Washington DC-based Emerging Capital Partners, a private equity firm focused on investing across the African continent, has announced the sale of its minority position in Somdiaa, a pro
Washington DC-based Emerging Capital Partners, a private equity firm focused on investing across the African continent, has announced the sale of its minority position in Somdiaa, a producer of sugar, flour and animal feed in Central Africa, to the company’s majority shareholders for a total of some USD26m.
Combined with dividends, this represents around two times ECP’s initial investment, which was made in September 2003.
ECP’s investment provided Somdiaa with working capital to expand its existing business, as well as funds to acquire flour milling companies in Cameroon and Réunion Island. Since the investment, Somdiaa’s sugar production has increased more than 15 per cent, and flour production has more than doubled.
‘Arable land is one of Africa’s most significant natural resources,’ says ECP chief executive Tom Gibian. ‘When combined with abundant labour, African agricultural commodity producers, such as Somdiaa, are able to be among the lowest-cost producers by global standards.
‘In addition, outlook for growth remains positive as local and global markets continue to expand, more land is cultivated and developed, and agricultural yields and production efficiencies improve.’
Through its plantations in Cameroon, Chad and the Republic of the Congo, Somdiaa produces approximately 80 per cent of the consumer and industrial sugar sold throughout Central Africa. The company was founded in 1970 by the Vilgrain family with its initial operation in the Republic of Congo. It currently employs more than 11,000 people on the African continent.
‘Throughout ECP’s holding period, we helped Somdiaa expand and increase the scale of its core sugar and flour businesses through capital investment and strategic acquisitions,’ says chief operating officer Hurley Doddy. ‘We also helped increase productivity and profitability by improving processes.’
The investment in Somdiaa was made through ECP’s AIG African Fund Infrastructure Fund, which was established in March 2000. The USD407m fund made investments throughout Africa primarily in telecommunications, natural resources, agribusiness, transportation, and power and water.
ECP’s previous investments in the agribusiness sector include the firm’s divestiture from natural rubber company Société Internationale de Plantations d’Hévéas at 3.4 times its initial investment.
Emerging Capital Partners is the first private equity firm to raise more than USD1.5bn to invest in companies across the African continent.
