Africa focused equity firm Phatisa raises US$121m for second generation fund

AFRICA – Phatisa, a sector-focused African private equity firm has closed its second generation fund, Phatisa Food Fund 2 (PFF 2) at US$121.5 million with a target to reach US$300 million by mid-2019.

PFF 2 will focus on investments in the African food value chain that is; mechanisation, inputs, poultry and meat production, food processing and manufacturing, logistics, aggregation and distribution across sub-Saharan Africa.

The company said it targets buy-out and expansion transactions with an investment size of between US$15 million and US$25 million, building and exiting regional platforms.

Phatisa which aims to build diversified capabilities in feeding and housing Africa announced PFF 2 as a successor fund to its debut, African Agriculture Fund (AAF) which closed in 2013 at US$246 million.

AAF was launched in 2009 by a consortium of European and African financial institutions to develop a fund focused on agriculture and food production in Africa.

PFF 2 seeks to address United Nations’ Sustainable Development Goals (SDGs) particularly No poverty and Zero hunger through contributing to food security.

According to the firm, it has already invested in the production of over 2.6 million tonnes of food and food-related products and will continue to mark its progress by measuring its impacts against the SDGs.

“We are delighted to achieve this milestone. Re-investments from our first Fund account for 88% of commitments, demonstrating strong support from AAF investors.

We continue to attract the private sector, with a 70:30 split between commercial investors and development finance institutions at first close.

With this round, we have now raised more than US$400 million for the African food and housing sectors,” said Stuart Bradley, Joint Managing Partner.

In collaboration with TechnoServe, an international non-profit business promoter in the developing world, Phatisa is looking to raise a second technical assistance facility (TAF) to work alongside PFF 2 to increase development impact and enhance financial returns as well.

The firm is however considering to exit a number of AAF investments and replicate solid returns in PFF 2 especially around inputs, mechanisation, logistics and FMCG.

Counting on agriculture

With AAF’s stronghold in 21 countries, Phatisa is capitalizing on certain trends dedicated to the agriculture and food value chains on the continent.

According to Africa Agribusiness Insights Survey 2017-2018 by PricewaterhouseCoopers (PwC), Africa is positioned to play a key role in increasing global agricultural output.

The survey indicated that agribusiness contributes 65% of employment, 75% of domestic trade with a 5% growth rate on the continent, which could result in Africa’s GDP tripling by as soon as 2030.

Additionally, as oil and commodity prices decline, oil-rich African nations, once dependent on capital resulting from high oil prices in recent years, are now looking for ways to diversify their economies, and are turning to agriculture

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