Whether for profit or social motives - and often both - an increasing number of investors are targeting opportunities in African agriculture. At the same time innovative approaches for deploying aid to support farming businesses linked to smallholders are emerging. This blog provides a snapshot of who is doing what, where and how.

24 September 2011

East African Agricultural Fund Raises $25 Million From Backers

African Agriculture Capital Fund, set up by the Rockefeller Foundation, the Gatsby Charitable Foundation and Volksvermogen NV, raised $25 million to support emerging farmers in East Africa, the fund’s manager said.

Pearl Capital Partners Uganda, a unit of Mauritius-based Pearl Capital Partners, will manage the fund, which is expected to launch on Sept. 27 in Kampala, the Ugandan capital, the investment group said in an e-mailed statement today.

The money has been raised from the Gatsby Foundation, the Rockefeller Foundation, the Bill and Melinda Gates Foundation, and New York-based J.P. Morgan Chase & Co., PCP Uganda said.

15 September 2011

AgDevCo and Small Foundation agree strategic collaboration to reduce poverty in rural Africa

AgDevCo has been awarded a grant of Euro 2.5 million by Small Foundation to promote socially responsible investment in the African agriculture sector. The funding will help AgDevCo expand its capacity to create a portfolio of investments in early-stage agricultural enterprises in Africa, with the aim of relieving rural poverty and promoting economic growth.

The private sector is the engine of long-term, sustainable development in Africa”, said Dr. Keith Palmer, AgDevCo’s Chairman. “AgDevCo believes that profitable agriculture with strong links to markets is the best route out of poverty for the majority of Africa’s rural poor. This grant from Small Foundation will enable us to reach many more African farmers”.

To date AgDevCo has raised more than Euro 15 million to invest in African agriculture. It is rolling out pioneering investments in farming and agri-processing businesses in Mozambique, Tanzania, Ghana and Zambia. “Our distinctive approach focuses on creation of profitable farm enterprises which also generate substantial benefits for smallholder farmers and local communities” said Chris Isaac, who heads AgDevCo’s office in Mozambique.

Tim Brosnan, Chairman of Small Foundation said “AgDevCo has a highly innovative approach to building socially responsible farming businesses at scale. We look forward to working with them to achieve our mutual goal of sharply reducing poverty in rural Africa.”

About AgDevCo
AgDevCo’s mission is to relieve poverty directly and indirectly by raising agricultural productivity and incomes for the benefit of rural communities as a whole in low and low-middle income developing countries. It aims to develop commercially viable agriculture and agribusiness ventures along entire value chains (including farm operations, infrastructure leasing businesses, storage and processing) and attract private sector capital to invest in them. It aims to ensure that substantial benefits accrue to the local communities including directly raising productivity and incomes of smallholder farmers. By taking a hands-on project development role and investing in early-stage agribusinesses, AgDevCo helps remove barriers to entry by private investors and structures ventures to achieve permanent benefits for smallholder farmers. AgDevCo’s goal is to demonstrate a scalable and sustainable approach to elimination of rural poverty by leveraging-in significant amounts of private capital in ways which generate transformational benefits for rural communities.

AgDevCo was established as a UK-headquartered not-for-profit-distribution company in 2009. Its funders including the UK government, the Norwegian Government, The Hewlett Foundation and the Rockefeller Foundation.

About Small Foundation
The vision of Small Foundation is an Africa free from the threat of famine within one generation. Its mission is to help provide opportunities to food-insecure rural African families that enable them to gain economic independence through income generation. Its goal is to support scaling up processes for opening up access to knowledge, finance, technology and markets to food-insecure rural African families and communities. Small Foundation aims to do this by, inter alia, helping to encourage the emergence of business-based systems for spreading the opportunity-creating process.

Small Foundation (www.smallfoundation.ie) was incorporated in Ireland in 2007 as a company limited by guarantee and a registered charity.

Further details contact: Rosanne Whalley rwhalley@agdevco.com Tel: +44 (0)20 7841 2821

7 September 2011

Feed the World: Bob Geldof to invest in African Agriculture

Forbes.com has this story on Bob Geldof's latest venture to raise private equity for investment in Africa, with a focus on agriculture.

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Irish rock star and former Boomtown Rats front man Bob Geldof has raised nearly $200 million for an Africa-focused private equity fund, Reuters has reported.

In September 2010, it was widely reported that Geldof, who has gained a reputation for his vocal advocacy for debt relief to Africa, was looking to raise a $1 billion private equity fund for investments in the region.

The fund, called 8 Miles (the distance between the southern tip of Europe and northern Africa) will make investments in financial services and telecommunications, but will nurture a bias for agribusiness and manufacturing, as Geldof told Reuters:

“Currently 80 per cent of exports from Africa are unprocessed raw materials. There’s your opportunity: they need manufacturing.”

Private equity on the continent is experiencing an unprecedented injection of external capital. According to an April 2011 report by the Emerging Markets Private Equity Association (EMPEA), private equity inflows into sub-Saharan Africa stood at about $151 million in 2002, but grew to $1.5 billion in 2010.

A few years ago, the idea of investing in an Africa-focused private equity fund would have been considered dicey. African fund managers experienced difficulty in convincing global limited partners (LPs) to invest in the region. LPs at the time were often skeptical about Africa- not because of its lack of opportunities or potential for growth, but as a result of the realities of political, economic and social instabilities that pervaded the region.

But as socio-economic stability sets into various parts of the continent, private equity is experiencing a record boom, driven primarily by Africans. Earlier this year, Helios Investment Partners, an African-focused private equity firm, closed its second fund, sized at $900 million. The fund is one of the largest in African private equity, and it was mobilized by Nigerian proprietors Tope Lawani and Babatunde Soyeye, both former staff of Texas Pacific Group. In 2007, Pamodzi Investments raised a $1.3 billion fund, the largest in Africa at the time. Other African-based firms like African Alliance Capital, Satya Capital and Citadel Capital among others are at the vanguard of the region’s private equity revolution.

But foreign firms are scrambling for their own share of the African private equity market. In March, American buyout firm Carlyle Group announced the launch of a $750 million African-focused fund. Last month, Singapore state investor Temasek Holdings joined forces with South Africa’s Oppenheimer family to launch a $300 million private equity fund for targeted investments in agribusiness and consumer goods. In March, London-based Asset manager Duet Group also teamed up with Standard Bank to launch a $100 million African fund.

The new scramble for African private equity is logical. According to a 2010 McKinsey report Lions on the move, the rate of return on foreign investment in Africa is higher than in any other developing region. Which explains why it appears that everyone wants a piece of the action.