Blue Mont to Raise ¢22.5 Bn in an IPO

Blue Mont Trading (Ghana) Limited (BMT), an agricultural commodities trading, processing and exporting company based in Tamale is to raise ¢22.5 billion through the Ghana Stock Exchange (GSE).

The company is to float 22,500,000 ordinary shares at ¢1,000 per share in its Initial Public Offer expected to commence next month.

According to Abena Amoah, Executive Director of Strategic African Securities Ltd (SAS), the managers of the offer, SAS has sent a draft prospectus to the GSE and the Securities and Exchange Commission (SEC) for approval to list the company's shares on the Exchange.

Ms Amoah said BMT plans to add value to its products by fractionating refined shea butter into shea fat for export to chocolate manufacturers in Europe and cosmetic manufacturers in the USA. To achieve this objective, BMT plans to use the proceeds from the offer to acquire a transportation fleet to facilitate the company's purchase of shea nuts, build silos and warehouses for storing the nuts and oil and increase the capacity of its existing refinery from 40 metric tones to 75 metric tones per shift. Some of the funds will also be used to reduce its outstanding loan and increase the company's working capital.

BMT was incorporated in Ghana on August 23, 2001 as a private company limited by shares under the Companies Code 1963, Act 179. A certificate to commence business was issued to the company on August 24, 2001.

BMT is a wholly-owned subsidiary of Blue Mont Trading (UK) Ltd, a company registered in the UK to trade, manufacture and deal in commodities around the world, and own and operate leisure hotels and centres.

On November 23, 2004 the shareholders adopted a special resolution converting Blue Mont Trading (Ghana) into a public limited liability company to enable it undertake a public floatation.

The ecological conditions in the three northern regions of Ghana provide a suitable climate for the growth of shea trees, thus providing abundant supply of shea nuts in these areas, hence BMT's location in Tamale in the Northern Region.

Blue Mont began operations in Ghana in 2001 buying and exporting cashew nuts. The company soon re-focused its attention to purchasing and exporting shea nuts. Blue Mont has seen its market share of shea nut purchases grow from nothing to 13.33% in the last four years, as shown in the table above.

The company, thorough its network of agents, purchases nuts from collectors and other middlemen, weighs the nuts and re-bags them into 85kg standard jute-bags for delivery to the warehouse of the final buyer at the Tema Port.

Since September 2004, Blue Mont has acquired and installed a 40-tonne per shift capacity oil mill at a factory in Tamale as part of its plan to add value to the company's exports. The company has begun exporting crude and refined shea butter to buyers in Europe and the USA and is slowly phasing out the export of raw nuts.

Blue Mont currently has fifteen (15) buying centres throughout the three northern regions. Each of these units, managed by a unit head, procures nuts from agents or dealers and directly from farmers and collectors. The unit heads live in the communities with the farmers and agents, and are trained to be sensitive to the needs of the farmers and collectors.

Blue Mont's purchasing approach contrasts sharply with those of its competitors. Unlike Blue Mont, the competitors only come to the major buying centres on market days to buy nuts and do not have employees living and interacting with the people. The company currently employs 145 people and plans to increase staff strength to 300 by December 2006 with the establishment of the de-fractionation plant.

Shea nuts are primarily grown in West and Central Africa in the semi-arid Sahel, referred to by traders as the "Shea Belt". Shea nuts are generally harvested from July to October and the nuts are generally available from August to April. Vitellaria paradoxa and Vitellaria nilotica are the two main varieties of shea nuts. Vitellaria paradoxa is exported in the largest volume and grows throughout the West African region. Vitellaria nilotica is produced primarily in northern Uganda and southern Sudan.

The tree was first discovered in the interiors of Mali in the 18th century and contributes to the export earnings of Ghana, Cote d'Ivoire, Burkina Faso, Nigeria, Benin and Togo. The shea fruit, when ripe, falls off the tree and is collected by members of a farmer's household who extract the nut from the fruit. The harvesting and processing of the nuts is primarily an activity of rural women.

Shea nut products, the solid fat (butter) and the liquid oil, are ideal for use as raw materials in cooking oil, margarine, cosmetics, soap, detergents and candles, but it has found its primary market as a substitute for cocoa butter in the chocolate and confectionery industry.

The export of shea nuts from West Africa currently varies from 60,000 to 80,000 MT per year but it is estimated that the harvestable crop could be as high as 150,000 MT. Ghana's shea butter is considered premium in the world market because of its higher oil and lower free fatty acid (FFA) content.

Shea trees grow widely and naturally in West Africa. They only begin to bear fruit after about 20 years and do not reach maturity for 45 years. They may continue to produce nuts for up to 200 years after reaching maturity. The long period taken to reach maturity has discouraged plantation farming, although they are used as shade trees for other crops in certain dry areas. The fruit also contains iron, vitamin B, protein, and calcium. Below are pictures of the shea tree, fruits and nuts: The main players in the shea nut industry in Ghana are Kassardjan Industries Ltd, Blue Mont (Gh) Ltd and International Business Group (IBG). Olam (Ghana) Ltd, was a major player in this industry until last year when it stopped purchases of shea nuts.

These companies account for about 90% of the total shea nuts exported from Ghana. There are even fewer oil mills in this sector, with the main players being Blue Mont Trading (Ghana) Ltd, Shebu Industries and Bosbel Industries Ltd.