By Lynda Kiernan
The $4 billion global impact investment platform The Rise Fund announced it has made its second investment in the global dairy sector, acquiring a 34 percent stake in Pearl Dairy, the largest dairy processor in Uganda.
Founded in 2016 through a partnership between TPG, Bono, and Jeff Skoll, The Rise Fund is the largest impact investment platform in the world. Working with growth-stage, high-potential, mission-driven companies, the fund’s goal is to realize social and environmental impact and drive measurable positive change, while still gaining competitive returns for its investors.
The vehicle offers investment resources, business-building skills, a global network, and thorough quantification to help its portfolio companies in the sectors of food and agriculture, energy, education, fintech, healthcare, and technology accelerate growth and achieve their social impact goals.
Impact Africa
Impact and sustainable investing is seeing greater standing in the investment world. Assets tied into sustainable and impact investment strategies totaled $23 trillion in 2016 – a 25 percent increase over such assets in 2014, according to The Global Sustainable Investment Alliance. By 2017, socially responsible investments accounted for 26 percent of all professionally managed investments worldwide.
The impact investment market offers not only an overarching benefit to society and the environment, but the potential for healthy returns as well. The Global Impact Investor Network (GIIN) concluded that between 2016 and 2018, impact AUM saw a 400 percent increase, climbing from US$120 billion to US$500 billion over the two-year period.
In the years following the financial crisis of 2008, impact investing has taken root with institutional investors and governments alike, according to a case study on impact investing in East Africa published last year by the Wilson Center. And while Kenya stands as the leading country for impact capital investment in the region, the report goes on to state that Uganda’s growth in GDP over the past decade has led the World Bank to predict that its purchasing power parity (PPP) will increase by 170 percent by this year, opening investment opportunities particularly within agriculture, energy, tourism, fast-moving consumer goods, and financial services.
Doubling Down
This investment in Pearl Dairy is its second capital commitment within the global dairy sector, following its $50 million investment in India’s Dodla Dairy in May 2017 – the fund’s first investment in the food and ag sectors, and its first in India.
Established in the Mbarara region of Western Uganda in 2013, Pearl is the largest dairy processor in the country, and a leading dairy company in Eastern Africa. The company’s mission is to drive consistent demand for Uganda’s smallholder farmers, while also setting a higher bar for hygienic production practices.
“Pearl Dairy was established with a dual vision of improving the lives of thousands of smallholder farmers in the region and providing consumers with safe, nutritious, and affordable dairy products,” said Amit Sagar, CEO, Pearl Dairy. “We are excited to be partnering with The Rise Fund and are looking forward to utilizing their global expertise to help build an inclusive ecosystem that will have an even larger impact on the lives of millions of Africans.”
Since its founding, Pearl Dairy has rapidly grown to source raw milk from more than 10,000 smallholders across Uganda, to selling its LATO branded milk powder, long-life and flavored milk, butter, and ghee throughout 10 countries in Africa and Asia.
A key to the company’s success has been its mission to directly engage and mentor its farmer-suppliers, according to the IFC, which previously provided Pearl with an $8 million financing package in partnership with the Global Agriculture and Food Security Program (GAFSP) Private Sector Window.
Although Uganda’s dairy sector is growing at a CAGR of 3 percent, the IFC said that its is far from reaching its full potential, and that Pearl’s offering of training to Uganda’s farmers in animal husbandry, record keeping, and hygienic practices will support Uganda’s dairy farmers reaching productivity of between 20 and 25 liters per cow per day, and drive Pearl’s existing suppliers to increase output by 100,000 liters per day by 2021.
The company’s state-of-the-art dairy manufacturing and processing facilities are also helping to improve the existing infrastructure for Uganda’s dairy industry, which in turn supports income growth for the country’s farmers and provides healthy and nutritious products for its communities.
“In East Africa, three out of every four farmers have limited access to markets and credit. Pearl Dairy’s impressive footprint across these markets provides vital reach and resources for smallholder farmers, positioning the company to create positive impact that will scale as the business grows,” said Jide Olanrewaju, partner at The Rise Fund. “We are excited to partner with Pearl as they continue to provide vital infrastructure and training to farmers alongside quality milk products for consumers across the region.”
– Lynda Kiernan is Editor with GAI Media and daily contributor to the GAI News and Agtech Intel platforms. If you would like to submit a contribution for consideration, please contact Ms. Kiernan at lkiernan@globalaginvesting.