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Aureos sells holding in African biscuit manufacturer

The Aureos Africa Fund has sold its stake in Deli Foods, the Nigerian biscuit manufacturer which makes biscuits for its own local brands as well as under license for United Biscuits’ McVities. The company, which operates a factory in Lagos, has been sold to Tiger Brands of South Africa.

Aureos Capital is a private equity fund management company specialising in investing in small and medium sized businesses in emerging markets. This transaction is the first exit for the USD381.1 million Aureos Africa Fund.

Jacob Kholi (pictured), Managing Partner for Aureos West Africa, says: “We are delighted to have achieved an exit so soon after our investment that delivers a solid return for the fund. The interest that Deli Foods has attracted confirms our view that small and medium sized businesses in Africa that are positioned to benefit from rising incomes or which support the infrastructure needs of the continent’s growing economies, offer exciting investment opportunities, as well as playing a crucial part in developing Africa’s future wealth.”

The Aureos Africa Fund, which invests in small and medium sized businesses, is the largest fund of its kind in Africa.  It engages closely with its investee companies to support their growth and value addition.

Aureos’s partnership with Deli Foods enabled the company to expand its production capabilities, adding two new production lines.  Short-term debt was re-financed, and the Company’s profitability improved, with margins more than doubling by June 2010.

In 2009 significant sums were invested in improving the company’s health, safety and environmental procedures, ensuring its compliance with international norms.  The company’s corporate governance was also strengthened through the introduction of board sub-committees.

Ravi Sharma, Partner for Aureos West Africa, says: “Aureos’s involvement with Deli Foods has been about taking the company to the next stage in its development.  As well as growing the company to the extent that it has been able to attract an international buyer, we are also proud that the improvements that we have made in health, safety and environmental procedures will bring significant benefits to the strong workforce, as well as the wider community in this part of Lagos.”
The Aureos Africa Fund has already invested USD149m in 14 deals, including Brookside Dairy, a Kenyan milk producer; Ciments du Sahel, a Senegalese cement company; and Dormac, a South African ship repair group.

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