Private equity fund boosts Agribusiness sector

NAIROBI, KENYA – A new US$100million private equity fund has been launched with the aim of investing in the buoyant agribusiness sector across sub-Saharan Africa.A joint initiative between Sanlam Private Equity and the investment group, SP-Aktif, the Agri-Vie fund will focus on entrepreneurs who are involved in the agribusiness value chain, rather than directly in the farming industry. It will offer an opportunity for potential investors to tap into a new growing African market and give strategic assistance to the owners of the agri businesses.The fund recently had its first close at US$ 40-million, with initial investments from the insurance and development finance industries as well as from US organisation, the WK Kellogg Foundation. The fund is open to other investors until May 2009.Pieter Kriel, chief executive of Sanlam Private Equity, said that agribusiness is the mainstay of the private economy in most sub-Saharan countries.On average the Gross Domestic Products in sub-Saharan Africa have grown between six and seven percent in the past three years and the number of democracies has increased from four to 25 since 1999.The resultant effect is that these countries offer exceptional opportunities for investors.The fund will look at businesses which offer value-added components along the agribusiness value chain.“We will not invest in farms, but rather in the processing and marketing of farming outputs such as food, certain beverages and fibre products. By following the route of expanding the industry, it will ultimately create new growth opportunities for existing and emerging farmers. In addition, Agri-Vie’s mandate includes investment into ecotourism in the context of integrated rural development,” said Kriel.  Agri-Vie investors have appointed an active management structure, led by Herman Marais of SP Aktif, and comprising members from Sanlam Private Equity and a women-led agricultural investment group, Makotulo Agricultural Company, among others.Marais said that Agri-Vie is a true business partner for agribusiness entrepreneurs.“The fund contributes risk capital and management know-how to fully unlock the potential of businesses.Over and above the opportunities associated with the prevailing global food and commodities cycle, there is growing demand globally for various African exports such as organically grown vegetables, fruit and flowers, processed natural fibre for industrial applications as well as natural supplements and health products.However, there are numerous existing agri-enterprises across the African continent, which are not performing to their potential – mainly as a result of lack of access to capital, limited market knowledge and infrastructure limitations. Agri-Vie aims to be a catalyst to unlock this potential to the advantage of both the enterprises concerned and the fund’s investors.Kriel said that the fund had a strong empowerment focus. Both Sanlam Private Equity and Strategy Partners truly believe in the business and investment potential of agribusiness in South Africa and on the continent and are delighted to be playing a role in realising it.Prominent business women including Ntombi Msimang and Kate Moloto are among the directors of the Makotulo Consortium, a shareholder in Agri-Vie’s investment management structure.Moloto motivates their participation in Agri-Vie against the background of the disadvantage experienced by women in the sector.Women are far behind with regard to participation as owners and managers in agribusiness. We intend, through Agri-Vie, to make a meaningful contribution to empowering women in this sector.  Marais said the fund has found a niche in Africa and was already experiencing healthy transaction flow.The fund is also investigating transaction opportunities in Ghana, other countries in West Africa as well as in Zambia.