AQUACULTURE: A GROWING INVESTMENT OPPORTUNITY IN SA
EXEO Capital’s Agri-Vie fund announces investment in Terrasan
07 February 2018: EXEO Capital has announced an investment into a fast-growing aquaculture company operating on the South and West coasts of South Africa – TerraSan. Kennett Sinclair, partner at EXEO Capital – an Africa-focused private equity manager – says that as wild-caught fish numbers decrease due to stricter regulated marine activity, climate effects and trading regulations, aquaculture – the breeding of fish and other aquatic animals under controlled conditions – continues to gain popularity across the world. Aquaculture has also seen rapid growth in South Africa given the high value export-oriented nature, local government support and expansion opportunities.
Sinclair says that it is for this reason that their Agri-Vie Fund II – the private equity fund focused on food and agribusiness investments in Sub-Saharan Africa – has concluded an investment into TerraSan.
“The fundamentals driving the aquaculture industry globally as well as in Sub-Sahara Africa support the strategic rationale for the transaction. In addition, this partnership introduces the potential for expansion and value addition across the TerraSan business to a level not possible before.”
A mature business with good management, a large percentage of black shareholders and very sound corporate governance, TerraSan has the proven ability to be a platform for other acquisitions, Sinclair explains. Dr Mohammad Karaan, Executive Chairman at Terrasan said: “Terrasan is pleased to welcome Agri-Vie to its fraternity of shareholders. We look forward to their contributions to our company as we strive to expand our investments.”
Despite being a long-standing business, Sinclair points out that TerraSan exhibits exceptional growth prospects which are in most cases already in the process of being implemented. “TerraSan’s strategic intent is to grow organically by expanding its abalone and mussel production facilities, improving the quality of the bulk fishmeal produced in order to command a higher price for exports and becoming the processing home for the smaller quota holders in the small pelagic fishing industry.”
As fishmeal is a major expenditure component for fish producers engaged in aquaculture based predominantly in the northern hemisphere and abalone is a highly sought-after delicacy in Asia, Sinclair says that EXEO Capital finds TerraSan attractive given EXEO’s emphasis on investing in companies focused on exports and import replacement, which most of TerraSan’s activities are focused on.
“Although substitute products such as soya meal, rapeseed oil, and even alternative proteins such as insects have been growing, most aquaculture products require fishmeal and fish oil in their diet, which will likely result in increasing prices of fishmeal and fish oil.”
EXEO Capital manages the $175m Agri-Vie Fund investing in TerraSan. This is a second Agri -Vie Fund, building on the success of its predecessor $100m Fund. The Fund’s deployment programme is gaining momentum with this, its first investment, and the investment team is also attending to a range of other imminent opportunities in Sub-Sahara Africa.
About EXEO Capital and Agri-Vie
EXEO Capital (www.exeocapital.com) is a pan- African, mid-market private equity investment manager with operations in nine countries in Sub-Sahara Africa. Operating from offices in Cape Town and Nairobi, EXEO Capital manages the Agri-Vie Funds I and II (www.agrivie.com), focused on the food & agri sector of the region since 2008. The firm tracks complementary growth investment opportunities in the region with a view to future investment platforms.
. EXEO is a financial service provider authorised by the Financial Services Board, Registration number 46251. For more information visit www.EXEOcapital.com .
EXEO CAPITAL’S AGRI-VIE FUND II ATTRACTS OVER $100 MILLION AT FIRST CLOSE
1 February 2017: EXEO Capital, the pan-African private equity investment firm, has announced the first close of the second Agri-Vie Fund, focused on the food and agribusiness sector in Sub-Saharan Africa, after attracting commitments of over $100 million – one third more than the initial target.
Herman Marais, Managing Partner at EXEO Capital, commented: “This first close is building on the momentum of Agri-Vie Fund I, which is now in its realisation stage. Since inception in 2008, Agri-Vie has developed a proven track record in identifying strong performing food and agribusiness portfolio companies in Sub-Saharan Africa.” Fund I is invested in 12 portfolio companies across East and Southern Africa, including South Africa, Mozambique, Tanzania, Kenya, Rwanda, Uganda and Ethiopia, and has been “successfully unlocking value for investors while making a real and positive impact in the communities and regions it invests in,” he added.
“The first close of Fund II is a 33% over-subscription on the initial target, supported by a core of Fund I investors as well as new investors. The Fund will remain open for additional investors for another 12 months with a target of $150 million and a hard cap of $200 million,” he said.
Norfund – the Norwegian Investment Fund for Developing Countries – has been invested with Agri-Vie Fund I since 2010 and has worked closely with the management on establishing fund II. “Agri-Vie is an important partner for Norfund” says Norfund CEO Kjell Roland. “There is a considerable investment deficit in the food and agribusiness sector, and we are pleased to see that our investments in this sector also can help catalysing other private investors”, says Roland.
Agri-Vie invests across the broad food and agricultural sector, capitalising on the thriving African markets for processed food as well as export opportunities. Its portfolio companies include dairy, proteins (beef, poultry, aquaculture products and plant protein), condiments, fresh convenience foods, non-alcoholic beverages as well as food ingredients. The Fund, whose institutional investors come from Africa, Europe and North America, also invests in businesses specialising in agri-inputs such as seeds, plant nutrients, crop protection, and food logistics.
Patrick Mamathuba, Head of Alternative Investments at Stanlib Asset Management, a partner in EXEO Capital, commented: “The Agri-Vie Funds give investors an opportunity to participate in a diversified range of growth investment opportunities in the food and agricultural sector of the sub- continent.
“These opportunities are supported and driven by distinct structural factors and trends, which include rapid urbanisation leading to increasing demand for processed food products, large-scale import replacement opportunities in several of the countries where the Fund operates, as well as the availability of new technologies to enable precision farming and efficient agro-processing at lower risk,” explained Mamathuba.
EXEO Capital, which manages Agri-Vie Fund II, operates from offices in Cape Town, Nairobi and Mauritius and has representation in other major centres such as Johannesburg, Dar Es Salaam, Addis Ababa, Lusaka, Kampala, and Accra. Commenting on the organisational set-up, Marais said: “This strong local presence enables the investment team to understand local conditions and ensures that the best companies are selected for investment.
“By investing in middle to lower cap companies that have a successful track record and exceptional growth prospects, Agri-Vie plays an active shareholder role in its portfolio companies, supporting them to achieve growth and profitability targets,” he explained. “Our philosophy is to actively help to build the success of our investee businesses rather than being a passive investor.
“We also work actively with our partner companies to achieve their best development impact on local communities through employing and procuring locally as well as improving social infrastructure such as schools and clinics. The 12 portfolio companies of the Agri-Vie Fund I support more than 8,000 jobs in the communities where they operate. We also expect of our partner companies to join us in upholding internationally recognised standards of environmental and social governance.
“The establishment of Agri-Vie Fund II adds an important milestone to the momentum of institutional private equity investment in the food and agri sector of Sub-Sahara Africa. The first close of the Fund demonstrates increasing confidence among investors in the sector and region,” Marais concluded.
NOTES TO EDITORS:
About EXEO Capital and Agri-Vie
EXEO CAPITAL – an Africa-focused private equity partnership – was formed in 2015 by the founders of Agri-Vie Investment Fund (www.agrivie.com) the African private equity fund focused on the food and agribusiness sector, and pan-African asset manager STANLIB (www.stanlib.com). EXEO is a financial service provider authorised by the Financial Services Board, Registration number 46251. Agri-Vie has been investing in the food & agri sector since 2008 and STANLIB, as a multi-specialist investment company, has a long-standing focus on alternative assets, including in areas such as infrastructure, real estate and private equity.
While presently focused on the food & agri sector, EXEO Capital intends, over time to address a broader range of geographical regions and industries, and to provide investors with opportunity to explore other mid-market private equity investment opportunities on the continent. For more information visit www.exeocapital.com.