SOUTH AFRICA – African Infrastructure Investment Managers (AIIM), one of South Africa’s largest infrastructure-focused private equity fund managers, has led a consortium of investors including Bauta Logistics and Mokobela Shakati (Pty) Ltd, to establish a cold chain logistics platform dubbed Commercial Cold Holdings (CCH).
According to the partners, they seek to establish a pan-African cold storage platform in a bid to ensure food security in the region through beefing up sub-Saharan Africa’s capacity for temperature-controlled logistics (TCL) infrastructure.
AIIM Investment Director Damilola Agbaje says, “South Africa, which possesses the continent’s most advanced TCL infrastructure at 13m3 of cold storage per 1,000 residents, lags comparable economies such as Egypt and Brazil, which have 105m3 and 83m3, respectively our research has indicated.
“TCL infrastructure is critical for both improving Sub-Saharan Africa’s food security; allowing domestic producers to meet the standards required to participate in global trade, and creating higher value jobs through more formal food retail and wholesale models.”
He noted that with current population growth rates mixed with the rapid rate of urbanization, the regional deficit in temperature-controlled logistics was expected to worsen.
To this end, CCH would focus on acquiring and developing facilities with strategic physical locations and/or integration with market-leading food producers, wholesalers, and retailers.
AIIM through its flagship South African IDEAS Fund and pan-African AIIF4 Fund intends to invest up to US$150m in the platform, having a controlling 59.2% stake in CCH.
Oceana to sell cold storage business
To kick-start, its investment plan, AIIM alongside a specialist food logistics company in mid- and East Africa Bauta Logistics, and strategic investment and empowerment partner Mokobela Shakati are eyeing Oceana’s commercial cold storage (CCS) unit.
The consortium has entered a R760 million (US$42.8m) deal with Africa’s largest fishing group to take full ownership of CCS, with the transaction subject to regulatory approval.
CCS is a leading cold storage provider in Southern Africa offering primary temperature-controlled storage and handling services of mainly perishable products on behalf of major manufacturers, exporters, and importers for over 50 years.
It has six cold storage facilities with a storage capacity of about 100,000 pallets across South Africa and Namibia.
“Anchoring CCH’s strategy with such an established player is crucial for the platform’s regional expansion.
“New market entries will leverage CCS’s technical expertise and operational track record to secure strategic customer relationships,” said Agbaje.
Up to 70% of CCS throughput will come from staple foods, critical for domestic food security. Maintaining a national network of state-of-the-art facilities will ensure a continuous supply of staple foods.
“This deal is a win-win. The transaction offers good value for Oceana. It strengthens our balance sheet allowing us to focus on leveraging the scale and capabilities of our fishing and fish-processing operations.
“It also gives CCS the access to capital it needs to remain competitive and grow,” CEO Neville Brink said.
Despite disposing of the business, Oceana said it will continue working with CCS as this forms part of transaction conditions.
The group has entered into a three-year service contract with CCS from the date of implementation where Oceana will have the option to renew should it be satisfied with CCS’s service levels.
Oceana will also provide transitional services to CCS for a year following implementation. The group says it expects to conclude the sale by the end of February 2023, subject to regulatory approval.
“The acquisition of CCS is a natural extension of our developing partnership with AIIM to create an infrastructure-based platform underpinned by integrated logistics, ports services, and cold storage.
“The acquisition enhances the solid base we have already established and provides us with the cornerstone required to realize our vision to play a meaningful role in key sectors of our economy,” said Moss Ngoasheng, founding director of the Mokobela Shataki consortium.
The consortium recognizes that cold stores are energy intensive and would leverage their extensive track record in energy investment across the continent to drive efficiency and improve the CCS generation mix.
“As we build out a network of temperature-controlled warehouses in key demand hubs and food production regions on the Continent, we are excited about the role that CCH will play in facilitating intracontinental trade,” said Michael Osekereh, the Managing Director of Bauta Logistics.
ENS Africa were the legal advisors, PWC were the financial advisors on CCS and Frost & Sullivan were the commercial advisors.