October 1, 2020

By Lynda Kiernan, Global AgInvesting Media

Mauritius-based Loinette Capital has acquired Hortanzia – a Tanzanian farming company based near Arusha that produces coffee, chives, baby corn, French beans, and mint – the bulk of which are grown for export markets. 

Founded in 2008, Loinette Capital is a specialist asset-based finance and insurance brokerage provider that formulates custom funding solutions to SME’s across the 10 sub-Saharan countries of Ghana, Ivory Coast, Democratic Republic of Congo, Kenya, Zambia, Namibia, Botswana, Zimbabwe, Mozambique, and Tanzania.

“As an SME-focused group offering bespoke funding solutions across sub-Saharan Africa, this deal presents a fantastic opportunity for Loinette,” said Lawrence Polkinghorne, executive and deal lead, Loinette. 

As the country’s largest sector, agriculture is the driver behind Tanzania’s economy. Spanning a diversity that includes staple crops, livestock, and cash crops, agriculture’s portion of Tanzania’s GDP has more than tripled in 10 years. This significant growth has been fostered by greater cash crop output, a rising ag processing industry, and greater domestic demand for processed foods, according to the Oxford Business Group. 

The country is home to between 1,000 and 2,000 large scale farms averaging 1,100 hectares (2,719 acres), with total land available for irrigation standing at 29 million hectares (71 million acres) – indicating vast unmet potential, according to Tanzania Invest. 

However, there remains great opportunity for growth as there is much need for modernization and development to increase yields, lift exports, and to strengthen value-added processing. Likewise, there are a host of challenges to be met – namely, the need for adequate storage, access for smallholders to viable technologies, and the need for more private investment.

Despite these hurdles, signs of progress in the country have been noted by the World Bank.

“The current trends in agriculture offer a tremendous opportunity to catalyze private investment, both local and foreign, and raise the incomes of the poor,” said Bella Bird, World Bank country director for Tanzania. 

“Since agriculture already accounts for a quarter of total GDP and two-thirds of jobs, enhanced agricultural growth must be part of the strategy to create more and better jobs and alleviate poverty.”

International law firm Clyde & Co. acted as sole counsel to Loinette throughout the transaction, including providing strategic advice, due diligence on regulatory processes, and drafting and negotiating key transactional documents.

With more than 100 professionals based in Dar es Salaam, Cape Town, and Johannesburg, Clyde & Co. is one of the largest international law firms on the continent, and a deep well of experience with clients investing in emerging markets across sub-Saharan Africa.

“This deal is a clear demonstration of the incredible opportunities that exist in the Tanzanian agribusiness sector,” said Michael Strain, partner and head of corporate – East Africa, Clyde & Co, Dar el Salaam. “We look forward to continuing to support Loinette as they expand across the region in the coming years.”

Strain led the Clyde & Co. team on this deal, and was supported by senior corporate associate James Pius, and corporate associate Imani Mselle.  

Lawrence Polkinghorne with Loinette added, “Tanzania (and East Africa more generally) is an important growth area for our organization and we look forward to continuing our partnership with Clyde & Co as we continue to invest across the region.”

 
– Lynda Kiernan is editor with GAI Media, and is managing editor and daily contributor for Global AgInvesting’s AgInvesting Weekly News and  Agtech Intel News, and HighQuest Group’s Oilseed & Grain News. She is also a contributor to the GAI Gazette. She can be reached at lkiernan@globalaginvesting.com.