May 23, 2018

Pan African mid-market private equity manager EXEO Capital announced an investment of US$6.4 million in Capital Fisheries, a leading food distributor in Zambia specializing in cold chain distribution of animal proteins.

The investment was made through EXEO’s Agri-Vie Fund II, a private equity vehicle focusing on investment opportunities in the food and agribusiness sectors in sub-Saharan Africa.

Driving EXEO’s decision to invest in Capital Fisheries were a number of factors. Zambia’s population is expected to grow at a rate of 2.8 percent per year through 2030, with an urbanization rate of 4.8 percent over the same time period. Furthermore, Zambia’s gross domestic product (GDP) is expected to increase by 2.1 percent per year over the same timeframe. More than half of the protein consumed by this growing population consists of fish, pointing to positive market prospects for the company, whose business model also drew EXEO’s attention.

“You have all the ingredients necessary for excellent further growth prospects for this company,” said Kennett Sinclair, partner, EXEO Capital.

Founded in 1999 by Damian Roberts and Gavin Thomas, Capital Fisheries sells fish (mainly tilapia, bream, or horse mackerel) that has been sustainably harvested in Zambia, Zimbabwe, and Namibia. The company has also added smoked fish to its product lines, along with fresh, locally sourced beef and sausage from Zambia and select imported goods. And all of the company’s value-added fish and meat products are processed in a modern facility located in Lusaka.

“Capital Fisheries already has a large market share in fish distribution in Zambia,” said  Sinclair. “The company’s innovative model of wholesaling frozen products from reconfigured, refrigerated shipping containers placed permanently at markets, small shopping centres and areas where people congregate, has been tremendously successful.”

EXEO and Agri-Vie

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.

Building upon the success of Agri-Vie Fund I, and launched with the continued mission of investing in food and agribusiness companies along the supply chain across sub-Saharan Africa, Fund II announced its first close in February of last year at $100 million, and has since grown to a corpus of $175 million.

Agri-Vie Fund II is managed by EXEO Capital from its offices in Cape Town, Nairobi, and Mauritius, and through its presence in other key locations including Johannesburg, Dar Es Salaam, Addis Ababa, Lusaka, Kampala, and Accra.

“This strong local presence enables the investment team to understand local conditions and ensures that the best companies are selected for investment,” said  Herman Marais, managing partner at Exeo Capital and Agri-Vie co-founder, last February.

Since its founding in 2008, Agri-Vie has built a proven investment track record that has resulted in a portfolio of strongly performing food and agribusiness companies that include dairy, beef, poultry, aquaculture, and plant proteins, condiments, fresh convenience foods, non-alcoholic beverages, and food ingredients.

The establishment of Fund II, which was supported by a field of core Fund I investors along with new investors, was backed by Norfund, the Norwegian Investment Fund for Developing Countries, which has been investing with Agri-Vie Fund I since 2010.

Protein is Popular

Another recent investment announced by EXEO in February of this year was in TerraSan, a rapidly growing animal protein company – with aquaculture operations on the West and South coasts of South Africa.

Market prospects, business structure, climate change, and strict corporate governance all played a role in bringing EXEO’s Agri-Vie Fund II and TerraSan together.

“The fundamentals driving the aquaculture industry globally as well as in sub-Saharan Africa support the strategic rationale for the transaction,” noted Sinclair. “In addition, this partnership introduces the potential for expansion and value addition across the TerraSan business to a level not possible before.”

TerraSan is a leading fish and marine farming company. It’s wholly owned subsidiary Aqunion controls investments along the entire abalone value chain, with farming operations Aquafarm and Bay Sea Farm, as well as processing and feed manufacturing assets in Hermanus and Gansbaai.

Established in 1994, TerraSan’s abalone division developed the first farm to export commercial volumes of farmed abalone to Hong Kong, and has since expanded to export to markets across Asia including China, Japan, Taiwan, Singapore, and Malaysia.

TerraSan also completely owns Blue Ocean Mussels Ltd. – an aquaculture operation and processor that supplies more than 50 percent of the domestic mussel market in South Africa.

-Lynda Kiernan