Emergence of local multinationals
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“Nagitinna, nagitinna. Call ekak thiyenawa (Wake up wake up, there is a call for you),” said Kussi Amma Sera on this bright and early Thursday morning (it was 7.30 a.m. and I normally wake up by 8.30 a.m.) Bleary-eyed and groggy, I walked across to the living room and picked up the phone.
It was Ruwanputha, my young economist friend, who said: “I hope I didn’t wake you up.” Blinking my eyes in still sleepy mode, I let that question ride as he appeared to have some information for me, which eventually became the subject of today’s column.
“I was interested in discussing with you a recent development where Browns Investments – part of LOLC Holdings – has acquired some LIPTON’s estates in three countries and would make it a global tea producer,” he said.
“That’s right, we are making waves in the global tea industry with Dilmah leading the way as Sri Lanka’s best known brand overseas,” I said.
“It seems like many Sri Lankan companies have become multinationals with production facilities and assets overseas which is an admirable feature of Sri Lanka’s business space,” he said.
“It is indeed,” I said. LIPTON is one of the top tea selling brands in the world.
In recent years, the number of Sri Lankan companies with global interests, rightly termed as local multinationals, has grown with two latest developments – one is Browns’ foray into three countries.
The other example – WSO2, an open-source technology provider founded in 2005, soon to be acquired by EQT Partners, the world’s 6th largest private equity firm – is in reverse, where a local company has been acquired by an international investor.
As discussed here, it’s a huge development for WSO2 with Founder & Director Sanjiva Weerawarana, the management team and the staff being retained. The company has 700+ customers in 93 countries and the best part of the deal is that the acquirer wants Weerawarana and his team to stay on.
With regard to Browns, meanwhile, it is this company’s second overseas acquisition following the purchase of James Finlay (Kenya) Ltd, last year. In the latest adventure, it has emerged as a global player in tea production after it signed an agreement with LIPTON Teas and Infusions which will result in the transfer of its tea estates in Kenya, Rwanda and Tanzania.
This long-term partnership will make Browns the world’s leading tea exporter – around 87 million kg each year as well as one of the largest suppliers to the world’s largest tea company, LIPTON Teas and Infusions. Browns will invest in its estates in Kenya and Sri Lanka to meet the new standards by 2025, as well as in the creation of additional skilled employment opportunities in Kenya.
Currently, as one of the largest tea producing companies globally, Browns oversees a 40,000-hectare area, producing approximately 43 million kg of black tea and providing employment to over 15,000 people across Sri Lanka and Kenya.
In the global tea market, Dilmah is among the 10 top selling brands in the world and has a presence in more than 100 countries with a few offices in some. Akbar Brothers is Sri Lanka’s largest tea exporter with over 75 million cups of Akbar tea brewed daily worldwide.
The LOLC Group, whose investment arm is Browns, has a presence in more than 25 countries across Asia and Africa. It is Sri Lanka’s biggest diversified conglomerate.
Then there is Hayleys, another local multinational, with production facilities and companies in Bangladesh, Thailand and the United Kingdom.
One must not forget Expolanka, a diversified conglomerate with interests in logistics, leisure and ventures, and a global presence in 20 countries and over 50 cities with 3,000 workers.
There are quite a few renewable energy companies that have ventured abroad and have solar units and other renewable energy assets overseas. JAT, a wood coatings producer, has interests in Kenya and East Africa
John Keells Holdings has resorts in Sri Lanka and the Maldives while Aitken Spence has hotels and resorts in
Sri Lanka, Maldives, Oman and India.
In the garments’ space, MAS Holdings, a Sri Lankan apparel manufacturer, has 53 manufacturing facilities in 17 countries employing over 100,000 people globally. It has design and development hubs in New York, London, Hong Kong and Colombo.
Another global garments manufacturer, Brandix Sri Lanka employs 60,400 and has 28 manufacturing facilities in
Sri Lanka, India, Bangladesh, Cambodia and Haiti.
While COVID-19 and the resultant economic crisis in
Sri Lanka dealt a severe blow to Sri Lankan companies with layoffs and growing debt, interestingly, some companies sought to set up production facilities and operations overseas – they saw an opportunity in a disaster situation.
It is said that the Colombo Stock Exchange (CSE) expects to see an increase in mergers and acquisitions and strategic share deals with big players and local multinationals. Watch this space as conglomerates like LOLC seek more ventures abroad.
Africa and Asia are the new frontiers for Sri Lankan multinationals and this where the growth would take place as incomes grow and buying power increases across the board. Both India and China have major stakes in Africa with companies from these two superpowers aiming to set up shop there.
As I reflected on the emergence of a new breed of companies that is taking on the world and making its presence felt across continents, I walked to the kitchen and peeped out of the window to find out what the trio was discussing today.
“Aiyo….den okkoma katha karanne chande gena nae (Aiyo…..now everyone is talking about elections),” said Serapina.
“Kisi wedak wenne nae. Kata katha godak thiyevi weda polawal wala ena maasa tikey (No work will be done. There will be a lot of ‘kata katha’ in workplaces in the next few months),” noted Kussi Amma Sera.
“Godak paksha walath hariyata prashna (Many political parties are also having a lot of problems),” said Mabel Rasthiyadu.
“Den hitapu janadipathi Chandrika Kumaratungath sakriya wela wagey (Former President Chandrika Kumaratunga has also got activated),” added Serapina.
Well, time to wind up. Thanking Kussi Amma Sera for bringing me my second mug of ‘good old’ Ceylon tea, I was left with the thought that Sri Lanka is making its presence felt in the world and would soon join the ranks of countries making waves overseas.
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