DAKAR - A new private equity fund plans to invest in
agricultural processing in Africa to cash in on booming food prices with backing
from a foundation linked to the world's biggest cereal maker, Kellogg Co, the
fund's manager said.
Surging prices and strong demand for food on world markets
has refocused philanthropists and investors alike on the rich farming potential
of the continent where agriculture contributes 30 percent of sub-Saharan
Africa's GDP.
"We are primarily interested in the value-added part of the
agri-chain. Our focus is on processing, services and logistics, and also the
input side," Herman Marais, managing director of the Agri-Vie fund, told Reuters
in a phone interview on Tuesday.
"We're not in principle excluding anything ... there is a
focus on the export crops, fresh (produce) chains, fruit and horticulture,
flowers," Marais said.
Agri-Vie is initially focusing on South Africa and
neighboring states; on Kenya, Tanzania and Uganda in East Africa; and Ghana and
Nigeria in West Africa - although Marais said the fund hoped to move into
French-speaking Africa later.
Potential projects in West Africa included the tropical crop
cassava, grown for its energy-rich roots and protein-rich leaves, and pineapple
juice manufacturing.
Marais said Agri-Vie was also interested in cocoa grinding in
Ghana. Ghana's government hopes to increase the crop by 50 percent to 1 million
tonnes by 2010, and grinding capacity is set to double to nearly 500,000 tons in
the coming years.
Agri-Vie has raised around half its target capital of $100
million, and hopes to announce its first investments in the coming months,
closing to new investors next May, he said.
It was formed by the private equity arm of South African
financial services group Sanlam and investment group Strategy Partners and has
headquarters in Cape Town and Mauritius. The fund has a projected 10-year
lifespan.
"Two major drivers brought the fund into being: the business
investment opportunity around agriculture in Africa (and) knowing that if this
fund can make contributions to make the industry competitive, it will
proportionally stimulate the economies in which we operate," Marais said.
He said the fund planned to work with local businesses.
"The idea is very much to partner local entrepreneurs, to
play a role in developing the local economies," he said.
"We're particularly inviting entrepreneurs that are running
businesses that have survived the first couple of years and so have a track
record, and are ready to move to the next level ... to build up their business,"
he said.
Agri-Vie's investors include state-owned entities like South
Africa's Development Bank of Southern Africa and Industrial Development Corp,
and private entities like the W.K. Kellogg Foundation, started in 1930 by the
breakfast cereal pioneer.
"Both these (groups) have recognized that the investment
model holds as an alternative to aid money," Marais said.
But he added Agri-Vie's investors also included "corporates with a strong
profit profile. They expect a market-related return from the fund. There is no
soft money."
