AFGRI taps PIC and Fairfax equity in bid to create pan-African ag group

Chief executive Chris Venter tells Agri Investor the company, which financial backers took private four years ago, could seek to co-invest with institutions to seal strategic acquisitions.

South Africa’s AFGRI Group (AGH) has turned itself into an investment holding in an effort to accelerate its overseas expansion.

Owned by a trio of financial investors, the group will now be “more agile” as it seeks to deploy between 1 billion rand ($75 million; €64 million) and 1.5 billion rand in Africa over the next 18 months to two years, chief executive Chris Venter told Agri Investor.

Shareholders in the company, which delisted from the Johannesburg Stock Exchange in 2014, include the Public Investment Corporation, a state-owned entity that manages assets for 35 public-sector pensions (15 percent); Canadian asset manager Fairfax Financial Holdings (60 percent); black empowerment consortium Bafepi Agri (20 percent); and management (5 percent).

In addition to restructuring, the company also raised 1 billion rand to support forthcoming acquisitions, all of which came from existing investors, Venter said. The lion’s share of this – 800 million rand – will go towards growing Philafrica Foods, AGH’s food division. The other two units in the holding are AFGRI itself, which is focused on agriculture, and GroCapital Holdings, the group’s financial services arm.

Venter said AGH could seek co-investment opportunities with institutional investors, including development agencies and DFIs such as the Overseas Private Investment Corporation and the International Finance Corporation, to achieve its investment target. “For certain long-term investments we’ll be looking for long-term partners.”

Philafrica, which runs grain and maize mills, an oilseed factory, animal feed plants and poultry production units, last week announced the acquisition of Pakworks, which makes snacks for PepsiCo. These come after two deals in late 2017 – the purchases of Mozambican poultry producer Novos Horizontes and the cassava processing activities of Dutch Agricultural Development Trading Company.

“In order to move faster and expand different parts of the business, we needed a focused entity,” said Venter, to explain AGH’s decision to become an investment holding. “We’ll continue to expand in South Africa, but there will be a big focus on African expansion.” The group is already present in 11 African countries.

Interestingly, it also has a significant Australian base, having deployed 500 million rand off its balance sheet over the past two-and-a-half years to build the largest John Deere dealership in the country.

A portion of the capital raised this month will also be used to fund AGH’s acquisition of South African Bank of Athens from the National Bank of Greece, which was announced in March last year and will be housed under GroCapital, Venter said.