$50m sub-Saharan Africa fund launched

Louis Dreyfus Group, one of the world's largest agricultural commodity traders, has teamed up with emerging markets firm Bamboo Finance to launch the fund.

Emerging markets private equity firm Bamboo Finance and Louis Dreyfus Group, one of the world’s largest agricultural commodity traders, have teamed to launch a $50 million fund (£33 million; €46 million) to invest in agribusiness in sub-Saharan Africa.

Nisaba, which has been seeded with $10 million from Louis Dreyfus Holdings and will invest for impact as well as profit, will back small- and medium-sized agribusinesses across the value chain in sub-Saharan Africa, the firm said in a statement. A spokeswoman told Agri Investor the fund will seek to bring in strategic corporate investors and development institutions to raise the balance of $40 million.

“Global agricultural production is not keeping pace with population growth. We believe that through appropriate financing tools like impact investing, the private sector must take an active role in addressing such challenges,” said Margarita Louis-Dreyfus, chairwoman of Louis Dreyfus Holdings.

The new fund says it will focus on SMEs that combine social, environmental and financial returns by improving efficiency through access to data, finance and risk mitigation, training, technology and innovation.

It also wants to strengthen market access for farmers by linking producers to end-consumers and build local capacity through post-harvest handling and storage. “We are prioritising Ethiopia, Ghana, Ivory Coast, Kenya, Mozambique, Senegal, Tanzania, Uganda and Zambia,” the spokeswoman said.

Nisaba is aiming to hire an investment manager and investment analyst for its Nairobi office.

Pointing to the opportunity in sub-Saharan Africa, the fund says food markets in the region are expected to increase four-fold to 2030 to reach $1 trillion.

The agri growth story in sub-Saharan Africa has been touted by a wide range of investors in recent months, from impact investors to venture firms and those focused on large-scale buyout deals.

In February the MasterCard Foundation launched a $50 million fund to invest in  agribusinesses and agribusiness finance providers to support the development of the agriculture sector. In April Abraaj raised almost $1 billion for mid-market buyouts in the region, a close which followed another $1 billion fundraise by pan-African player Helios Investment Partners. And at the other end of the scale, AgDevCo, the impact investor backed by the UK’s Department for International Development, earlier this month invested $375,000 in a Ghanaian guinea fowl business.

Bamboo Finance is a Luxembourg-based fund with $250 million under management across two funds, with investments in 46 emerging market-based companies.