Phatisa reaches $143m final close on Food Fund II

The African impact investor fell short of its $300m target but continues to target IRRs ‘in the twenties,’ says managing partner Stuart Bradley.

African private equity firm Phatisa has closed its second food fund on $143 million following an $82 million commitment from a group of five development finance institutions.

The vehicle’s final round of commitments came from CDC Group ($20 million), Norfund ($20 million), Finnfund ($15 million), FinDev Canada ($10 million) and BIO ($7 million).

Phatisa Food Fund II was launched in 2017 and had an initial target of $300 million. Managing partner Stuart Bradley told Agri Investor 2020 “had been quite challenging from a fund raising perspective without the ability for investors to undertake physical due diligence.”

Other investors that have made commitments into the fund include the US government’s development finance institution Overseas Private Investment Corporation, which invested $75 million in 2017, and the African Development Bank, which committed $10 million in the same year.

Bradley confirmed the impact fund will target IRRs “in the twenties” – Agri Investor has previously reported this figure to be 22 percent – and invest in the sub-Saharan African food value chain in areas including food production, inputs, processing, and branded foods and beverages, among others.

Phatisa Food Fund II has already invested in Malawi agricultural equipment company Farming and Engineering Services and Rofles Group, a South African provider of water treatment, food ingredient and agricultural services.

The fund’s impact goals include reaching 90,000 farmers, increasing their yields by 25 percent and reducing food losses by 50 percent, said Bradley.

“The fund anticipates that its investments will allow firms to maintain 10,000 existing quality jobs and create at least another 2,000,” he said.

“Based on the representation of women at its senior management level and a commitment to have at least 30 percent of portfolio companies meet 2X Challenge criteria, the fund is eligible for inclusion in the 2X Challenge. In addition, 100 percent of portfolio companies will be required to have and implement a gender equality policy.”

Phatisa has funds under management “totaling more than $400 million,” the firm confirmed.

The firm’s debut food fund, African Agriculture Fund, closed on $246 million in 2013 and made investment into nine businesses. The vehicle has since exited three of those investments.