HARARE – Seed Co, the leading seed producer in Southern Africa is seeking immediate funding amounting to approximately US$31 million through the soon to be unbundled Seedco International, to finance growth and counter growing competition in the regional market.
In a circular to shareholders on Tuesday, Seedco said it has resolved, subject to shareholder approval to mobilise half of the required funding as permanent equity through the placement of 37,920,648 Seed Co International ordinary shares for subscription by Vilmorin and Cie, a related party, at a subscription price of $0,5069 per share.
Vilmorin and Cie, a strategic partner, emerged as the top shareholder in the seed giant 4 years ago in a $50.1 million deal which saw the company control 29.40% of Seedco. Vimorin is a Paris headquartered seed company which is ranked as the fourth largest globally.
If approved by Shareholders, the Private Placement will have a dilutive effect of 10 percent to post partial unbundling shareholding structure of Seedco.
The Board has proposed to separately list Seed Co International on the BSE and the ZSE respectively with the objective of providing a vehicle for future offshore fund raising and to provide another platform for the rating of the Group’s equity.
Zimbabwe has Seed Co’s biggest business operations, including contribution to group revenue.
Seed Co chief executive officer Morgan Nzwere, last year confirmed about the group intends to raise money to fund expansion, build regional offices and investment in research.
“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,” said Nzwere.
The seed producing giant has external operations in various countries across the continent 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.
The regional expansion comes as Seed Co previously said the performance of the external operations showed strong potential for further growth opportunities, but also had palpable signs of competition heating up.
“If you look at business performance this year (2017), it did very well and we are seeing further growth opportunities, particularly in the region.
“What we are also seeing is competition heating up so we need to be investing more to make sure that we protect our markets against this competition,” the Seed Co CEO said.
– EQUITY AXIS NEWS