AFRICA – Phatisa Food Fund 2 (PFF 2), a sector-specific African private equity fund manager, has reached a US$143 million final close following an US$82 million joint commitment from a group of development finance institutions (DFIs).
The DFIs include CDC, Norfund, Finnfund, FinDev Canada, and BIO which committed to the Fund’s final close with US$30 million, US$20 million, US$15 million, US$10 million and US$7 million, respectively.
“We are pleased to welcome this multinational group of investors to Phatisa Food Fund 2, a fund focused on increasing investment in the undercapitalised African agribusiness and food value chain. Development impact, without deviating from sound commercial principles, is at the heart of Phatisa’s investment approach,” Stuart Bradley, Managing Partner, Phatisa said.
“Over the Fund’s investment cycle and through its investments in talented and driven management teams, we aim to create shared value; inclusive and sustainable growth; and address social and environmental challenges impacting some of the most marginalised people in Africa.”
PFF 2 will invest across the African food value chain, considering investments in mechanisation, inputs, poultry and meat production, food processing and manufacturing, logistics, aggregation and distribution across Sub-Saharan Africa.
The investment will strengthen and increase food supply, local production and distribution across the region.
“Norfund is happy to be part of this opportunity to invest in businesses that are expected to create a large number of jobs and increased business opportunities within the food production space across Sub-Saharan Africa,” Olav Akrawi, Project Manager in Scalable Enterprises at Norfund said.
“The Fund’s plans are aligned with Norfund’s strategy, directing its focus towards companies with strong financial prospects that will contribute to economic growth and improve the value chain in the food and agri-sector.”
The Fund, via its investment in companies in the food value chain, targets over 90,000 small-holder farmers and micro-entrepreneurs and aims to create over 2,000 permanent jobs and sustain another 10,000 jobs.
“With our investment in Phatisa Food Fund 2. We want to increase food security in Africa by supporting sustainable food production in Africa for local markets and by helping African food value chains and companies grow,” said Carole Maman, Chief Investment Officer at BIO.
The new fund will also address access to, and affordability of products among farmers and promote smart agricultural methods – enhancing crop resilience, reducing food loss and waste by 50% in the companies it finances, while increasing outputs, yields and incomes.
“We are glad to participate in this fund with our fellow investors. Strengthening and increasing food supply, local production and distribution – enhancing food security and supporting small-holder farmers – is at the core of Finnfund’s mission,” Riikka Molander, Associate Director & Head of Funds, Finnfund, said.
“Food insecurity is a major issue on the continent, compounded by the COVID-19 pandemic which threatens to push another 23 million African citizens into extreme poverty. Phatisa has shown what it can do to benefit small-holder farmers and the firms working with them while promoting rural livelihoods,” he added.
“It’s great to see DFIs and commercial investors partnering to tackle one of Africa’s most pressing challenges.
According to Clarisa De Franco, Managing Director & Head of Private Equity Funds, CDC, small-holder farmers account for 60% of Sub-Saharan Africa’s population and the continent remains a net food importer.
“By mobilising capital and investing in the food and agriculture value chain, we can drive tremendous impact, sustain employment and improve food security across the continent, while reducing reliance on imports,” he said.
According to the African Development Bank (AfDB), rapidly rising net food imports are expected to grow from US$35 billion in 2015 to over US$110 billion by 2025.