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South African Buyout Firm Targets Nigerian Food Investments

Agri-Vie, a South African private-equity firm, is seeking opportunities in Nigerian food companies as the continent’s most populous country tries to reduce imports and diversify its economy away from oil.

The fund, which has investments in 12 African food businesses, plans to target companies involved in the processing of grains, dairy, fruits, poultry and fast food in Nigeria, Executive Director Avril Stassen said in an April 2 interview in Lagos. The Nigerian government is trying to reverse decades of farming neglect and promote the industry as its “new frontier for growth” to ease dependence on crude, President Goodluck Jonathan said in July.

Nigeria’s 170 million people provide a major market for processed food, according to Stassen.

“There are a lot of locally produced foods in Nigeria, with limited processing,” he said. “It is also an area our team has skill and experience in. The scope for growth is wide.”

Investment companies from Carlyle Group LP to Robert Diamond’s Atlas Mara Co-Nvest Ltd. are seeking to profit from a continent where the economies of many countries are growing faster than those of developed nations. Standard Chartered Plc, the London-based bank present in Africa for more than 150 years, said in February it’s investing more money in private-equity deals there than in any other region in which it operates.

Fund Growth

Private equity funds invested more than three times as much in sub-Saharan Africa last year as they did in 2012 as the number of deals during the period rose to 84 from 58, according to the 2014 East Africa Private Equity Confidence Survey released by Deloitte.

Agri-Vie, which is based in Cape Town, plans to more than double the size of its investment fund next year to $285 million from $110 million and reach $500 million within the next decade, Stassen said. Its focus will spread to West African countries including Ghana, Senegal and Ivory Coast. Existing investments include South African salad producer Dew Crisp and Ethiopia’s Africa Juice.

The company will invest a maximum of $12 million in each Nigerian business, without setting a specific number of targets.

“We are interested in companies that are already profitable,” Stassen said. “Companies that will add value to local production and by that promote food security.”

Nigeria’s economy probably expanded 6.4 percent in 2013 and services, trade and agriculture will continue to drive growth this year, the Washington-based International Monetary Fund said March 7. It overtook South Africa as the continent’s biggest economy as of yesterday following a revamp of gross domestic product data.

“As the Nigerian economy grows, we expect more companies here to require growth capital,” Stassen said.

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