Paragon Volta, a Ghanaian investment firm, has launched a $65 million capital raising effort for a sustainable crop farming project in the Volta region.
The firm is already in talks with two high net worth individuals in Ghana and Nigeria about commitments as well as the International Finance Corporation and African Development Fund, according to Vijay Thakrar, chairman and majority shareholder of Paragon Volta.
The firm aims to hold a first close in June next year. It is likely to launch a second round of capital raising at a later stage.
The structure of the investment offering is yet to be decided and the firm is considering the merits of either a private equity fund structure or a direct investment vehicle, according to Thakrar.
The firm is seeking commitments in the range of $50,000-$25 million. Investors would commit to a minimum 5-year investment period.
Performance fees are being considered. The firm will not charge management fees.
Ghana’s Volta region is an appropriate location for agriculture development owing to its flat land surface and the natural irrigation from the Volta River, according to Thakrar.
The team, which comprises Thakrar and chief executive Rob Stichbury, have past experience in Ghana developing biofuel and forestry projects. Ghana is also politically stable and is largely unaffected by regional or continental strife, making it the ideal country for the project, he added.
Despite much debate about land titling in Africa, Thakrar does not consider this the biggest challenge. “Securing the land wasn’t an issue, as we had our forestry experience and local contacts to draw on,” he said. “The first challenge we faced was finding the right team that understood Ghana, Ghanaian farming and the impact of the investment vision we have for the project which includes a substantial CSR commitment including a school, health clinic and solar lighting for villagers.”
Another challenge is education of investors according to Thakrar. “There needs to be more awareness of differing risk profiles in Africa from country to country and the tax advantages afforded to UK investors in Ghanaian projects, from the Ghanaian and UK governments,” he said.
The firm plans to farm oil seed crops and rice as well as processing crop residue for animal feed. In the long term, through vertical integration further up the value chain, Paragon hopes to develop itself as a supplier of processed food products and animal feed.