Ugandan snacks maker Newman Foods clinches investment from Yield Fund for expansion

UGANDA – Yield Uganda Investment Fund, an agribusiness impact vehicle, has channeled an equity investment to Newman Foods, an agro-processing company based in Kampala.

Newman Foods focuses on the production and marketing of branded consumer foods sold through retail stores in the local and regional markets, as well as the aggregation and export of fresh fruits and vegetables (FFV) to the European market.

The investment, comprising of a blend of equity and quasi-equity, will be channeled towards scaling the company’s consumer foods and snacks segment through the construction of a new processing facility.

It will also enable the acquisition of larger modern equipment to improve the production throughput, support the company to improve packaging, branding and increased marketing of Newman products, as well as to augment its supply network for the consumer foods segment.

“Newman Foods is a vibrant growing company with significant growth potential, thanks to its strong brand and market visibility. However, our growth has been stifled by a lack of patient capital to scale our production capacity and implement production efficiencies to unlock the commercial facets.

“The Yield Fund investment could not have come at a better time, as we now have a great opportunity to implement a sustainable growth strategy in our value addition category.

“This investment has given the company the confidence to engage many of our smallholder farmers, who are pivotal to our business, and to develop a sustainable integrated supply chain,” said Mr. Nasser Segujja – Managing Director, Newman Foods Ltd.

Newman Foods was incorporated in 2013, initially focusing on procuring, packaging, and exporting fresh fruits and vegetables, and later diversified its strategy in 2017 through the introduction of the consumer foods/snacks product category.

Its integrated business model, combined with high-quality products, has allowed them to grow their income and increase market share over the years, even during COVID-19 disruptions.

Yield Fund invested in the company for its strong social impact proposition, which is demonstrated by strong backward linkages with smallholder farmers and ambitions to develop a sustainable supply chain largely made up of local youth and women farmers.

Wanjohi Ndagu – The Co-Managing Partner at Pearl Capital Partners said, “This investment in the snacks value chain makes available much-needed resources to the sector especially when funding enterprises for growth has been constrained by a slowed-down economy owing to the high inflation rate and effects of the Covid-19 pandemic.

“The investment will go towards the construction of a new processing facility and acquisition of larger modern equipment to serve a growing demand for consumer foods in Uganda and East Africa markets”.

Along with the Yield Fund’s investment, Newman Foods Ltd was successful in obtaining a Business Development Support (BDS) matching grant facility (USD 157,750) from the European Union, which is managed by the International Fund for Agricultural Development (IFAD).

European Union (EU) Ambassador to Uganda, H.E Jan Sadek said, “We welcome Yield Fund’s investment in Newman Foods, a local food processing company. The investment will boost the company’s processing capacity, which in turn will lead to increased volumes procured from smallholder farmers, with a direct impact on their livelihoods.

“At the same time, the investment will help the company tap into an unmet demand for snacks on the local and regional market, by improving the quality of their products”.

The BDS support will be anchored to enhance the technical aspects of the business with a key focus on the implementation of a robust commercial strategy, the inclusion of additional smallholder farmers to its supply chain, and strengthening the governance structures to support sustainable strategic growth.

Lakshmi Moola, the IFAD Country Director for Uganda added, “This investment in Newman Foods, presents an exciting opportunity to partner and support an established local Ugandan enterprise.

“Newman’s will streamline its business processes, improve its production capacity and most importantly link rural farming communities, across Uganda to the consumer foods value chains.”

Yield Fund managed by Pearl Capital Partners was set up in January 2017 by the European Union (EU), through the International Fund for Agricultural Development (IFAD) and the National Social Security Fund (NSSF), with follow-on investments from the Open Society Foundation (OSF) and FCA Investments in June 2019.

This investment marks the Fund’s 14th investment into the Ugandan agricultural sector having backed companies such as Sekajja Agro Farms, Kamp Group, AMFRI organic farm, Enimiro, NASECO, and Pura Organic Agro Tech.

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