Hemas Holdings PLC’s acquisition of the 75% majority stake in Kenyan Twiga Stationers and Printers Limited, which holds roughly around 49.4% of the local stationary market share, was motivated by the need of the conglomerate to use its capabilities in a youth market, as Sri Lanka’s population continues to age, Hemas Holdings PLC Group CEO Ashish Chandra said, speaking at a press conference held in Colombo recently (19).
“One of the areas that we were really struggling with was the size of the Sri Lankan population. In our consumer brands segments, where we have been market leaders in our segment of stationary, home, and personal care products – we got restricted by the population that we could market to,” Chandra said.
Since 2023, Hemas Holdings PLC has held total ownership of Sri Lankan stationary household brand, Atlas Axillia Co (Pvt) Ltd, which now operates as a fully owned subsidiary. In January 2018, it acquired a controlling stake of 75.1%, for Rs 5.7 billion, and the remaining 24.9% stake was purchased in 2023, for Rs 3.4 billion.
Hemas’ latest 75% majority stake acquisition in Twiga Stationers and Printers Limited is an investment of $ 22 million, for which foreign currency borrowing over a 3.5 year period had been attained, with a P/E of 11.3x.
In addition to the ageing population restrictions that Sri Lanka’s market poses, Chandra also emphasised that the entry into the Kenyan market is to serve as a strategic gateway into other East African nations; particularly with Kenya’s membership in African trade blocs, such as the East African Community.
“Kenya offers a geopolitical advantage, it is considered to be the gateway to east africa. Kenya has free trade arrangements with multiple associations existing in Africa, one of which is the East African Community that comprises 10-11 countries and offers access to about 330 million population, which is nearly about 15x that of Sri Lanka’s population.”
Kenya is also a signatory to the African Continental Free Trade Area (AfCFTA) agreement, the Common Market for Eastern and Southern Africa (COMESA) agreement, and the African Growth and Opportunity Act (AGOA).
According to Hemas Consumer Brands Managing Director Sabrina Esufally, Hemas expects to scale the Kenyan business into the region, using its capabilities that have been raised in Sri Lanka, to earn 15% of international revenue by 2030.
“Twiga Publications was really looking for a partner that they could work with, to scale the business outside of Kenya, and scale this business into other product categories that they haven been in, and there we realised we had a tonne of domain expertise.”
“Our aspiration is that Hemas gets 15% of international revenue by 2030, that’s really the deal we are chasing.”
Chandra, citing the IMF’s findings, said that Kenya continues to be the 8th fastest growing economy in the last 20 years, with an economy that is 25% bigger than Sri Lanka, has a 2.5x larger population and has a median age far younger than that of Sri Lanka.
“Its a $ 136 billion economy, which means it’s 25% bigger than the Sri Lankan economy. With a population of nearly around 54 million, which is 2.5x more than Sri Lanka. Today the Sri Lankan median age is about 33-34 years, whereas the median age in Kenya is 19.5 years, which makes it a very young and growing economy. The Sri Lankan population has now virtually stagnated, it is not growing, whereas Kenya continues to grow by 2%.”