FAFIN makes maiden investment in L&Z Integrated Farms

Sahel Capital, fund managers of Fund for Agricultural Finance in Nigeria (FAFIN), has announced its first investment of a 25 percent stake in L&Z Integrated Farms Limited, one of the fastest growing dairy producers and processors in Nigeria.

Sahel Capital, fund managers of Fund for Agricultural Finance in Nigeria (FAFIN), has announced its first investment of a 25 percent stake in L&Z Integrated Farms Limited, one of the fastest growing dairy producers and processors in Nigeria.

The announcement was made during the public launch of FAFIN at a ceremony held at the Banquet Hall of the State House, Abuja, recently.

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L&Z was selected after a rigorous operational review of dairy farms across Nigeria. L&Z has an integrated facility that produces yoghurt, fresh milk and ice cream from its dairy operations, and eggs and poultry meat from its poultry operations under the L&Z brand. Backed by a strong management team, the company has established itself as a key player in the yoghurt and fresh milk segment of the Nigerian agricultural sector.

The company is located in Kano, in close proximity to a broad range of sources of fresh milk from local Fulani herdsmen and small commercial cattle farms, enabling it through a community outreach programme to successfully source over 60 percent of its milk requirements from Northern Nigeria, in line with the government’s efforts to reduce importation of milk powder.

With FAFIN’s investment, L&Z intends to expand its production and processing capacity and also increase the number of its milk collection centres. Establishment of milk collection centres reduces the need for the Fulani herdsmen’s children to hawk milk products, thus increasing the likelihood of them attending school.

Speaking at the event, President Goodluck Jonathan commended FAFIN and its goal to invest $100 million to support sustainable growth in agriculture-oriented SMEs. He also thanked Akinwumi Adesina, minister of agriculture and rural development, for the initiative, as well as the other fund sponsors, the German Development Bank – KfW and the Nigerian Sovereign Investment Authority for their collaborative support.

On his part, Adesina said: “The dairy industry in Nigeria is highly underdeveloped, relying heavily on the importation of dairy products. Companies either import and repackage milk powder or reconstitute imported milk powder into liquid milk and other dairy products. FAFIN’s investment in L&Z is transformational as it will promote local milk production.”

In her speech, Rakiya Abubakar, executive director, operations, L&Z Integrated Farms, said “we have established three cooperative societies, thus providing a consistent milk market to more than 500 Fulani cattle herders; for a produce which would otherwise have continued to go to waste due to the highly perishable nature of dairy outputs in our tropical climate.”

Commenting on the investment, M.D. Abubakar, founder/managing director of L&Z Integrated Farms, said: “We are delighted to welcome FAFIN as an investor in our company and we look forward to having Sahel Capital’s team assist in executing our ambitious expansion plans as we write the next chapter of our company’s growth story.”

As part of the investment, L&Z’s board of directors has been reconstituted to include two independent directors with significant wealth of experience in business and change management. The new directors

include A.B. Mahmoud (former solicitor general, attorney general and commissioner of justice in Kano State), and Keith Richards (chairman, Promasidor Nigeria Limited). Two members of Sahel Capital’s team will also be joining L&Z’s board – Mezuo Nwuneli and Olumide Lawson.

Uche Orji, CEO of Nigeria Sovereign Investment Authority (NSIA), said: “We are pleased with FAFIN’s investment in L&Z as we see opportunities for significant growth and profit in the company even while supporting the realisation of the government’s Agriculture Transformation Agenda and facilitating Nigeria’s food security.”

Mezuo Nwuneli, managing partner of Sahel Capital, also commented: “L&Z Integrated Farms is a leader in the dairy sector with great potential and we are excited for FAFIN’s first investment to be in such a promising company. We look forward to providing the necessary support to take the company through its next phase of growth.”

FAFIN is an innovative $100 million agribusiness-focused investment fund that aims to transform the landscape of private sector agricultural finance in Nigeria, while providing commercial returns to investors.

$34 million has been raised from FAFIN’s sponsors for investments, alongside $2.75 million for a dedicated Technical Assistance Facility to provide support to companies in which FAFIN invests.

FAFIN is managed by Sahel Capital, a leading fund manager and advisory firm focused on West Africa with deep roots in private equity, management consulting, and agribusiness.

January 8, 2014; http://businessdayonline.com/2015/01/fafin-makes-maiden-investment-in-lz-integrated-farms/#.VK4GenvFy94

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