By Dan Emerson

 

Luxembourg-based Bamboo Finance and global agriculture conglomerate Louis Dreyfus Holding recently announced the launch of NISABA, a $50 million impact fund. NISABA, which is named after the Sumerian goddess of writing, learning and the harvest, will focus on agribusinesses in Sub-Saharan Africa (SSA).

 

Global AgInvesting spoke with NISABA Fund Director Pierrick Paindavoine.

 

GAI: How do you see the agricultural and economic development potential for the Sub-Saharan region?

NISABA: Obviously, agribusiness in SSA is highly pluralist and diverse. Development stage, approaches, performances and potential vary from one country to another. In a nutshell, we have looked at three core building blocks: country fundamentals, crop/commodity fundamentals and value chain fundamentals.

 

Agribusiness sector development is at the crossroads of crucial challenges for SSA: 2 billion people to feed by 2050, 330 million young Africans to enter the labor market by 2025, and globally, an agricultural production not keeping pace with population growth. But, agribusiness has a huge untapped potential. SSA food markets are expected to increase fourfold between 2010 and 2030 to reach USD 1 trillion.

 

GAI: How would you characterize the agriculture that is practiced there now?

NISABA: We see significant room for improvement. Many parts of SSA have major agricultural and agribusiness potential: Africa could be a major producer, processor and exporter of agricultural and agri-food products. Besides, developing the agricultural sector could have a significant impact on local populations.

 

GAI: What are some of the challenges to be overcome and what does your group hope to provide to improve/develop agriculture and agribusiness in the region?

NISABA: Agribusiness investments in Africa share some common hurdles which hinder growth potential. The most common ones include: low yields (mostly linked to farming practices); lack of logistical and storage infrastructure (sometimes leading to high post-harvest losses); poor linkages to markets; lack of well-structured smallholders and/or producers’ associations; lack of financing and risk management tools and, to some extent, scarcity of experienced management teams. Combining sector expertise and impact private equity know-how, we think we can help in improving the situation.

 

GAI: When do you expect to make your first investment?

NISABA: We hope to have a first closing by the middle of next year and make our first investment by the end of 2016.

 

GAI: What will be your typical investment size?

NISABA: We will target an average size of USD 3-3.5 million over the lifetime of the investment.

 

GAI: Are you looking for a mix of investments from different parts of the agribusiness continuum?

NISABA: The Fund will invest in small and medium businesses with the intended impact goal of increasing capacity, promoting more equitable and sustainable agrifood value chain diversification, enhancing local value addition, fostering innovation, streamlining distribution for smallholder farmers and their communities or improving food security. The Fund’s target is to be well-diversified through a balanced portfolio of countries, activities and agricultural commodities.

 

GAI: How do you plan to add value to companies you invest in?

NISABA: The Fund will add strategic value to its portfolio companies and drive growth through: providing active governance (board representation); providing management support – for instance, to implement transparent internal procedures, strong financial management systems and social metric tracking systems; identifying key needs and supporting investees with targeted technical expertise, market development, fundraising, HR development and strategic planning; leveraging strategic linkages and synergies across the Fund portfolio companies and with other Bamboo Finance portfolio companies, or Louis Dreyfus Commodities’ activities; and supporting companies when required with targeted assistance.

 

GAI:  What kind of criteria will you use in picking investments?

NISABA: NISABA’s investment philosophy and strategy has been shaped around three key themes that we believe have the greatest potential of turning long term capital into measurable, positive impact: addressing value chain bottlenecks by investing in SMEs that address those bottlenecks, unlocking unrealized economic value and, eventually, being a catalyst for additional investment into the sector.

 

GAI: Do you see much ag investing competition in the region or do you have the advantage of “getting in early?”

NISABA: There are a few impact funds specialized in agriculture or agribusiness in SSA. And we think this is quite encouraging to see new actors entering the field. We think our project brings something new and very valuable: a partnership that will merge multinational sector expertise with access to finance and impact investment know-how to actively co-manage investments from pipeline to exit.