February 26, 2020

By Lynda Kiernan

Through its Food Fund 2, Phatisa, along with Sabvest, Masimong Chemicals and Rolfes management, has fully acquired the South African agribusiness Rolfes Group, de-listing the company from the Johannesburg Stock Exchange in order to position the company for greater growth. 

Founded in 1938, Rolfes operates four divisions:

Agricultural – Rolfes Agri: develops, manufactures, and distributes products that promote plant root and foliar health, soil nutrition, disease prevention, and other agricultural solutions for the farming sector. 

Food ingredients – Bragan Chemicals is a specialist supplier of ingredients and commodities to the food industry.

Industrial chemicals – Rolfes Chemicals distributes an extensive range of solution-focused industrial chemicals and services.

Water – Rolfes Water provides total industrial water management solutions, including specialized water purification solutions and products to the industrial, home, and personal care markets.

“We have chosen to partner with Phatisa, as they are like-minded investors who have a proven track record of investing and growing businesses across Africa,” said Richard Buttle, CEO, Rolfes. “The Rolfes management team has demonstrated incredible grit over the past few years and we are looking forward to embarking on our next chapter as we continue building a market leading business.”

Food Fund 2

Phatisa, a sector-focused African private equity firm with $400 million under management and the mission of feeding and housing the continent, announced in March of 2017 that it was targeting US$300 million for Phatisa Food Fund II (PFF)– a successor to the firm’s debut African Agriculture Fund (AAF) which closed in 2013 at US$246 million.

Following AAF, Phatisa’s Food Fund 2 carries forward Phatisa’s core focus on investments along the African food value chain, considering buy-outs and expansion transactions of between US$15 million and US$25 million in support of mechanization, ag inputs, poultry and meat production, food processing, rapidly-moving consumer goods, logistics, aggregation, distribution, wholesale, and retail across sub-Saharan Africa.

Having announced its first close at $121.5 million in October 2018, the PFF offers a balanced blend of private equity and development finance to build sustainable assets and communities, while also generating optimum returns for investors. 

A combination of macro factors are aligning in the sub-Saharan region indicating positive opportunities for investment along the agriculture and food value chains in the region, and across the African continent.

Africa is positioned to play a key role in increasing global agricultural output, according to the Africa Agribusiness Insights Survey 2017-2018 released by PricewaterhouseCoopers (PwC). Agribusiness is the driving force behind 65 percent of employment on the continent, and 75 percent of its domestic trade. Overall, Africa is seeing a growth rate of 5 percent per year, which PwC said could result in Africa’s GDP tripling by as soon as 2030. And if the rate remains sustained, Africa’s GDP could outpace that of Asia by 2050.

Underlying this is a working age population between 15 and 64 that is on pace to outnumber the same age group for the rest of the world combined by 2035. Furthermore, the International Monetary Fund (IMF) noted that sub-Saharan Africa is on pace to be home to the world’s top labor force, as its population booms from 800 million in 2010 to 3.7 billion by 2100. Over that time period, sub-Saharan Africa is expected to contribute 100 percent of the expected increase of two billion global workers.

Situated within this market landscape, Rolfes is well-positioned to meet the growing food security, water treatment, and manufacturing demands that come with a growing population. And with Phatisa as a partner, to set its sights on continental growth.

“We see tremendous growth potential in Rolfes and this take-private transaction unlocks latent value within the group, allowing management to focus on private equity aligned growth targets,” said Rinolan Moodley, partner, Phatisa. “We look forward to partnering with our co-investors and a highly capable management team.”

“As a specialist investor within the African food value chain, Phatisa is well placed to further propel Rolfes’s growth across the continent,” added Eugene Stals, CIO, Phatisa. “The transaction is aligned with our investment model of backing passionate management teams and leveraging our deep sector expertise to add value and implement focused impact initiatives.”

– Lynda Kiernan is Editor with GAI Media and daily contributor to the GAI News and Agtech Intel platforms. If you would like to submit a contribution for consideration, please contact Ms. Kiernan at lkiernan@globalaginvesting.com.