by Lynda Kiernan

EXEO Capital’s Agri-Vie Fund II has made an undisclosed investment in PPHL in exchange for a significant minority stake. PPHL’s Tanzanian wholly-owned subsidiary PPTL is a leading regional producer of grain, sugar, and fertilizer bags, including its PICS Hermetic grain storage bags developed by Purdue University, and tarpaulins for the agricultural industry. 

“In addition to investing equity into the business, Agri-Vie is also assisting in the raising of additional debt funding for expansion projects,”  said Avril Stassen, senior partner at EXEO Capital. “PPHL expects to employ an additional 200 people when these expansion projects have been completed, further extending their already impressive social reach.”

EXEO Capital was launched in March 2016 through a 50/50 joint venture between the founders of the South African private equity fund, Agri-Vie, and pan-African asset manager, STANLIB, as an entity through which to manage private equity vehicles formed to invest in strategically selected sectors.

The partnership planned to take an equity position of between 25 and 75 percent in opportunities that are closely tied to growth trends within sub-Saharan Africa, broadening investment opportunities and geographies for both parties, while the launch of EXEO Capital also added private equity to STANLIB’s alternatives offerings platform, which already included Infrastructure, High Yield Credit, and Director Property Investment.

The news of the addition of PPHL to the Agri-Vie Fund II portfolio comes one month after EXEO Capital announced the final close of the fund at $146 million. 

The establishment of Fund II was supported by a field of core Fund I investors along with new investors, and was backed by Norfund, the Norwegian Investment Fund for Developing Countries, which had been investing with Agri-Vie Fund I since 2010. In February 2017 Fund II announced its first close of $100 million.

“The first close of Fund II is a 33 percent over-subscription on the initial target, supported by a core of Fund I investors as well as new investors,” said Herman Marais, managing partner at EXEO Capital at the time.

As of Fund II’s closing in June, the fund had made five equity investments spanning $5 million to $15 million in high-growth potential companies across sub-Saharan Africa. This investment in PPHL would mark its sixth.

Founded in 1994 in Tanga, Tanzania, PPTL employs 740  people, and has recently been awarded the rights to manufacture and distribute their PICS bags in East and Southern Africa. These hermetic-sealable bags, developed in the U.S. at Purdue University, give the region’s smallholder farmers a low-cost solution to help cut post-harvest crop losses that average 30 percent across sub-Saharan Africa at a value of $1.6 billion per year. 

“PICS bags are therefore a solution to poverty and low incomes among the tens of millions of subsistence farmers, post-harvest losses, food security and numerous health concerns caused by poor post-harvest storage practices,” said Stassen, adding, “The company is also looking to implement a recycling programme to reduce any negative environmental impact.”

“We believe that the support and guidance offered by the EXEO team, coupled with the additional debt funding being provided for the expansion projects, will enable us to realise our goal of being able to reach out to millions of farmers in East and Southern Africa with sustainable technology based solutions for crop drying and storage,” said Suraj Devani, executive with PPHL.

Two other previous deals include a US$6.4 million investment in Capital Fisheries, a leading food distributor in Zambia specializing in cold chain distribution of animal proteins, in May 2018; and an investment in South Africa aquaculture company TerraSan in February 2018.

Through its funding, Agri-Vie II has also been instrumental in establishing one of the largest flower export companies in East Africa. 

“Our task as long-term investors is to find established businesses with resilient and vertically integrated business models that can scale up relatively fast,” said Herman Marais, managing partner at EXEO Capital, last month.

”Our approach to finding these companies is on-the-ground networking. We look for founders and management who are willing to partner with us and who are at risk with us, who maintain the highest ethical standards, are strong on sustainability principles, and have a strong social license. These are the companies that are more successful over the longer term.”

 

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