Phatisa, a leading sector-specific African development and private equity firm with the mission of feeding and housing the continent, announced an agreement to sell its controlling stake in Meridian Group to Ma’adan, Saudi Arabia’s largest mining company.
Meridian is a top African agricultural inputs company distributing about 500,000 tons of superior fertilizer, including custom blends, across Malawi, Mozambique, Zimbabwe, and Zambia, generating annual revenues exceeding $300 million.
Phatisa initially invested in the group through its African Agricultural Fund (AAF) in 2014 as lead investor for a consortium that included Mbuyu Capital. The capital provided supported Meridian in achieving its strategic growth and increasing the market Superfert, the company’s flagship fertilizer brand.
“Meridian exemplifies Phatisa’s ethos of development equity, demonstrating how private equity investments can deliver a tangible and sustainable impact on food security within the continent, as well as driving superior returns for our investors,” said Rinolan Moodley, deal partner with Phatisa.
“Our capital and insight were instrumental in developing Meridian’s distribution networks, providing smallholders with access to customised fertiliser blends that continually drove volume growth and resulted in EBITDA tripling over our investment period. Importantly, during this growth trajectory, we positively impacted over 13,000 smallholders – 69% of which were women – with our training programmes and technical assistance facility.”
The African Agriculture Fund (AAF) was launched in 2009 as a coordinated effort by a consortium of European and African financial institutions to develop a fund that would have a positive impact on agriculture and food production in Africa through a pan-African approach. After gaining investments from a wide field of multinational limited partners, the fund saw a final close in 2013 at US$246 million.
While open, the fund built out a portfolio of eight investments, including Zambian poultry company Goldenlay, palm oil companies Goldtree and Feronia, Côte d’Ivoire-based water purification and juice company Continental Beverage, Malawi’s Farming and Engineering Services, agricultural distributor Torre Equipment Africa, and the AAF SME Fund.
More recently, in October 2018, Phatisa announced the first close of its Phatisa Food Fund 2 (PFF 2) at $121.5 million. PFF 2 carries forward Phatisa’s core focus on investments along the African food value chain, and will consider buy-outs and expansion transactions between US$15 million and US$25 million in support of mechanization, inputs, poultry and meat production, food processing and manufacturing, logistics, aggregation, and distribution across sub-Saharan Africa.
For Meridian, upon completion of the divestment, the company’s executive team will remain in place, creating a partnership with publicly-listed Ma’adan that will strengthen Meridian’s market position through capitalizing upon Ma’adan’s integrated supply chain and global presence.
“Through the combined ability and vision of management and Phatisa, Meridian has developed its business to become the regional fertiliser market leader,” said Chris Giannakis, co-CEO, Meridian. “We are excited to embark on our next chapter with Ma’aden, which will bring a global scale and strategic aspect to Meridian’s entrepreneurial culture.”
-Lynda Kiernan