8 Miles to raise Fund II, invests in Ethiopian beef exporter – exclusive

Pan-African private equity firm 8 Miles has bought a minority stake in vertically integrated Ethiopian beef producer Verde Beef Processing and will raise a second fund before the second quarter of 2017, according to sources.

The latest investment, financial details of which were not disclosed, will fund the company’s expansion plans to “grow more than tenfold from its current base of 6,000 animals,” according to a statement from 8 Miles.

The London-based firm said Verde Beef, founded with $4 million in seed funding from investment firm Verdant Frontiers two years ago, is actively exporting beef as demand from the Middle East, Africa and Asia climbs. Verde Beef plans to begin construction on an in-house abattoir and processing facility next year to add to its 1,300 hectare feedlot and crop-farming facility, where it fattens cattle.

The investment was made from 8 Miles Fund I A, which held a first close on $200 million in February 2012, about $250 million short of its target. Investors include the International Finance Corporation, the African Development Bank and development finance firm CDC Group, as well as two US, one European and one African private investor. Companies House documents indicate some of the partners restructured the investment vehicles through which they invested in the fund in 2013.

No details on a second fund were provided by the firm, but it is thought it would also target a geographically wide investor base.

Ethiopia has the largest livestock herd in Africa, and the tenth-largest cattle population in the world. However, with about seven major functioning abattoirs and small-holder farm systems still dominating the country, competitiveness is an issue for beef exporters, according to a study conducted by the Addis Ababa chamber of commerce last year.

8 Miles has identified beef export, mostly to the Middle East as a major opportunity in Ethiopia, but one that needs supply chain investment.

“The investment from 8 Miles will enable us to grow our business significantly and become a top beef processing company in Africa,” co-founder and chief executive officer at Verde Beef, Scott Friesen, said in a statement. “Over the coming years, we expect this project to reskill and employ hundreds of Ethiopian people in the production of export grade beef.”

8 Miles says it typically makes investments of between $15 million and $45 million each, aiming to take majority or influential minority positions in companies. Its portfolio includes agribusiness and financial services provider eleni, Ethiopian wine producer Awash Wine and Uganda’s Biyinzika Poultry International.

Verdant Frontiers was established in 2013 and makes investments of between $1 million to $10 million, according to its website.