EXEO Capital takes significant minority stake in dairy business

The firm intends to draw on its inaugural fund’s ‘very successful' investment in Farefield Dairy as it seeks to support Glacier Products’ expansion across Africa.

EXEO Capital has made an investment of an undisclosed size into Kenyan dairy agribusiness Glacier Products. Capital was drawn from the firm’s Agri-Vie Fund II, which closed on $146 million in June 2019.

Partner Paul Nguru confirmed the investment fell into the $5 million to $20 million range of the investments the fund has made to date. He added that it was structured as a “pure equity deal”, which has made EXEO “a significant minority shareholder” in the company.

The deal came about towards the end of 2019 following a period when Glacier was looking for capital options, said Nguru, which culminated in EXEO securing the investment.

“What attracted us to the deal is that one of our key focuses is import replacement and export – this company is doing just that,” he said. “All of the chocolate brands before [Glacier’s] Dairyland came on to the scene were all imported and Dairyland has now come in and is producing a product of equal quality, but cheaper.”

Glacier was incorporated in 1979 and started out in ice cream before moving into chocolate with its Dairyland brand, which has a product range that includes chocolate bars, spreads and cooking chocolates. Nguru said the company also intends to move into yogurts and drinking chocolate products.

Glacier exports its products to East African countries such as Uganda, Tanzania and Rwanda from its base in Kenya, with plans to expand further into Ethiopia and Zambia.

Nguru said EXEO intends to use the lessons learned from the firm’s Fund I investment in South African business Farefield Dairy, which the vehicle held for seven years and which had proved to be a “very successful investment” for the firm.

“They are one of the leading companies in value-added dairy products like yoghurt, so we can bring that expertise on board having steered the company to significant growth over our investment period,” he explained.

One of the investors into Fund II is French dairy giant Bel Group, whose products include staples such as Babybel and The Laughing Cow and which could offer another expansion route for Glacier.

“We can draw on that [Bel Group] experience and potentially go into cheese or begin contract manufacturing of cheese or distributing their products in the country,” Nguru said. “But, most significantly, we can benefit from their best-in-class and operational and technical expertise.”

Fund II is roughly 75 percent deployed and will be fully invested by H1 2021. The firm will then begin putting together its third fund, said Nguru, which it expects to launch before the end of next year.