Africa’s agribusiness industry continues to attract private equity interest

Two recent private equity deals in Africa’s agribusiness and food sectors show that investors continue to see opportunities in these industries.

A promotional image showing a vendor selling Fan Milk products.

A promotional image showing a vendor selling Fan Milk products.

This week The Abraaj Group, a private equity firm with operations across the world, announced that it will acquire a 100% stake in Fan Milk International, one of West Africa’s largest dairy companies.

Established in Ghana more than 50 years ago, Fan Milk is today one of West Africa’s top producers and distributors of frozen dairy products and juices. In addition to Ghana, the company also operates subsidiaries in Nigeria, Ivory Coast, Burkina Faso, Togo and Benin. It is estimated that Fan Milk currently sells more than 1.8 million products on a daily basis throughout West Africa.

Although it is unclear how much The Abraaj Group will pay for Fan Milk, a statement released by the firm called the deal “the largest ever Africa fast-moving consumer goods private equity transaction in sub-Saharan Africa, outside South Africa”.

“This is a landmark deal for both African private equity and The Abraaj Group. The considerable investment and growth plans we have for Fan Milk mirror the scale and depth of investment opportunities we believe are now abundant on the African continent,” commented Arif Naqvi, chief executive of The Abraaj Group.

“Africa is witnessing the rise of a burgeoning middle and consumer class, so the acquisition of Fan Milk is an extremely exciting and compelling investment opportunity. Fan Milk’s portfolio of leading consumer brands perfectly complements our African investment strategy,” he added.

The Abraaj Group already has an investment in East Africa’s Brookside Dairy.

Processing coconut into specialist oils

In another deal, South Africa-based private equity fund Agri-Vie recently announced an investment in Vida Oils International, a company involved in the processing of coconut into specialist oils and fats. Vida Oils has its head office in Mauritius and subsidiaries in South Africa and Mozambique.

Vida Oils supplies coconut oil to the food, pharmaceuticals, cosmetics and chemical sectors in South Africa, and the plan is to eventually also export internationally.

“There is significant market development potential for coconut oil and there is currently a high degree of interest in the medical and health benefits of the product. Coconut oil is already a key ingredient in dermatological applications and the critical role of coconut products are increasingly growing in acceptance in the US,” commented Deon Coetzee, CEO of Vida Oils.

Vida Oils currently sources its coconuts from smallholder farmers in Mozambique as well as from Asia. Coetzee told How we made it in Africa that the company could eventually also buy raw coconuts from other African countries, including Tanzania, Ghana and Nigeria.

According to Avril Stassen, a partner at Agri-Vie, Vida Oils is set to increase the output of coconut oil by three to four-fold over the coming years. “Currently, this is an untapped market and only a very small portion of the coconuts produced in Mozambique are currently converted to value added products,” he noted.