SOUTH AFRICA – EXEO Capital’s Agri-Vie Fund 1, an agribusiness Investment Fund focusing on Sub-Saharan Africa has announced its exit from South Africa’s abalone farming companies, HIK Abalone Farm (HIK).
The exit marks the end of an eight years rewarding partnership, bring in new partners, the African Pioneer Group, an investment company with other interests in the fishing sector whom Agri-Vie sold its interest of the company to.
Over the eight-year investment term, the pan-African equity investment firm injected a total sum of R41.5mn in two tranches and achieved an excellent return that is in line with expectations for private equity investments.
EXEO Capital partner, Izak Strauss believes that their interaction at board level and with management contributed to HIK’s expansion as a business. “We were able to assist the company in improving the evaluation of new investments and capital projects, as well as improve their financial reporting and corporate governance.”
Peter Inglis, the Chairman of HIK, added that the development of an abalone farm is highly capital-intensive during expansion phases, primarily because the revenue stream lags capital expenditure by a number of years, making organic growth very slow.
“Investment by Agri-Vie has enabled HIK to advance the expansion cycle by the development of a second farm, enabling production to increase from 80 tonnes per year to 300 tonnes per year.”
“We have derived a significant benefit from the association with Agri-Vie over the years, not only in terms of financial muscle but also in terms of financial management and reporting structures. HIK are now in a position to play a major role in the farmed abalone industry,” says Inglis.
While this exit brings to a close the partnership between EXEO Capital and HIK, Strauss revealed that aquaculture remains a focus area for their current investments.
“Just last year, our Agri-Vie Fund II concluded an investment into TerraSan – a fast-growing aquaculture company operating on the South and West coasts of South Africa. This is our second Agri -Vie Fund, building on the success of its predecessor US$100mn Fund,” he said.