International Cement Group Increases Stake in Kazakhstan Subsidiary

Comprehensive Review of the Acquisition of Additional Shares in Sharcem LLP

International Cement Group Ltd. (ICG) has announced a significant development that could have a notable impact on its future growth and potentially its share price. The Group’s wholly-owned subsidiary, International Cement Shar Pte. Ltd. (ICS), has entered into a sale and purchase agreement (SPA) to acquire an additional 12.5% equity stake in its Kazakhstan-based subsidiary, Sharcem LLP. This move increases ICG’s effective stake in Sharcem from 75.0% to 87.5%.

Key Highlights of the Acquisition

• Transaction Details:
  • ICS is acquiring 12.5% of Sharcem’s charter capital from Mr. Nurzhan Shakirov, who previously held 25.0%.
  • The acquisition involves 125,000 ordinary shares, each with a nominal value of 1 Kazakhstani Tenge (KZT), totaling KZT 125,000 (approx. SGD 325).
  • The agreed consideration is USD 15 million (approx. SGD 19.2 million), based on independent valuation by BDO Tax and Advisory Qazaqstan LLP. Including taxes to be paid on behalf of Mr. Shakirov, the total purchase consideration rises to USD 16.667 million (approx. SGD 21.334 million).
  • The payment will be made in four instalments between June and September 2026.
• Valuation and Financials:
  • BDO valued Sharcem at approximately USD 120 million (approx. SGD 152 million), using International Valuation Standards.
  • For FY2025, Sharcem’s net tangible asset (excluding shareholder loans) stood at SGD 29.5 million, with net operating profits attributed to the acquired stake at SGD 0.1 million.
• Completion and Conditions:
  • Transfer of shares and update of Sharcem’s register of members will occur immediately upon SPA execution, subject to Kazakhstan legal formalities.
  • Completion is expected by 31 August 2026.

Rationale and Strategic Implications

The acquisition serves several strategic purposes:

• Market Expansion: Sharcem’s cement plant (1 million metric tonnes annual capacity) extends ICG’s reach in Eastern Kazakhstan and the Astana region, positioning it to benefit from regional industrial expansion and infrastructure development.
• Environmental Advantage: Sharcem utilizes environmentally friendly “dry-processed” cement technology, which is being favored by new government regulations over the “wet-processed” methods still used by competitors. This regulatory shift provides Sharcem with a competitive edge.
• Improving Performance: Since ICG’s involvement in 2021, Sharcem has resolved operational issues, leading to improved profitability driven by increased revenue in FY2025.
• Long-term Perspective: Despite downgrades in the regional economic outlook due to conflicts in the Persian Gulf, ICG remains optimistic about Sharcem’s prospects and is increasing its stake to capitalize on market changes and regulatory advantages.

Financial Effects on International Cement Group

• Net Tangible Assets (NTA):
  • Post-acquisition, the NTA of the Group will decrease from SGD 273.4 million to SGD 249.9 million.
  • NTA per share will decline from 4.77 cents to 4.36 cents.
• Earnings Per Share (EPS):
  • EPS will see a slight increase: from 1.046 cents to 1.049 cents for FY2025, based on pro-forma calculations.
• Relative Figures:
  • The acquisition represents 6% of the company’s market capitalization (SGD 21.334 million purchase consideration versus a market cap of SGD 361.288 million as at 12 March 2026).
  • The net profits attributable to the assets acquired account for 1% of the Group’s consolidated net profits.

Important Information for Shareholders

• No Dilution: The acquisition is to be funded entirely by internal cash resources and does not involve the issuance of new shares—existing shareholders’ interests will not be diluted.
• Directors and Major Shareholders: No director or substantial shareholder has any direct or indirect interest in the transaction, other than through their existing shareholdings.
• Inspection of Documents: Copies of the SPA and the BDO valuation report are available for inspection at the company’s registered office for three months following the announcement.
• Potential Price Sensitivity: The increase in shareholding in a profitable, strategically located cement plant with technological and regulatory advantages could positively affect ICG’s long-term growth prospects and share value. However, the immediate impact on financial metrics is modest, and there will be a short-term decrease in NTA per share.

Cautionary Statement

Shareholders and potential investors are advised to exercise caution when dealing in ICG shares. The information provided is based on the company’s announcement and projections. Investors should seek independent professional advice if in doubt about their investment actions.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Readers are encouraged to conduct their own research or consult with a qualified financial adviser before making investment decisions related to International Cement Group Ltd. The company’s financial outlook and share performance may be influenced by factors not covered in this article.

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