StanChart in ‘timely’ MENA agri deal

The bank's private equity arm recently invested $35m into a Middle Eastern chicken producer.

Standard Chartered Private Equity’s recent $35 million investment into Al Jazeera Agricultural Company, the fully integrated poultry producer and distributor in Jordan, was a great opportunity to take advantage of the growing importance of chicken as protein in the region, according to Taimoor Labib, regional head of MENA private equity & head of global private equity portfolio management at SCPE.

SPCE acquired a “significant minority stake” in Al Jazeera, according to a statement. The chicken producer will use the proceeds for geographical expansion and growth.

SPCE, which invests in private equity deals off Standard Chartered’s balance sheet, realised the meat’s importance when delving into the sector.

“The price of beef has probably doubled in the past four to five years, lamb and fish are also expensive and most people in the Middle East do not eat pork, so chicken is becoming the de facto protein of the region,” said Labib.

A well-established business, Al Jazeera is also a vertically-integrated business ticking another box for SPCE when looking at agriculture.

“Greenfield agriculture is a difficult place to be for financial investors; you may have a better upside but there is certainly more downside,” he told Agri Investor. “Another thing that is very important when it comes to agriculture is that we prefer to be in fully integrated businesses. If you don’t have full integration then you may get squeezed in parts of the chain; from the supplier to commodity prices and so on. In this business they control everything from the raising of the chickens to the broilers to the slaughter house and retail and for us that was very important.”

While SPCE operates a sector agnostic approach to private equity investing, Labib and his colleagues are keen to take advantage of a recent trend for investment in the sector in the wake of deals from other big private equity players such as KKR. The US firm recently invested in the same agriculture sector buying a $400 million stake in Fujian Sunner Development, the Chinese vertically integrated chicken meat producer, two weeks ago.

“We are sector agnostic but we are open-minded and we are certainly seeing increasing numbers of firms doing deals in agribusiness, a sector that traditionally would not have looked for financial investors before,” said Labib. “And our investing platform, across Asia, Africa and the Middle East, covers high growth markets with growing populations and an increasing focus on food security, so it is a timely topic.”