Al Rawabi Dairy Company plans to invest US$200 million expanding overseas and eventually aims to list on the Dubai Financial Market.
Dairy aims to be cream of market
The UAE's biggest dairy producer is milking banks for more than US$200 million (Dh734.6m) to expand overseas and eventually take the cows to market with an initial public offering in Dubai.
Al Rawabi Dairy Company, which supplies the UAE with about 250,000 litres of milk a day, aims to extend its regional presence by replicating its business model across the Middle East.
"We are expanding in Kuwait and Qatar," said Ahmed Eltigani Abdul Rahim, the general manager of Al Rawabi. "We are going to build factories, yards for the cows and import new cows."
The dairy producer based in Dubai supplies milk to more than 9,000 outlets in the UAE and Oman and controls a third of the domestic market.
"We studied the market in Qatar. It's quite promising and the prices are reasonable," said Mr Rahim.
Of the $200m to be invested, a quarter will be used to upgrade the company's farming facilities in Sudan, so it can supply feed cheaply to its cows in the Gulf.
Al Rawabi currently imports much of its feed from the US and Spain and wants the improved farm in Sudan to reduce its costs, which have risen in the past year.
Al Rawabi will also invest Dh370m ($100m) in upgrading its processing and production capacity in the UAE and increase its herd to 10,000 cows by next year from the current count of 7,000.
"We are constantly investing in new technology to maintain the best quality products," said Mr Rahim. "This year, we plan to expand our existing facilities with the addition of a world-class milking parlour, yard and cooling system."
He added that the company received strong interest from banks that were keen to lend money for defensive investments such as food.
"They used to invest in real estate and it has become risky, so now they want to invest in the food sector," he said.
Once this swath of investment is complete, Mr Rahim plans to list the company on the Dubai Financial Market, having previously prepared to do so, then shelving the idea at the height of the financial crisis.
At the time, the company was valued at Dh1.6 billion, which Mr Rahim now hopes to improve upon, given the high level of investment planned.
"After we finish this expansion, we will go out to list the company if we find the market healthy," he said.