Stockbroker puts Sh10bn price tag on Rea Vipingo

A view of the Vipingo Ridge Golf Course that adjoins the Rea Vipingo sisal plantation in Kilifi. FILE 

By John Gachiri,

In Summary

• AIB Capital says based its calculations on the value of the land.

Stockbroker AIB Capital has said that NSE-listed sisal producer Rea Vipingo could be worth as much as Sh10.12 billion, a significantly higher valuation than the figure that all three firms that are bidding to buy out the company have offered.

AIB Capital has said that by using two different valuations, they found the listed agricultural firm is valued at between Sh6.07 and Sh10.12 billion billion.

The two values are higher than the Sh3.3 billion offered by WWW.Bid Investment Company, Centum’s Sh3 billion offer and the Sh2.4 billion offered by Richard and Jeremy Robinow, the two brothers who made the first buyout proposal early last month.

The two brothers are the majority shareholders, with a 57.04 per cent stake and are now seeking full control of the company.

AIB Capital’s first valuation looks at how much money Rea Vipingo would get if it sold all its land in the market, the company’s main asset.

“Our valuation is thus primarily focused towards the value of the land and not the value of the operations or business i.e. selling sisal,” says a note on the proposed takeover of Africa’s largest sisal producer.

READ: Rea Vipingo battle hots up with entry of third bidder

The note says that valuation also takes into account input from real estate experts who say that part of the land, especially in Vipingo, Kilifi County, can be used to put up hotels and commercial property in addition to growing sisal.

Rea Vipingo lists in its books land holdings of close to 70,000 acres — the Vipingo Estate that is 10,573.64 acres in size, DWA Estate in Kibwezi (22,214.77 acres) and the Tanzanian subsidiary, Amboni Plantations, with 36,660.5 acres.

AIB Capital’s second valuation is based on the price of land and the value of mature sisal and liabilities in that land. It gives a final valuation of Sh6.7 billion.

Both values are discounted due to analysts’ consideration that not all the land would be sold if it was up for sale and also the illiquidity of Rea Vipingo shares on the Nairobi Securities Exchange (NSE).

Better deal

Using either of the valuations means that shareholders should get between Sh101.21 and Sh168.72 per share. The lowest valuation by AIB Capital is nearly twice the latest WWW.Bid Investment’s Sh55 offer per share.

Rea Vipingo is the third takeover bid for an NSE-listed company this year after Dubai-based Al-Futtaim Group made a Sh7.5 billion offer for CMC Holdings in September, which was preceded by Dimension Data’s acquisition and subsequent de-listing of AccessKenya Group for Sh2.6 billion in August.

The first offer for Rea Vipingo was a Sh40 per share bid by the Robinow brothers early last month, representing a 46 per cent premium on the Sh27.50 closing price share.