EXEO Capital exits Fairfield Dairy

Pan-African private equity firm EXEO Capital has sold its stake in Fairfield Dairy, a South African dairy company in which it held a substantial minority stake

The sale represents an exit for the firm’s Agri-Vie Fund I, a $100 million food and agribusiness fund, from which it made the $4 million investment in Fairfield in 2009.

Financial details of the transaction were not disclosed but according to EXEO Capital co-founder and managing partner Herman Marais, the investment substantially exceeded the fund’s target return of 2.5x – 3x money multiple.

“I think for Agri-Vie Fund I, the successful exit is a good milestone and I think especially for the food and agribusiness asset class in Sub-Saharan Africa it’s an important data point,” Marais told Agri Investor.

The transaction marks the first realized investment out of a total of 12 companies that comprise the Agri-Vie Fund I portfolio. Other exits are currently in progress, Marais said.

“Agri-Vie brought both risk and capital, as well as many other valuable contributions to the business, having actively worked with management to improve both revenues and profitability over the investment period,” Fairfield Dairy founder and major shareholder Kevin Lang said in a statement.

Asked how this was realized, Marais explained: “It was achieved mainly through the combination of two things. The first was placing a stronger focus on value-added dairy products, such as yogurt, desserts, cheese, rather than commodity-milk products. The second was substantially improving efficiencies in the business by reducing waste and rationalizing the product portfolio, essentially streamlining the business on an operational level.”

The result, according to Marais, was more than doubling turnover and achieving a proportionately greater improvement in profitability.

EXEO Capital did not disclose the name of the buyer, other than to say that it is a private investment trust linked to Fairfield Dairy’s founding family.

Marais said the firm is assessing further opportunities in the dairy sector “in terms of our Fund II program.” The firm is in the process of raising Agri-Vie Fund II, which has a target of $175 million, reached a first close of $100 million in late January.

“We see [dairy] as a sector with continued potential and opportunities in Sub-Saharan Africa, so we certainly maintain an interest in the sector and may well do an investment in the Fund II program,” he added.

EXEO Capital said that while currently focused on food and agri, the firm may expand its target focus over time.

“While presently focused on the food and agri sector, EXEO Capital intends, over time to address a broader range of geographical regions and industries, and to provide investors with opportunity to explore other mid-market private equity investment opportunities on the continent,” the firm said in a statement announcing the first close of Agri-Vie Fund II.