Indorama joins Dangote, MTN Nigeria, BUA, Zenith as companies worth over $1bn

By Ben Eguzozie

• Company buys remaining 15% from UK-based Actis Capital from Eleme Fertilisers 

• Port Harcourt-based producer’s valuation now $3.3bn, as one of SSA’s most valuable companies

Indorama Nigeria, owners of Indorama Eleme Petrochemicals Ltd (IEPL) and Indorama Eleme Fertilisers & Chemicals Ltd (IEFCL), and a subsidiary of Singapore-based global conglomerate, has joined the league of Nigerian operating companies worth over $1 billion, including the likes of Dangote, MTN Nigeria, BUA and Zenith Bank.

The Port Harcourt-based fertiliser producer’s valuation is now around $3.3 billion, making it one of sub-Saharan Africa’s most valuable companies outside of South Africa.

Business A.M. was reliably informed by sources with knowledge in equity buyback that Indorama has bought the remaining 15 percent share initially held by the United Kingdom-based Actis Capital in Eleme Fertilisers & Chemicals (IEFCL). This leaves Indorama gaining full control of the IEFCL urea plant following Actis Capital’s exit. It will also become the leading producer of urea fertiliser in all of sub-Saharan Africa. The company already owns 85 percent of the fertiliser plant.

Abraaj, a Dubai-based private equity firm, in 2016, took a 15 percent stake in the IEFCL. The 15 percent stake was valued then at $150 million, which brought IEFCL value to $1 billion. With the collapse of Abraaj, which was at the time the largest private equity group focusing on emerging markets, Actis Capital took over some of its assets including various private equity groups.

Business A.M. learnt from a source that the 15 percent stake was purchased at under $500 million, which comes to around three times what it was originally sold for. The transaction is yet to be officially confirmed by Indorama and Actis Capital.

Indorama today produces about three million tonnes of fertiliser per annum (mtpa) from its two-train Port Harcourt plant, with some being shipped for export to Brazil and India. The company is already afoot with the Train 3 plant, which will take its production level higher.

Urea is a key ingredient in agricultural fertilisers. In Nigeria, fertiliser consumption was reported at 94.74 percent in 2020, according to the World Bank collection of development indicators compiled from officially recognized sources. With about 20 kg fertiliser usage per hectare, Nigeria on the average, lags behind Morocco, South Africa and Egypt that use over 100 kg/hectare. This is also far below developed countries’ usage rate of over 200 kg/hectare. It holds true that there is a correlation between fertiliser usage and crop yield.

The fertiliser market globally is on an upward rise. Valued at $193.3 billion in 2021. It is expected to reach $240 billion by 2030, according to research by Global Market Insights.