.
It is now expected that Stride Group’s intervention would bring RIVOC’s past glory, restore jobs, and ensure profitability. As a matter of fact, Stride Group is hoping to achieve more with RIVOC than what the original stakeholders were able to achieve.
Meanwhile, the consortium has expressed delight that RIVOC has eventually been purchased by an indigenous company. According to Tokunbo Ajayi, the CEO of United Capital Trustees:
“we are happy an indigenous company like Strides Group took over the plant, we look forward towards a speedy conclusion of the transactions and the speedy revival of the business complex.”
It is yet to be disclosed whether Strides Group intends to change RIVOC’s name or retain it.
Strides Group is the owners of Strides Energy and Maritime Limited (SEML), which operates in Nigeria’s oil sector. The company offers dredging services, petroleum terminal tank farm construction/rehabilitation services, and offshore oil & gas pipeline construction/installation etc.
The acquisition of RIVOC marks a shift from the company’s core focus on crude oil. That notwithstanding, the company still stands a chance to compete against the likes of UAC’s Grand Oil, PZ Wilmar’s Mamador and Sunola etc.
Strides Group will, however, need to put in a lot of work in order to favourably compete.