Abu Dhabi's IHC launches $2.1bn bid to buy stake in Colombia's Grupo Nutresa

IHC Capital has received regulatory approval to acquire a minimum of 25% stake in the Colombian food processing company

The logo of Grupo Nutresa, at its offices at Medellin, Colombia. IHC plans to take as much as 31.25 per cent stake in the company. Reuters

International Holding Company has submitted a Dh7.7 billion ($2.1bn) tender offer to buy a stake in Grupo Nutresa, one of the biggest food processing companies in Colombia, as the Abu Dhabi conglomerate looks to expand its portfolio of assets in South America.

The bid launched through IHC Capital, a subsidiary of IHC, follows the formal approval for the deal from the Colombian Superintendency of Finance, IHC said in a statement to the Abu Dhabi Securities Exchange, where its shares are traded.

The regulatory nod allows IHC Capital to buy a minimum of 25 per cent and a maximum of 31.25 per cent of the shareholding in Grupo Nutresa, which is headquartered in Medellin, northern Colombia.

IHC had applied for the Colombian regulatory approval to launch its bid at $15 per share for the company in September.

“The process has been smooth and entirely transparent,” said Ahmad Ibrahim, IHC’s head of marketing and corporate communications.

“We will continue to work with the local authority over the coming weeks as this is still a work in progress, and the results of the tender will be known by the end of the acceptance period of the tender offer on November 18.”

This move is part of IHC's long-term investment and expansion plan in South America, with Colombia as its new base there.

The successful closure of the Grupo Nutresa transaction will be IHC’s second deal in the country.

It made its foray into Colombian market earlier this month when IHC Capital invested Dh734 million to acquire a 49.99 per cent stake in Lulo Colombia, the holding company of Colombia’s first regulated digital bank, Lulo Bank.

As the first fully digitalised bank in Colombia, Lulo Bank has plans of expansion into other Latin American markets.

The deal, subject to regulatory approvals, is “critical” for IHC “to align any transaction with our growth strategies, whether to acquire new capabilities or consolidate, and Lulo Colombia sits very well with our expansion plans in Latin America”, Syed Shueb, chief executive of IHC, said in a statement at the time.

Colombia is the fourth global market where IHC, the most valuable company on the ADX, has expanded its investments this year, after the UK, India and Turkey.

An employee labels boxes of produce at the Grupo Nutresa factory in Medellin, Colombia. Bloomberg

The company is aggressively expanding its portfolio through local and global acquisitions as well as investments amid a strengthening dollar that gives it more financial muscle to secure deals.

The US dollar index, a measure of the value of the greenback against a weighted basket of major currencies, has gained about 18 per cent year to date at 112.90.

IHC is diversifying its holdings across sectors, including real estate, agriculture, health care, utilities, industries, IT and communications, retail and leisure. The Grupo Nutresa deal underlines is growing focus on the food and beverage sector.

Food security is among top priorities for the UAE as government and private sector companies continue to invest in agricultural ventures, food producers and food processing companies in Asia, Africa and the Americas.

In June, the UAE said it plans to invest $2bn in “agricultural food parks” across India in an effort to boost food security across South-East Asia and the Middle East.

In August, IHC acquired a 50 per cent stake in Turkish renewable energy company Kalyon Enerji for Dh1.8bn. In May, it completed a Dh7.3bn investment deal with the Adani Group, which is led by billionaire industrialist Gautam Adani.

In June, IHC and Abu Dhabi-listed Alpha Dhabi announced a combined $50m investment in aerospace company SpaceX, founded by billionaire businessman Elon Musk.