Agri-Vie, the African agribusiness private equity firm, has delayed the first close of Fund II, according to co-founder and managing partner Herman Marais.
The delay comes as the firm awaits commitments from repeat investors that are expected to participate in 75 percent of the fundraise.
It was expected to hold first close this summer and had started marketing at the start of the year, but now expects a first close on $75 million at the end of the year and a final close at the end of 2015. It is targeting between $150 million and $200 million overall.
Agri-Vie has also set itself the objective to increase the level of private investor participation in the fund above Fund I’s 35 percent benchmark, said Marais.
“Now that global interest and recognition of direct investment opportunities in Sub Saharan Africa has progressed further we are trying to align with that by setting this objective beyond our previous benchmark for public-private participation,” he said.
“This is important not just from a business objective but for the general mainstreaming of the food and agri asset class in Africa.”
But Agri-Vie will not shun returning development finance institution investors that want to commit again to Fund II, because they played an important role in Fund I.
“The DFIs were valuable partners in Fund I by demonstrating the investability of the sector to private sectors,” said Marais.
Primary agriculture asset managers operating in Africa have complained in the past about the DFIs’ lack of action in the sector, but Marais argues that primary agriculture and agribusinesses further up the value chain provide a very different proposition.
“I think there’s a general recognition that primary agriculture carries a higher risk level than companies further up the value chain such as food processors,” he said. “This added risk ranges from climate risk to social risk, especially in the African context where there is a high level of socio-political sensitivity around land rights, and DFIs, similar to Agri-Vie, have very rigorous ESG criteria which could limit their reach.”
“I can point to a number of examples where DFIs have very much played an instrumental role in garnering investment, whether through fund commitments or co-investments,” he added.
Marais expects new investors will yield from North America, Europe and possibly East Asia, although those conversations are still in the early stages, he added.
Fund I closed on $100 million in 2010 and attracted commitments from LPs such as the African Development Bank and US charitable trust the WK Kellogg Foundation.
It last deployed capital in February with a 5 percent investment in Kariki Group, the Kenyan flower exporting business; it may add one more asset to the portfolio, said Marais.
Both funds pursue a standard private equity fund and fee structure.
The fund has a minimum commitment of $5 million although they tend to come in between $10 million and $15 million. The fund has a five-year deployment period.