Secrets Behind Gov’t Acquisition of Roko Shares
Secrets why government is acquiring a stake in Roko Construction Limited (ROKO) are today revealed for the first time, we can exclusively revealed.
The Uganda Government through the Ministry of Finance and economic development tabled a motion seeking parliamentary approval of Shs202.13bn aimed at purchasing shares in Roko Construction Limited.
The motion was tabled by Henry Musasizi (pictured), State Minister for Finance (General Duties) during Thursday’s plenary sitting.
“I beg to lay on table the proposal to acquire 150,000 preferential shares into Roko Construction Limited which is equivalent to Shs202.13Bn in Roko Construction Limited,” Musasizi said.
Roko was established in Uganda in 1969 as a construction and engineering company. ROKO employs approximately over 2,000 employees with the vast majority being Ugandan staff and a small percentage expatriates.
The company is ranking top in the construction industry and is known to produce an exceptionally high standard of workmanship which is reflected in all the projects they have so far completed.We can exclusively reveal details why the government is seeking to aquire a stake in Roko.
According to our government insiders, the absence of a government owned construction company has subjected the Government to contract foreign companies that have flooded the market and repatriate the funds back to their home countries.
“ROKO has continued to show ability to handle government projects that require quality and technical ability,” the source said “There is also a need to build capacity of local firms in strategic sectors and industries and the need for Government to set quality standards in the construction industry.”
Currently, the company is a contractor for Government projects such as the Parliament of Uganda, the Inspectorate of government, the Uganda Cancer Institute and the Ministry of Finance, Planning and Economic Development.
“Roko Construction Limited has always set the standards for construction works in Uganda with the highest quality thresholds in the execution of all their construction projects. As such, ROKO was the first construction firm to get International certification standard (ISO standards) in the construction industry in Uganda and has to date maintained the standards,” Roko Construction spokesman Muhangi Bernard said when contacted.
“Over the years ROKO has executed most of the major building jobs in Uganda including Workers House, Crested Towers, the Namugongo Shrine, Bank of Uganda, Mapeera House, Acacia Mall, Rwenzori Towers, DFCU Towers, Imperial mall and apartments Entebbe, the Latitude Hotel, Mestil among others.”
With a current portfolio value of government and private sector works amounting to UGX 1,064.7 billion, an employer of over 2,000 employees and one of the largest tax payers in construction, Roko Construction Limited is a key player in the construction industry as well as the economy as a whole,” he added.
Further justification for Government’s intervention is the fact that the Company has a pipeline of contracts worth UGX 1,204 bn equivalent of works that it is negotiating with prospective clients in the Oil and Gas, Tourism and Government Infrastructure sectors.
This pipeline will enable the company to expand further and create many new employment opportunities for Ugandans.
ROKO and the Ministry of Finance, Planning and Economic Development on behalf of the GOU are set to enter into a Share Subscription Agreement wherein ROKO prepares and offers for sale and Government accepts to purchase 150,000 shares.
Following the acquisition of shares, the company shall pay Government its dividends at a rate of 4.35% and also redeem the shares as per the Shares Subscription Agreement.
“With the Government liquidity injection in ROKO, a five-year cash flow projection of the company reveals free cash flow increases 12-fold over five years, from UGX 1.02bn in 2022 to UGX 122.9bn in 2027. This analysis demonstrates that Government support for the Financing Plan, together with Governance and Management Reforms, will therefore positively impact the Company’s viability and financial position.To date the company continues to exhibit consistency in the execution of their construction works in line with the International certification standards.
“In the last 9-month ROKO has successfully concluded projects such as the Electricity Regulatory Authority Headquarters, the Insurance Regulatory Authority Headquarters, the Busoga Institute of Technology, Mbarara Central Market, Uganda Hotel Tourism and Training Institute (Phase1), Makerere University School of Public Health (Phase1), National Social Security Fund Fit out among others,” Muhangi said.
“Therefore, having stood the test of time in the construction industry, Roko Construction Limited is a worthwhile investment for the Government of Uganda,” he added.