Published: December 13, 2010
AAF will enhance and modernise Africa’s food industry.
A private equity fund established to invest in the continent’s agricultural sector has raised US$135mn its first closing.
The African Agriculture Fund (AAF), which intends to raise US$300mn, will invest in food production, processing and distribution in various areas of the industry, such as cereals, livestock farming, dairy, fruit and vegetables and crop protection.
The pan-African fund will invest up to US$20mn in its portfolio companies to enhance and diversify food production and distribution across the continent to modernise its agricultural sector.
AAF’s investors include the African Development Bank, the Development Bank of Southern Africa, the West African Development Bank and the ECOWAS Bank of Investment and Development. It also names several European development institutions, such as the Spanish Agency for International Development Cooperation and the International Fund for Agricultural Development among its backers.
The fund will be managed by Phatisa, which is led by Duncan Owen and Stuart Bradley. It has offices in Mauritius, Zambia, Kenya and South Africa.
Owen says that the commercial success of this fund is crucial for the future of agriculture in Africa. Phatisa’s chairman, Valentine Chitalu, adds that the funds investors are contributing to Africa’s long-term prosperity. “With food security such a crucial issue across Africa, the AAF will make equity finance available for African agricultural companies.”
To enhance its impact on Africa’s agriculture industry, AAF has created an SME-sub fund worth an initial US$30mn, which it intends to increase to US$60mn. It will also offer technical assistance with a budget of €10mn to support outgrower schemes in large companies and business development services in SMEs, funded by the European Commission, the Alliance for a Green Revolution in Africa and the Italian Cooperation, which supports the UN’s efforts to reduce poverty.