South Africa’s agribusiness firm Afgri opens a new investment unit to boost growth

SOUTH AFRICA – Afgri Group, a South African agribusiness firm, has unveiled the ‘AFGRI Grain Silo Company Proprietary Limited, as the firm’s new investment vehicle poised to increase investments and expand its operation.

Chris Venter, Afgri Group chief executive said the move will allow the company to significantly grow the business to set off its dependence on financial resources to stimulate growth, reports Bussines Day.

Grain Silo Company has enabled the group to accelerate its growth reflected by the US$256.38 million (R3.6 billion) investments by various institution investors in its grain silo properties.

Among the investors include: Izitsalo Employee Investments, Stanlib Infrastructure Investments, Wiphold, and the Land and Agricultural Development Bank of South Africa.

Venter said the plan was to increase storage capacity in its grain silo properties to between 4.7-million tonnes to 6-million tonnes.

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“This will allow us to not only cater for grain storage, but to expand into the storage of other types of commodities.Afgri Operations will manage the storage facilities on behalf of Afgri Grain Silo Company in terms of an evergreen management agreement.

This arrangement provides the strategic benefit of Afgri’s excellent track record in managing storage operations, and deep experience of the sector,” Venter said.

According to Venter the deal is expected to help the firm gain access to a stronger balance sheet and the ability to expand its lending capabilities to offer a broader base of financial support to farmers across major value chains.

In 2011, Afgri closed with the Land and Agricultural Development Bank of South Arica where it sold its debtors book valued at US$121.07 million (R1.7 billion) and has since then grown to US$1.068 billion (R15 billion).

Venter said the sale of its debtor’s book and the creation of the Grain Silo Company was part of its broader strategy of offering a range of financial services in the agriculture sector.

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“Since then the AFGRI Group has substantially increased its debtors’ book, growing it more than fivefold in value from 2011.

The number of loans to farmers has also increased considerably from 1,290 to 8,620 farmers.The Group has expanded its financial service offerings across all nine provinces, financing not only grain production but various other commodities.

Through the recent acquisition of the South African Bank of Athens, we are today able to offer a wide range of additional banking products to farmers,” Venter explained.

The Group’s current 4.7 million tonne storage footprint consists of grain silos and bunker complexes across the country.

“High-quality commodity storage and related services is in demand by our customers, and through the consortium, we aim to ensure that we enter new areas across South Africa and simultaneously grow capacity,” said Jacob de Villiers, MD of AFGRI Grain Management.

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