Flow Equity secures AgDevCo backing to build Rwandan poultry platform

Having received a $3m debt investment from the UK institution, the US firm hopes to attract equity investors to the portfolio.

Chickens on traditional free range poultry farm

Having received a $3m debt investment from the UK institution, the US firm hopes to attract equity investors to the portfolio.

UK-based impact investor Africa Agriculture Development Company has made a $3 million debt investment in Uzima Chicken, a Rwandan poultry venture backed by New York-headquartered Flow Equity.

Located in Rubirizi, Kigali, and using land leased from the Government of Rwanda, Uzima provides days-old chicks to distributors, who feed and vaccinate them before selling four-week-old chickens to smallholder farmers.

AgDevCo said the debt provided to Uzima will help the company reach its goal of producing between 8 million and 10 million chicks per year. The support comes as part of Uzima’s effort to help up to 1 million smallholders in the region earn income from egg and meat production within five years.

Flow Equity managing director Joe Shields told Agri Investor that AgDevCo’s investment in Uzima stands out among those made to help smallholders in that it currently generates income, in addition to having social benefits that include improving nutrition and empowering women.

“Chicken is a particularly excellent product in Africa because it markets itself. Nobody has to explain to a mother what it means to feed their kid an extra egg,” he said. “The poultry industry is able to grow, and not just in hotels and in industrial poultry. It has much broader growth opportunities across Africa.”

PE appetite for East Africa

Shields declined to share any details about the loan extended to Uzima but did tell Agri Investor that AgDevCo’s technical assistance will focus on both agricultural operations and capacity-building. Flow Equity plans to use the institution’s support as part of a broader effort to attract investors into a portfolio of regional rural poultry businesses.

“We’ve worked with a number of investors, but AgDevCo is unique in being completely focused on agriculture,” he said. “From an ESG perspective, there is clear intention for them to improve our operations. They’ve made it clear that they also will be involved from a corporate systems-building perspective, which, particularly as companies start to scale from one geography to multiple ones, will be very beneficial to the business.”

Mekelle Farms, a formerly government-run poultry farm in northern Ethiopia that was revitalized and re-branded by Flow Equity, is the model the firm hopes to replicate in Rwanda with Uzima.

Shields said Flow Equity’s experience with Mekelle Farms has demonstrated that there is a very large amount of investor interest in Rwanda and Ethiopia. The experience has also, according to Shields, underscored the importance of focusing on the needs of the rural consumer and devoting resources to developing a pipeline of management talent.

“The investors that we look at are the VC/impact investors that are very aligned with us in terms of purpose, particularly as we are an earlier-stage business,” Shields said.  “As we start scaling across more geographies, the ones that do understand the focus on impact we have as a rural business – whether it be private equity players or DFIs – will be the folks that will be most likely a good fit for our company.”