May 3, 2017

Construction Firm Eyes Multi-Million Dollar Funding for Cement Project

The construction and real estate con­glomerate Shwe Taung Group is close to striking a deal with the private lending arm of the World Bank to secure funding for its cement production.
The International Fi­nance Corporation is con­sidering providing the company with a $15 mil­lion equity injection for a brownfield project run by its subsidiary, the Shwe Taung Cement Company.

The deal would also see the IFC invest $20 mil­lion in the form of debt capital to help fund the expansion of one of Shwe Taung’s plants in Manda­lay region.
The $110 million up­grade at Pyi Naung village in Thazi would also be funded with other loans, equity from other spon­sors and internal accru­als, the company said in a disclosure document.

The plant can produce 1,500 tonnes of clinker, the raw material that is ground down to make ce­ment powder, per day. It also has the capacity to grind 2,800 tonnes of ce­ment each day.

The financing from the IFC would help the plant expand its capacity to produce 5,500 tonnes of clinker and 7,200 tonnes of cement a day.

Shwe Taung said in its disclosure document that it required long-term fi­nancing because the ce­ment industry was cycli­cal, leaving it vulnerable to periods of low revenues that made it difficult to in­vest.

“The proposed IFC in­vestment and mobiliza­tions will bridge this gap and provide the necessary financing to the Compa­ny,” the disclosure docu­ment said.

The lender is also con­sidering providing long-term finance with the aim of helping the company to compete with the growing number of international companies.

Several foreign firms have entered Myanmar in recent years as demand for cement surges amid a construction boom. Thailand’s Siam Cement Group is planning a $5.8 million project while Ja­pan’s IHI Corp has part­nered with the govern­ment for a $15 million cement factory.
Shwe Taung Group is involved in major con­struction projects in Yan­gon, including the newly-opened Junction City, a huge downtown complex including a shopping mall, cinemas and offices.

Source: Myanmar Business Today