French, South African PE funds buy stake in Kenafric’s food business

KENYAAmethis Finance, a Paris-based company focused on investing debt and equity in Africa and Metier, a South African private equity firm, have jointly acquired a 40 per cent stake in Kenafric Industries’ packaged food business.

The Kenyan firm, which was founded in 1987 by Velji Punja Shah and his four sons, has an annual turnover of Sh10 billion.

The firm has interests in confectionery, footwear, culinary and stationery manufacturing.

A statement by Kenafric said yesterday the acquisition is limited to the confectionery and culinary business of Kenafric and the Shah family would continue to operate the footwear and stationery business separately.

Kenafric said the deal brings external partners to the family business “for the very first time”, with the ambition to “institutionalise the business and achieve its ambitious vision”.

“We are excited about the partnership with Amethis and Metier. Through this investment, we will seek to leverage the deep relationships that they enjoy in the region, operational support and a strong capital base to accelerate future growth’”, said Bharat Shah, chairman of Kenafric.

Kenafric packaged food business deals with manufacture, branding and distribution of confectionery, snacks, ready-to-drink juices and culinary spices.

Both Amethis Finance and Metier said they are banking on Kenafric’s strong distribution network in Kenya and Africa. The deal has been in the works for a while, they disclosed.

Kenafric said it sells about 45 per cent of its products outside Kenya.

“Having built a trustworthy relationship with Kenafric’s management over the past years, we are excited about this partnership which will allow Kenafric to leverage on its strong existing base to expand into a diversified packaged food platform in East Africa.

Thanks to this partnership, Kenafric is now poised to engage in a new phase of its history,” said Jean-Sebastien Bergasse, Amethis Partner in charge of the project.

The deal marks Metier’s first investment in Kenya.

“Metier, as a partner to both the Shah family and Amethis, are glad and proud to seal a partnership with Kenafric to support the business’ future evolution while contributing to the development of the regional consumer goods sector” said Paul Botha, Metier managing partner.

BellHouse Capital, Pratul Shah and Bowmans Law acted as the company’s transaction advisers while Anjarwala & Khanna and KPMG represented the investors.

In July last year, Kenafric said it was targeting expansion to Ethiopia, which it noted has a huge affordable labour force.

“We are conducting feasibility studies there and we could possibly set up a plant by 2019,” said Kenafric senior executive director Mayur Shah.

Amethis and Metier said Kenafric had reached “a critical size” and time is right for it leverage on its “existing strengths of an excellent route to market to broaden its product range and basket offering.” 

“The fragmented East African market offers a unique opportunity for acquisitions and strategic partnerships. 

“The stated aim is to be able to supply the entire range of snacking products in a kiosk through adjacencies and brand extensions,” they said.

February 21, 2017; http://www.businessdailyafrica.com/corporate/French-South-African-PE-funds-buy-stake-Kenafric/539550-3822708-salcyc/index.html 

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