DPI eyes African ag exports following $900m close

Principal Jean-Philippe Syed says European retailers including Carrefour, Lidl and Aldi established multi-year relationships with North African producers following covid-19-related supply disruption last year.

Development Partners International plans to help its portfolio companies capitalize on a post-covid shift in European supply chains that has made African agricultural supply more attractive, says a principal at the firm.

Soon after London-headquartered DPI announced the $900 million close of its third fund this month, Jean-Philippe Syed told Agri Investor that SICAM, a Tunisian tomato products producer, has experienced significant growth since DPI invested $56 million in June 2020.

“Europe used to import a lot of product from China and that supply chain was cut off during covid, and [now] it has become overwhelmingly expensive for these type of products,” he said.

Syed added that because covid-19 infection rates were high last year in countries, such as Italy and Spain, that traditionally supply European tomatoes, many crops went unplanted, thus providing an opportunity for producers elsewhere.

“Northern Africa and Tunisia were able to get their foot in the door and get contracts to supply the major top-tier European retailers such as Carrefour, Lidl, Auchan and Aldi,” he said. “They were so impressed by the quality and price of our products that this has forged multi-year relationships and opened a whole new avenue of exports for African producers.”

DPI’s African Development Partners III fund surpassed an initial target of $800 million through commitments from pensions, development finance institutions, funds of funds, endowments and others. Investors in the vehicle came from more than 20 countries and included Chicago Teachers’ Pension Fund, the pension of the City of Philadelphia and the City of Hartford Pension Commission. DPI also secured $250 million in co-investment capital.

Syed said ADP III’s LPs included sovereign wealth funds from Europe and the Middle East, alongside “sovereign-type entities” from Africa.

“We’ve also seen increasingly-strong demand from US-based LPs,” he added. “For the first time, we have real impact-oriented investors joining our LP group.”

In January, DPI completed a merger between its portfolio company Compagnie Marocaine de Goutte à Goutte et de Pompage, an irrigation provider, and domestic rival Comptoir Agricole de Souss, in a deal designed to create a “one-stop shop” for regional farmers. CMGP has since expanded into Senegal and the Côte d’Ivoire and is investing in moving into Nigeria.

Syed said DPI has investigated other ag-related markets such as olive oil, flour and biscuits and will continue to seek opportunities to build multinational platforms focused on African ag.

“By creating these regional platforms with multi-country footprints, we are able to create the scale to compete with other potential sources,” he said. “It also gives us the scale to attract top-quality management that allows us to compete from a strategic perspective.”

DPI’s investment into SICAM and is one of four existing deals from ADP III. Syed said that as DPI continues to build SICAM, it hopes to increase its secondary product manufacturing capacity and to potentially acquire existing brands in Italy and Spain to solidify the company’s market position.

In addition to agribusiness, DPI invests in financial services, healthcare and infrastructure through a strategy focused on middle-class growth and digital transformation in Africa. Its plans call for ADP III to support up to 12 investments of between $75 million and $125 million. Syed declined to address return expectations.

Investors’ recently increased interest in Africa, he said, can be attributed in part to the continent’s relative resilience against covid-19.

“It was the least affected continent in many ways: in terms of the GDP impact, the number of deaths and the incidence of covid cases in the population,” he said. “Because of this, we are investing in resilient sectors, which are primary needs sectors, that have seen growth across the continent, like healthcare and – very importantly – like agriculture.”