SOUTH AFRICA – Phatisa, together with a consortium of leading development finance institutions (DFIs), has acquired a significant minority stake in South African-based citrus and fresh-produce exporter, Lona Group, for an undisclosed sum.
The DFIs co-investors led by led by Phatisa’s US$143 million Food Fund 2, include British International Investment (formerly known as CDC Group), Norfund, and Finnfund – all of whom are also investors in Phatisa Food Fund 2.
The transaction has received all regulatory approvals and the funds received will be used as expansion capital.
“While the decision to seek expansion capital to grow Lona was relatively easy, finding the right business partner, who shared our passion and values, was more challenging,” Spencer Johnson, Lona CEO, said.
“We are proud to be partnering with such experienced, principled investors and know that we have much to share and learn from each other as we realise our vision for Lona.”
As one of the largest integrated fruit businesses in South Africa, the Lona Group is involved in activities across the food value chain, from: farming, aggregating and packing fruit to: cold storage and logistics, marketing of the produces for export and domestic consumption, plus fruit and vegetable processing.
With line of sight across the entire value chain, Lona has tight controls, traceability, and reknowned reliability amongst customers.
Beyond its own fruit production, Lona also provides an integrated platform for other producers. Its business has also expanded to value-add products, such as dried fruit through its two M-Pak facilities, Veggie Crisps, and the local leader in table olives – Cape Olive.
Established by CEO, Spencer Johnson, in 1996 from his father’s garage, Lona now exports c. 5 million cartons of citrus, in addition to a significant volume of other fresh produce each year – predominantly to the UK and Europe, North America, the Middle East, Asia, and increasingly to the rest of the African continent.
Beyond its farming and packhouse operations in the Western and Eastern Cape, Mpumalanga, Limpopo and Zimbabwe, Lona has developed some of the most advanced automated cold storage facilities on the continent.
These provide Lona and their third-party customers with a state-of-the-art and efficient cold chain, thus ensuring fruit has a longer shelf life, and reducing food waste.
More recently, it acquired a majority stake in the Unlimited Group – an integrated producer, packer, processor, exporter and importer of fresh fruit, vegetables and nuts.
Tie up of the two companies will have a combined export and import volume of more than 8 million cartons of fruit and vegetables and over 4,000 ha of fruit on owned, managed, or licensed farms.
“Growing from humble roots, Spencer and his team have built an impressive business, which Phatisa has been attracted to for some time,” Martin Kromat, Senior Partner at Phatisa, commented.
“Integral to our negotiations with them has been our partnership philosophy, and shared belief that we can achieve commercial outcomes while safeguarding the environment and communities which Lona touches.
“Together with our co-investment partners, we are genuinely excited to play our part in the business’ continued growth and domestic as well as export expansion.”
It is envisaged that the consortium’s expansion capital will be used to further improve Lona’s facilities, particularly the building of new packhouses, orchard netting to protect crops from adverse weather, the development of new innovative fruit and value-add products, as well as making the business more climate resilient whilst reducing its carbon footprint.
The investment comes a week after Phatisa announced its successful exit from Côte d’Ivoire bottler Continental Beverage Company, and its investment into animal vaccine manufacturer, Deltamune, early this year.
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