The National Social Security Fund (NSSF) has announced plans to sell a 27% stake in East African Portland Cement Plc (EAPC) to Kalahari Cement, in a transaction valued at Sh1.6 billion. The deal marks one of the most significant ownership restructurings in Kenya’s cement industry in recent years, and it signals a renewed push to revive the long-struggling cement manufacturer.
According to the agreement, Kalahari Cement will acquire 24 million shares at Sh66 each, giving the investor a substantial foothold in one of Kenya’s oldest cement companies. The sale is expected to inject new capital, stabilize EAPC’s financial position, and potentially reposition the company within a highly competitive construction materials market.
A Strategic Exit for NSSF
NSSF has been a major shareholder in East African Portland Cement for decades. However, the fund has faced mounting pressure to optimize its investment portfolio and strengthen returns for its members. The sale of its 27% shareholding represents a strategic shift toward divesting from underperforming state-linked firms and reallocating funds into more profitable ventures.
For several years, EAPC has struggled with:
- Deep financial losses
- Management instability
- Operational inefficiencies
- Debt accumulation
- Falling market share
By offloading its shares, NSSF reduces exposure to financial risk and frees up capital that can be redirected into growth-oriented investments.
Who Is Kalahari Cement?
Kalahari Cement is an emerging regional investor with ambitions to expand within East Africa’s construction and building materials market. The firm has shown interest in acquiring distressed industrial assets that have potential for recovery with the right capital and technical input.
The acquisition of a large stake in EAPC positions Kalahari as a new strategic player in the cement sector. The company is expected to focus on:
- Injecting capital into plant modernization
- Strengthening production and supply capacity
- Increasing competitiveness against market leaders
- Driving long-term restructuring and profitability
Implications for East African Portland Cement Plc
East African Portland Cement has faced persistent operational struggles, leading to declining output and financial distress. The entry of Kalahari Cement into the ownership structure provides a chance for the company to rebuild its business model and reclaim lost ground.
1. Fresh Capital Injection
With the Sh1.6 billion stake purchase, EAPC may soon receive new funds that can be invested in upgrading technology, repairing production lines, and addressing debt obligations.
2. Potential Leadership and Governance Reforms
New shareholders often push for stronger governance structures. Kalahari may advocate for improved accountability, performance-based management, and modern corporate practices to drive efficiency.
3. Increased Competitiveness
Kenya’s cement industry is dominated by Bamburi Cement, National Cement (Simba Cement), and Savannah Cement. With modernized infrastructure and strategic leadership, EAPC could regain its position as a major competitor.
4. Revival of Athi River Operations
EAPC’s Athi River plant has long struggled with aging machinery and maintenance issues. Kalahari’s entry could lead to renewed investment in the facility, boosting production volumes.
Impact on Kenya’s Cement Market
The transaction is likely to have ripple effects across the cement sector. An improved and revitalized Portland Cement would shift market dynamics, particularly in Nairobi, Central Kenya, and regional export markets.
Moreover:
- Increased production could stabilize cement supply
- Prices may become more predictable
- Employment levels at EAPC may be preserved or improved
- New investor confidence could attract additional capital into the manufacturing industry
Share Sale Details and Valuation
NSSF will sell:
- 24,000,000 shares
- At a price of Sh66 per share
- Total value: Sh1.584 billion (rounded to Sh1.6 billion)
The valuation represents confidence by Kalahari Cement that EAPC can be turned around despite its challenges. Market analysts will watch closely to see whether this acquisition becomes a long-term success story or another struggle in Kenya’s competitive cement market.
Government and Regulatory Considerations
Because EAPC is partially government-owned, the transaction must comply with:
- Capital Markets Authority (CMA) regulations
- Competition Authority of Kenya (CAK) approvals
- Public investment guidelines
Regulators will evaluate whether the acquisition affects market dominance and ensures fair competition. They will also review the buyer’s financial capacity and long-term plans for the cement firm.
What This Means for NSSF Members
For NSSF contributors, the sale improves the fund’s strategic posture. It reduces exposure to loss-making state corporations and unlocks capital that can be invested in more profitable ventures such as real estate, government securities, and blue-chip stocks. In the long term, this could improve the fund’s financial performance and its ability to pay members efficiently.
