Dubai-based private equity firm, Abraaj Group announced the acquisition of a minority stake in sub-Saharan urea fertilizer manufacturer, Indorama Fertilizers for an undisclosed amount.
The stake was purchased by Abraaj through an unspecified fund from Indorama Holdings BV Netherlands, a wholly owned subsidiary of Indorama Corporation, a major petrochemical company with operations in Africa, Asia, Europe, and North America.
This is a landmark transaction for Abraaj in Sub-Saharan Africa,” said Arif Naqvi, Founder and Group Chief Executive, The Abraaj Group. “We are privileged to be partnering with Indorama Corporation to create a global fertilizer leader in Africa.”
Indorama Fertilizers operates a manufacturing facility in Port Harcourt, Nigeria that has been constructed to meet global environmental, social, and building standards that has the capacity to produce 1.4 million tons per year, placing Indorama in the position of being the largest prouder of urea fertilizer in the sub-Saharan region. From this plant, Indorama is a key supplier of fertilizers to Nigerian farmers, however, geographically the plant is well positioned to also supply fertilizers to countries in West Africa as well as markets in the Western Hemisphere including those in Europe and the Americas.
“We are pleased to welcome The Abraaj Group as an investor in our fertilizer business as we endeavor to create a world-class manufacturing and distribution network for fertilizers in the African continent, to meet the needs of underserved farmers and help propel the growth of the agricultural sector even further,” said Sri Prakash Lohia, founder and chairman of Indorama Corporation.
With 20 years of experience on the African continent, Abraaj plans to utilize its expertise and networks to help Indorama capitalize upon its strong management, production capabilities, and competitive costs to deepen its market penetration and reach its expansion plans.
Increases in population and income levels are creating an outlook of long-term growth for the fertilizer industry as food demand climbs, particularly in emerging economies. With urea being the most widely used fertilizer in the world due to its nutrient content and ability to be handled and stored easily, Indorama is well-positioned to leverage its standing in the market to become a leading global fertilizer supplier.
“Having successfully invested in the fertilizer business in North Africa, we look forward to leveraging that know-how and working with the management team in developing the company’s route-to-market infrastructure, build its network and support its capacity expansion and product diversification plans in the region.” “said Arif Naqvi.
To date, Abraaj has deployed approximately $3 billion in investments across the African continent in sectors including agribusiness, food and beverages, healthcare, consumer goods and financial services and raised $1.3 billion for its Africa-focused funds last year. However, Abraaj has an investment scope not only in Africa but in global emerging markets.
Other recent commitments by Abraaj in the food and ag space include a $150 million investment in a Series D round for Indian online grocer, Big Basket in March of this year; the acquisition of a majority stake in South African food company, Liberty Star Consumer Holdings in October 2014, and a majority stake in Turkish dairy company, Yörsan Group in January of 2014. Abraaj is also a backer of Brookside Dairy, the largest dairy company in East Africa and Fan Milk, a distributor of frozen dairy products and juices in West Africa.