Nigerian SWF and Old Mutual launch $200m agri fund

UFF managing director Duncan Vink says the fund will look to invest in on-farm improvements and scaling up for smallholders.

The Nigerian Sovereign Investment Authority, the country’s sovereign wealth fund, and Old Mutual Investment Group have launched an agriculture fund targeted $200 million.

The investment is part of a larger $700 million collaboration between OMIG and the NSIA that will also include investments in commercial, retail and hospitality assets. UFF African Agri Investments, a partnership between OMIG and South Africa manager Futuregrowth will manage assets on behalf of the fund.

The fund’s bite-size is likely to range between $20 million and $25 million. The fund will not look to make supply chain or processing acquisitions, said Vink. However, on-farm infrastructure improvements such as cold-storage and warehousing facilities will be a major focus.

With an initial raise of $50 million between the two investment groups, the fund will focus on acquiring and scaling up agricultural producers in a market that is currently dominated by smallholders, UFF managing director Duncan Vink told Agri Investor.

“We think there are a number of opportunities in Nigeria. It’s a large market with a big population that imports most of its food,” said Vink.

Dairy and fresh produce operations offer strong growth potential in Nigeria, according to Vink, due to urbanisation. However, the fund will also look to acquire other agricultural assets, including row crop farms.

He added that the NSIA has also brought on a local person with extensive experience of investing in Nigeria. The sovereign wealth fund wants to drive development of the agri sector.

“From the NSIA perspective, they’re looking to diversify the economy and reduce dependence on oil,” said Vink.

OMIG and the NSIA hope to increase the fund from their initial $50 million investment to around $200 million from outside investors over the next three years, he added.

With an expected growth rate of over 114 percent to 2050, demand for food in sub-Saharan Africa will grow significantly in the coming decades.

Investors have described the region’s undercapitalised agriculture sector as having great potential. However, a challenging regulatory environment and lack of agriculture infrastructure are barriers.

Alternative asset manager Duet Private Equity and the state-backed Asset Management Corporation of Nigeria are raising a distressed and turnaround capital and debt fund for food and drinks businesses in Nigeria with a $400 million target.