MERU COUNTY INTERNATIONAL INVESTMENT … · Who are we? Integrated County Corporation (Parastatal)...
Transcript of MERU COUNTY INTERNATIONAL INVESTMENT … · Who are we? Integrated County Corporation (Parastatal)...
MERU COUNTY INVESTMENT
&DEVELOPMENTCORPORATION
Joel Kinyua Imitira / Managing Director
Who are we?
Integrated County Corporation (Parastatal)
Legal Foundation
– Meru County Investment and Development
Corporation Act, 2014
– Establishment of Special Purpose County
Corporations
– Desire to deliver Investment in a Coherent Manner
Mission & Vision
To create value for all Our Partners by attracting and promoting growth oriented investments that are innovative and sustainable
To be the leading Investment Corporation in Kenya through design and Execution of World-Class Commercial Ventures
Mission
MISSION
Vision
Core Values
Concern for Environment
Adaptability and Flexibility
Humility
Accountability
Integrity
Transparency
Our Structure
Board of Directors
Managing Director
Directorate Technical Services
Directorate Economic &
Financial Analysis
Directorate Support Services
Administration
Governance
Fidelity to the Law
Modern Corporate Governance
Frameworks
Internal Corporate Structures
External Engagements
Why MCI&DC : What’s the end game?
1. County Allocations Vs Many Needs
2. Opportunity to harness Private Sector Enterprise/Resources to deliver services
3. High Opportunity Cost for Public Resources – Focus on Public Goods - non Rivalrous, non excludable
4. MCIDC- Organizing to Engage Private Sector Better
Value Proposition from this Model :
1. Underwriting Political Risks – Insulate Investments Decisions from Political Cycles
2. Focal/Dedicated institution on investments
3. Local Private Sector Advocate – Policies, Laws, JVs, PPP, BOTs etc
Our Mandate
Enhance prudence in County Investments
Develop Effective Investments Instruments at the County
Enhance Competitiveness of County Investments
Promote Local/International Investments
Mobilize Resources for
Investments
Facilitate/Coordinate
Investments
Promote Investments with
Social Returns
Undertake PPP & JVs
Why we exist Why we exist
Assets/property on behalf of the County
Undertake Investments
Identifying/Profiling Investment Opportunities
Undertake Ventures –sorely/Partnerships
Advising on Investment Opportunities
Facilitating Investors
Promoting Investments
Focal Agency on investment promotion
Advise on Policies/Laws
How we will execute How we will execute
…Cont…
Our Approach
Investment Profiling/Building a Business Case:
Identifying and Profiling Opportunities
Partnerships - Identifying and Building Mutually
Rewarding Partnerships
Defining Attractive Financing Models - Hybrid
Debt Equity Financing Framework; Joint
Ventures; PPP, (D)-BOT
Financial Closure + Execution
Our Partners
County Government – Policy, Law, Resources
Local/Diaspora Communities – Meru Home of
Cooperatives –
Investors – Sport the Opportunities; Focus on the
Future
Financial Institutions – Innovative Financing
Models/County Peculiarities
Technical Assistance – Project Life Cycle (USAID –
County Investment Plan)
Our Mantra…..Finding the Rough Diamonds…
….that require some little polishing to sparkle
So How Does a Rough Diamond Look Like?
Rough Diamonds would easily be passed up on the beach,
looking like nothing more than broken glass that may
have washed up on the shore.
The famous beauty of a diamond only appears with the
skill Art of a diamond cutter.
Meru-IDC –aspires to find, polish and Skillfully Cut
Commercial Diamonds in Meru County and the Region
So,what are our rough Diamonds?
a)Agriculture & Livestock Value Addition:
a) Coffee & Tea, Miraa – Processing, branding
b) Nuts – Macadamia, Groundnuts
c) Oil Crops
d) Grapes – Wine Making
e) Banana – flour, wine, crisp, puree, etc
f) Potatoes – Cold Storage and Processing – chips, crisps
g) Fruits & Vegetables
h) Leather – Mini-tannery
….Cont….
Bananas & Potatoes
…Cont…
Macadamia & Honey
b)Rough Diamonds in Renewable
Energy
Wind Farms – Various (KenGen, Windlab, Gulf,
Blue Sea etc) Wind Speeds – 5-7m/s;
Solar – 30MW Solar Park – Naanovo (K) Ltd
Waste to Energy – 7MW – Naanovo (K) Ltd
Small Hydo Power – Energy Asset Map 16 Sites
Pre-feasibility for a further 20 sites
….Cont..
Mini HydrosProject Name Location
(River)
Size (MW) Estimated
Annual Power
Generation
(MWH)
Company
1 Mukarangatine Upstream SHP Iraru 2.6 13,666 IDEA Power
3 Kanyakine SHP Iraru 1.5 7,884 Available
4 Yururu SHP Iraru 1 5,256 Achelis
5 Kiringa SHP Iraru 1.6 8,199 Achelis
6 Baranga Kamachege SHP Kithino 2.4 12,373 Eco Power
7 Mikambune SHP Kithino 1 5,256 Abbey Construction
8 Kithino - Nkubu road SHP Kithino 0.3 1,645 Available
9 Thangatha Kunati SHP Thangatha River 3.1 16,451 IDEA Power
10 Irindiro - Mbiili SHP Thangatha River 2.4 12,373 IDEA Power
11 Ura SHP Ura 3.1 16,499 IDEA Power
12 Kiagu Forest SHP Kathita 2.3 12,299 IDEA Power
13 Kathita SHP Kathita 1.2 6,150 Achelis
14 Ura - Achenge SHP Ura River 0.3 1,645 IDEA Power
15 Kathita Community SHP Kathita River 0.3 1,577 Available
16 Thingithu SHP Thingithu 0.3 1,577 Available
Total 144.9 MW 122,850
C) Rough Diamonds in Real Estate
i)Maua Mall – Design, Finance, BOT Model
ii)Edu City The Master Plan
…Cont….Edu City-Concept Developments
Cooperative University
iii)The Meru Rising Tower
Ready Design
….Cont…
The Meru Rising Tower-Master Plan
Meru Rising Tower - Milestones
• Ready Grade A-Design
• Ready Feasibility – Attractive Returns
• Ready Investment Vehicles for you
• Ready Structure - LLP
• Land Transfer to Meru-IDC
• Initial Capitalization by Meru County
Government – Ksh200M
Can we do this?
• Yes
– Inspiration from the cooperative movement in Meru
(Mccu, Nyambene Hse, Imenti Hse…etc)
– Inspiration from the Kicc Model, Timing & History
– We can recreation of Kicc Model in Meru in 2016
.
.
What’s Ongoing?-The Meru County Hotel
• A standard Room
• Conference Room
• The Dining Room
What are we looking for?
Partnerships – Let’s do this together
Value Addition
Opportunities
Thilange Acquilino M
Director; Technical Services
Why Agro Processing in Meru County?
Proposed 15,000MT Banana processing Plant
Proposed 150,000M2 Leather processing
Proposed 1,000MT Potatoes
Investment Model
County Incentive In Agro business
Content
Benefits- Why Meru County?
A• Create Employment
B• Increase returns to farmers
• Eradicate Poverty and improve standard of
C• Generate Revenue
Proposed 15000MT Banana Plant
PROPOSED BANANA PROCESSING
PLANT
A
• Second Largest Produced fruit after Citrus,
• 16% of worlds total fruit Production.
• India is the largest producer contributing to 27%
• Banana is highly nutritious, and easily digestible than many
other fruits.
•During ripening process, starch is converted into sugar throughenzymatic process. Sugar content in a fully mature banana is highmaking it ideal for wine making
Banana
• Meru County is leading in Banana production in the Country, producing an average of 200,000MT/year, Valued at KSH 5B.
• Followed by Kisii County
•Mainly used for food and commercial purposes•Approx. 40% of the crop get damaged due to lack of storage facility
Crop Cover In Meru County
Banana Products
Crisp
Wine Flour
Raw Materials
• Annual Banana Production from Meru County: 200,000 MT
• Proposed to process 8%(15000MT) of the produced Bananas into various product.
Input/output Analysis
Tonnage from
farm Input Conversion Factor Unit Output
15,000MT
(8% per year)
Wine 5000MT
30%
1,500,000
(1LT Pack)
Crisp 5000MT
30%
1,500,000
(1Kg Pack )
Flour5000.00
30%
500,000
(1Kg Pack)
Production Facility
PARTICULARS QTY
Building (5000MT) 1 1,200,000
Banana Brush Washer 2 200,000
Banana inspection Conveyor 1 200,000
Pre Cooler and Pre cooling chambers @5MT per day 4 7,000,000
Banana Ripening Chamber 10MT 3 5,000,000
Heavy Duty Plastic crates for Banana storage and
handling 20000 1,000,000
Ammonia Compressor for Pre cooling and Cold Storage 4 6,000,000
Atmospheric Condenser 2 4,000,000
HT/LT Electrical syatem with DG st for standby
Power Lot 5,000,000
Pallet handling truck 1 1,000,000
Refer insulated vans for transport of Banana from Farm
and to Market 2 2,000,000
32,600,000
Receiving and Storage
32,600,000
Wine Making Process
Fermentation (9 days at 26 Deg Cent)
Inoculation Saccharomyces Cerevociae
Pectinase treatment(0.25% for 45minutes)
Banana Pulp
Banana Fruit
Banana Wine
Pasteurization( 60 Deg, 3min) and 0.1Bentonite
Bottling
Racking
Wine Processing Cost
PARTICULARS QTY COST
Receiving Equipment Lot 5,802,375
Cellular Equipment Lot 1,662,265
Material Handling Lot 4,952,000
Refrigeration Lot 2,891,857
Fermentation/Storage Lot 4,981,525
Cooperage Lot 5,194,400
Tasting room Lot 367,595
Plant and Offices Lot 20,000,000
Total 45,852,017
45,852,017
Crisp Processing
PARTICULARS QTY COST
Peeling Room accessories 1 2,000,000
Preservation area and accessories 1 3,000,000
Deep frying and accessories 4 5,000,000
Packaging 3 3,000,000
Tasting room 1 1,000,000
Offices, Furnitures, office equipment 1,000,000
Total 15,000,000
15,000,000
Flour Processing
PARTICULARS QTY COST
Peeling Room accessories 1 2,000,000
Preservation area and
accessories 3 3,000,000
Drier 3 10,000,000
Milling 4 2,500,000
Formulation Preparation lot 3,000,000
Packaging 3 3,000,000
Total 23,500,000
23,500,500
Employment Cost Per annum
PARTICULARS QTY COST
General Manager 1 2,400,000
Supervisors 2 2,400,000
Wine maker 2 1,680,000
Operators(Packers) and Support
Staff 50 24,000,000
Technicians 10 6,000,000
Total 36,480,000
36,480,000
Other Cost
Particular Cost
Plant Depreciation 15,343,201
Overheads 24,000,000
Operational and Maintenance 40,000,000
79,343,201
79,343,201
Total Investment
PARTICULAR COST
Receiving and Storage 32,600,000
Wine Processing 45,852,017
Crisp Processing 15,000,000
Flour Processing 23,500,000
Employment Cost Per annum 36,480,000
Other Costs 79,343,201
192,432,017
192,432,017
Financial Analysis
Profitability Index
CapacityNet Profit
MarginGross Profit
Margin EBIT Margin
100% Capacity 0.43 0.71 0.62
75% Capacity 0.33 0.60 0.48
50% Capacity 0.22 0.51 0.34
30% Capacity 0.01 0.34 0.04
At a 50% and above capacity, Net profit is 32% of Revenues, a Net Profit Margin of 30% and above is ideal for this project
Internal Rates Of Return
At a capacity of 50% and above IRR is above
WACC making the project desirable
Capacity IRR
100% Capacity 363%
75% Capacity 222%
50% Capacity 117%
30% Capacity 31%
At a capacity of 50% and above IRR is
above WACC making the project desirable
Capital Recovery
WACC 23.33%
Years (n) 10
CRF 0.265969674
Initial Investment 145,329,997.00
Annual Desirable Cash flow 38,653,371.99
For the capital to be fully recovered in
10yrs,annual cash flow of 38,653,371.99 must be achieved which at any capacity above
50% it surpasses this threshold
Potato
1,000MT POTATO PLANT
PROPOSED 1000MT
POTATO PROCESSING PLANT
• Potato is the second main crop in the County with a
production of about 160,000 tons/year.
•Almost 30% of the crop get damaged due to lack of
storage facility
• Proposed to set up a 1,000MT plant in Meru County preferably.
Product Description and Application
Potato Processing (UOP)
Blanching
Slicing Washing
Slicing
Peeling
Potato Loading
Packing
Flavoring
Inspection
Frying
Receiving, Cleaning Storage PARTICULARS QTY COST
Building 1 4,200,000
Washer 2 600,000
Inspection Conveyor 1 700,000
Pre Cooler and Pe cooling chambers @5MT
per day 4 6,000,000
Cold Storage Facility 3 4,000,000
Heavy Duty Plastic crates for Banana
storage and handling 100000 1,000,000
Ammonia Compressor for Pre cooling and
Cold Storage 4 6,000,000
Atmospheric Condenser 2 4,000,000
HT/LT Electrical syatem with DG st for
standby Power Lot 4,000,000
Pallet handling truck 1 1,000,000
Refer insulated vans for transport of Banana
from Farm and to Market 2 2,000,000
Total 33,500,000
33,500,000
Machinery and Equipment
Pre Frying PARTICULARS Cost
Batch Peeler 3,000,000
Elevator 1,000,000
Continuous Slicer 1,200,000
Slice Washer Drums 800,000
Drum Bluchers 3,000,000
Dewatering and even feed shaker 1,000,000
Total 10,000,000
10,000,000
Machinery and EquipmentFrying and Seasoning Equipment
Frying System 6,000,000
Sub-merger Belt 4,000,000Holding Belt 600,000Hood and hood lift 1,000,000Hot oil circulation system 2,000,000Oil Top up with oil indicator 500,000Automatic temperature controller 200,000Continuous Fat Filter 300,000Oil Heat Exchanger for dryer 2,000,000Inspection belt 400,000Salt Flavor dispenser 200,000Tumbling Drum 800,000Multi Head Weigher 2,100,000Other Accessories 1,000,000Control Panel 2,000,000Total 23,100,000
Total 33,100,000
33,100,000
PRODUCTION PROCESS AND COSTINGOther cost
Utility Quantity KES
Electricity 480,000 10,080,000
Water 4800000lt 15,790,909
Operation and Maintenance
20,000,000
Total Utility Cost 44,228,309
44,228,309
PRODUCTION PROCESS AND COSTINGEmployment Cost
POSITION No Required Total Annual SalaryManaging Director 1 1,200,000
Production Manager 1 1,200,000
Administration/Finance Head 1 1,200,000
Accountant 1 960,000
Secretary 1 720,000
Sales Clerk 2 1,200,000
Store Keeper 2 1,200,000
Technician 2 960,000
Supervisor 3 2,520,000
Daily Laborers 8 2,880,000
Cleaners 2 720,000
Messengers 1 240,000
Driver 1 300,000
Guards 4 960,000
Total 30 16,260,000
16,260,000
PRODUCTION PROCESS AND COSTING
Production Cost
Raw Materials 7,300,000
Depreciation 6,772,676
Utility 24,228,309
Employment cost 16,260,000
54,560,985
54,560,985
PRODUCTION PROCESS AND COSTINGTotal Initial Cost
Utility 24,228,309
Raw Materials 3,300,000
Receiving, Cleaning and Storage 33,500,000
Equipment and Machinery 33,100,000
Employment cost 16,260,000
Depreciation 6,772,676
Land 5,070,422
Building and Civil works 16,901,408
Office equipment 1,126,760
Vehicles 5,070,422
Total 165,329,997
165,329,997
Financial Analysis
Internal Rate of Return
Capacity IRR
100% Capacity 145%
75% Capacity 100%
50% Capacity 53%
30% Capacity 9%
At 50% capacity IRR is Above
Weighted Avg Cost
At 50% capacity
IRR is Above Weighted Avg
Cost
Profitability Index
CapacityNet Profit Margin
Gross Profit Margin
EBIT Margin
Pretax Margin
100% Capacity 0.51 0.86 0.74 0.72
75% Capacity 0.44 0.82 0.66 0.63
50% Capacity 0.32 0.74 0.50 0.50
30% Capacity 0.05 0.57 0.15 0.07
At a 50% and above capacity Net profit
is 32% of Revenues, A NPM of 30% and above is ideal for
this project
Capital Recovery
WACC 23.33%
Years(n) 10
CRF 0.27
Initial Investment 165,329,997.00
Annual Desirable Cash flow 38,653,371.99
For the capital to be fully recovered in 10yrs,annual cash flow of 38,653,371.99 must be achieved which at any capacity
above 50% it surpasses this threshold
Tannery
Industrial Process
PROPOSED 150,000M2
TANNERY PROCESSING PLANT
• Leather is animal skin that has been chemically modifiedto produce a strong, flexible material that resists decay.
•Hides and skins undergo a number of processing stagesbefore a final product called finished leather is reached.
• World Demand projection divulges that the domestic demand for finished leather is substantial and is increasing with time.
Product Description and Application
Raw Materials Availability In Meru County
Total Annual Hideproduction **
Total Annual Skin production **
Total Annual production
Annual requirement for tannery for the Proposed Tannery
60,000 units 90,000 units 150,000 Units
-
240,000M2 90,000M2330,000 M2
**Source Department of Agriculture Meru County
Other sources include animal from neighboring County (Isiolo, Marsabit) and Country (Ethiopia)
150,000M2
PRODUCTION PROCESS AND COSTINGMaterial Input
Material Input Quantity KES
Wet Blue Hides 150,000 48,600,000
Lacquer Emulsion 3 tons 1,363,636
Sodium Bicarbonate 2 tons 297,818
Sodium Acetate 2 tons 400,000
Formaldehyde 1 tons 318,181
Dyes (different Colours) 4 tons 2,000,000
Total Material Cost 52,979,635
52,979,635
PRODUCTION PROCESS AND COSTINGEmployment Cost
POSITION No Required Total Annual SalaryManaging Director 1 2,400,000
Production Manager 1 1,200,000
Administration/Finance Head 1 1,200,000
Accountant 1 960,000
Secretary 1 720,000
Sales Clerk 2 1,200,000
Store Keeper 2 1,200,000
Technician 2 960,000
Supervisor 3 2,520,000
Operators 18 8,640,000
Daily Laborers 8 2,880,000
Cleaners 2 720,000
Messengers 1 240,000
Driver 1 300,000
Guards 4 960,000
Total 48 26,100,000
26,100,000
PRODUCTION PROCESS AND COSTINGMachinery and Equipment
Machinery and Equipment Quantity
Drum with 5HP motor shaft pulley 2
Electrical Unit Heater for Stuffing Drum 5HP 2
Shaving Machine - single width 1 1
Electrical Hand Operated Setting Out Machinery 1
Lace Cutting Machine 1
Spraying Machine with Dryer 1
Hydraulic Press 1
Brushing Machine with Drier 1
PRODUCTION PROCESS AND COSTINGTotal Initial Cost
ITEM TOTAL
Land 5,070,422
Building and Civil works 16,901,408
Office equipment 1,126,760
Vehicles 5,070,422
Plant Machinery and equipment 35,211,267
Operational and Maintenance 20, 000,000
Total 90,215,492**Pre production Capital Expenditure pre investment studies, consultancy,expence for company
90,215,492
PRODUCTION PROCESS AND COSTING
Total Investment Cost
ITEM COST
Material Input 52,979,635
Utility 24,228,309
Employment Cost 26,100,000
Total Initial Cost 90,215,492
Total 193,523,436
Machinery Depreciation 5,830,986
Total Investment Cost 199,354,422
199,354,422
PRODUCTION PROCESS AND COSTING
Revenue
Input Volume in Square meters 150,000.00
Yield 90% 135,000.00 Price per Square Meter KES (Global
Range) 800
Total Revenue 108,000,000.00
Cost of producing square meter 481
Financial Analysis
Profitability Index
CapacityNet Profit Margin
Gross Profit Margin
EBIT Margin
Pretax Margin
100% Capacity 0.42 0.74 0.61 0.59
75% Capacity 0.24 0.47 0.36 0.34
50% Capacity 0.09 0.32 0.15 0.13
30% Capacity (0.21) 0.03 -0.27 (0.30)
10yrs,annual cash flow of 46,151,971.78 is achieved above 50%
Internal Rates Of Return
Capacity IRR
100% Capacity 164%
75% Capacity 112%
50% Capacity 58%
30% Capacity 7%
At 50% capacity IRR is Above Weighted AvgCost making project viable
Capital Recovery
Capital Recovery
WACC 23.3%
Years (n) 10
CRF 0.27
Initial Investment 173,523,436
Annual Desirable Cash flow 46,151,971.78
For the capital to be fully recovered in 10yrs,annual cash flow of 46,151,971.78 must be achieved which at any capacity
above 50% it surpasses this threshold
Free Land – Long term leases to allow capital recovery
Grading and Maintenance of roads to useable standards
Connection to water supply mains within reasonable distances
Pre-feasibility studies/data collection/collation
Waiver of plan approval fees
Waiver of rates for 5 years
Facilitation and support in processing other national and county regulatory approvals
County Incentive In Agro business
Investment Models
• Available Models:
• 100% private investment with incentives from Govt
• Public Private Partnership/Joint Venture
• 100% Government investing
Thanks!
The Meru Rising Tower
The Tower ….from a distance
Space Appropriation
SPACE GBA (Mtrs.sq) Sq.Ft
Anchor tenant 5,043 54,282.35
Other retail areas 4,637 49,912.20
Restaurants/food court 1,294 13,928.49
Office block 11,190 120,448.04
Meeting rooms 980 10,548.62
Basements 9,000 96,875.10
Breakout & service areas 4,808 51,752.83
TOTAL 36,952 397,747.63
Retail 16,872.00 181,608.52
Office 20,080.00 216,139.11
SPACE GLA (Mtrs.Sq)
Retail 12,654.00 136,206.39
Office 12,170.00 130,996.66
TOTAL 24,824.00 267,203.05
PARKING BAYS 440
Financing Structure
Partner 1-MCIDC, 13.73%
Partner 2-ILLP, 20.59%
Partner 3-PS, 17.16%Partner 4-HNW I & I, 10.29%
Partner 5-The Company, 4.80%
Parner 6-The Building Society,
3.43%Mezzanine Funding,
30.00%
Meru Rising LLP
The company
ILLPMCIDC
Building Society
HNW-Investors
How to Enter
a)HNW Investor-With a minimum of kes.5M an investor can
directly buy a unit and become a partner in the LLP.
……Cont
The Company
Investor 2
Investor 1
Investor 3
Meru Rising LLP
b)The Company-At 1Mn@share, investors will be pooled
together in a private company and the company shall be
the partner in the LLP
c)The building Society-An aggregating vehicle , small investors will
buy a share ,then the small amounts will be pooled and invested
together by the company as a partner in the LLP.
2 Mn. 2 Mn.
2 Mn.2 Mn
200K
200K200K
200K
Returns Scorecard
The tower shall offer investors up to 14% net rental yield in a
payback period of 7 years based on the base case scenario.
Return Measure Rate
Net Rental Yield (%) 14%
Gross Income Multiplier 5.87
Payback Period 7Yrs
COC Return 22.50%
IRR 32.20%
ROI 52.70%
…….Cont
.Capital Recovery
Equity Proportion 70%
Debt Proportion 30%
COE 25%
COD 20%
WACC 23.500%
n 7
CRF 0.30
Initial Capital Outlay 2,500,000,000.00
Annual Desirable turnover 761,215,680.89
Project Best annual turnover 782,358,083.43
Off-Plan purchase
• Kes. 13,500.00Price per Sq.ft
• 1,000 Sq.ftMin.No.of Sq.ft
• 20 %Down payment
• 12 MonthsPayment Period
Off-Plan Buy/Pre-sale
…..Cont…
Historically low correlation of returns with traditional markets(Equities & Fixed incomes).
Secondary recipient of external shocks on both the currency and economy.
Opportunity to diversify investments and spread the risk
A hedge against inflation.
Constant, stable and reliable cash flows
Why real estate ?
High effective demand for commercial grade A offices in the county.
An opportunity to diversify geographically.
County government
anchor tenant taking 40% of the
GLA
Opportunity to invest in
the 5th
richest County
Why Invest in the tower ?
….and for Listening