Nigeria an attractive destination for business, says UAC Chief

Famous Brands, South Africa, is making a purchase into Nigeria to double its footprint outside of South Africa in Sub Saharan Africa (SSA) by buying 49 per cent stake in Nigeria’s UAC restaurants, which includes Mr Biggs, Mr. RenCap said.

The Group Managing Director and Chief Executive Officer, UAC of Nigeria PLC (UAC), Larry Etta, on Monday, described Nigeria as an attractive destination for Quick Service Restaurant (QSR) business.

Mr. Etta, who noted that the country has in recent times seen an influx of international brands, announced the establishment of strategic partnership with Famous Brands, the leading quick service and casual dining restaurant operator in Africa,

The partnership would see Famous Brands acquire a 49 per cent stake in UAC Restaurants Limited (UACR), reputed to be one of the leading diversified company with operations in foods, paints, logistics and real estate, and hitherto a wholly-owned company of UAC.

The UAC boss said the firm was delighted to partner with Famous Brands in this venture, saying this was a transformative transaction that would ensure that UACR had the necessary strategic partner to unlock the considerable value potential in the QSR industry, which he said Mr Bigg’s defined 25 years ago and still maintains a leadership position.

“UACR will be availed of Famous Brands’ tested and highly successful brand stewardship to enhance and reinforce the Mr Bigg’s brand market power,” he said. “This deal further reinforces UACN’s commitment to ensure we collaborate and leverage international partnerships to accelerate our strategic growth and progress.

“Nigeria is an attractive destination for QSRs and the country has seen an influx of international brands recently. Future consumer expenditure is underpinned by a range of key drivers, including higher monthly income levels resulting from GDP (gross domestic product) expansion, an increase in the minimum wage (from N7,500 to N18,000), and a shift in social class demographics, with the middle class (the business’s core target market) expected to increase to 35 per cent of the population in 2015 compared to 30 per cent in 2009. Significantly, this middle class comprises a large, young population with an average age of 18,” he added.

Mr. Ettah said Nigeria’s other investment incentives include an increasingly supportive business environment resulting from continued political and macro-economic stability coupled with growth positive policies and initiatives.

In addition, he said the country continues to experience an improvement in efficiency, particularly in the distribution and manufacturing sectors, pointing out that this was attracting positive interest from foreign investors with a long term view of the opportunities.

Chief Executive, Famous Brands, Kevin Hedderwick, said the organisation was enormously excited about this transaction, which would boost the Group’s strategy to expand its presence in the broader African QSR market.

“Famous Brands has operated in African countries north of South Africa’s borders for 15 years and we have a good grasp of doing business in those territories; prudent expansion in a select range of key markets in the region has always been part of our programme.

He spoke of the benefits to be derived from the joint venture for both parties, pointing out that while UACR would be vending in a formidable brand (Mr Bigg’s), local expertise as well as a nationwide distribution network and Lagos-based manufacturing infrastructure, Famous Brands would add value to the business through its expertise in managing intellectual property, growing brands and optimising supply chain operations and efficiencies.

“Historically one of the key challenges of expanding into the rest of Africa has been to source suitable local partners. This acquisition surmounts that obstacle and enables us to not only acquire a substantial stake in an existing leading home-grown brand in Nigeria with opportunities to unlock value in that market, but also to export the format to other markets. We foresee our operations in the rest of Africa becoming increasingly significant to the Group over time,” Mr Hedderwick said,

“Our immediate goal is to bed down this joint venture and optimise on the evident success of the existing operation and its enormous potential within the Nigerian market,” he added.

UAC of Nigeria PLC (UAC), a diversified company has for over a century played a prominent role in the development of Nigeria. UAC’s growth strategy consists in building strong partnerships with leading regional and international corporations to drive effective business transformation and deliver sustainable growth.

UAC operates through the following subsidiaries: Grand Cereals Limited, UAC Foods Limited, UAC Restaurants Limited, MDS Logistics Plc, a joint venture with Imperial Logistics of South Africa, UACN Property Development Company Plc (UPDC), and CAP Plc, the Akzonobel technical licensee of Dulux.

“We believe this is particularly positive for UACN”, Renaissance Capital, an investment bank, said of the development.

Famous Brands, South Africa, is making a purchase into Nigeria to double its footprint outside of South Africa in Sub Saharan Africa (SSA) by buying 49 per cent stake in Nigeria’s UAC restaurants, which includes Mr Biggs, Mr. RenCap said.

The price of the deal, expected to become effective October 1, was not disclosed.

But RenCap said the transaction would bring UACN closer to the finish line of the transformational restructuring it has been pursuing in recent times.