South African agribusiness private equity firm Agri-Vie is targeting a $75 million first close on its second fund during the second half of this year, according to Izak Strauss, the executive director.
The fund is targeting $175 million overall and a similar investor base to the firm’s first $100 million fund which closed in 2010. Thirty percent of investors in Fund I were from South Africa with the remainder mostly from Europe, plus the American WK Kellogg Foundation and the African Development Bank.
Returning investors are expected to account for a large portion of the fundraising.
Fund I is now fully deployed across 13 investments, in 11 sub-sectors and seven countries in Sub-Saharan Africa. The fund is invested across downstream, upstream and agricultural inputs assets, including some greenfield forestry plantations.
The firm sees particular opportunity to provide local consumers with processed goods in the dairy, beverage, protein and fruit and vegetable sectors.
“With urbanisation comes demand for more value-added products but these are relatively infant sub-sectors for local production,” said Avril Stassen, senior partner at Agri-Vie, adding that products such as yoghurts and juices are mostly imported across several countries on the continent. “Raw milk is by far the highest consumed dairy product because so little processing gets done domestically. So milk is a good sector to invest in with good margins.”
Fund I bought some processing assets that ended up acquiring primary production assets to secure supply. “We see that sometimes; investing back into the raw material,” said Stassen.
Stassen and Strauss hope to make investments in West Africa with Fund II after failing to find any good deals for Fund I and the team’s expertise in Southern and Eastern Africa was another factor.
The firm was targeting a first close last year but has delayed as investors take time to do due diligence on the vehicle, Strauss told Agri Investor on the sidelines of the Annual AVCA Conference in London this week.