CDC Group, Norfund, Finnfund, FinDev Canada and BIO jointly commit $82 million to Phatisa’s second food fund
A group of leading development finance institutions (DFIs) and impact investors have teamed up in a $82 million joint commitment to Phatisa Food Fund 2 (PFF 2), managed by Phatisa. The fund has reached a final close of $143 million, bringing DFIs and commercial investors together to boost the supply of quality food in Sub-Saharan Africa – where an estimated 239 million people are affected by food insecurity.
PFF 2 will invest across the African food value chain, considering investments in mechanisation, inputs, poultry and meat production, food processing and manufacturing, logistics, aggregation and distribution across Sub-Saharan Africa.
A consortium of investors, consisting of CDC, Norfund, Finnfund,FinDev Canada, and BIO committed to the Fund’s final close, $30m, $20m, $15m, $10m and $7m, respectively.
Clarisa De Franco, managing director & head of private equity funds at CDC said: “It’s great to see DFIs and commercial investors partnering to tackle one of Africa’s most pressing challenges. Small-holder farmers account for 60% of Sub-Saharan Africa’s population and the continent remains a net food importer.”
De Franco noted that according to the African Development Bank (AfDB), rapidly rising net food imports are expected to grow from $35 billion in 2015 to over $110 billion by 2025. “By mobilising capital and investing in the food and agriculture value chain, we can drive tremendous impact, sustain employment and improve food security across the continent, while reducing reliance on imports,” she said.
Phatisa Food Fund 2: A fund with impact
The investment will strengthen and increase food supply, local production and distribution across the region.
The fund, via its investment in companies in the food value chain, targeting more than 90,000 small-holder farmers and micro-entrepreneurs and aims to create over 2,000 permanent jobs and sustain another 10,000 jobs.
Stuart Bradley, managing partner, Phatisa, said: “We are pleased to welcome this multinational group of investors to Phatisa Food Fund 2, a fund focused on increasing investment in the undercapitalised African agribusiness and food value chain. Development impact, without deviating from sound commercial principles, is at the heart of Phatisa’s investment approach.”
Bradly explained that over the fund’s investment cycle and through its investments in talented and driven management teams, Phatisa aims to create shared value; inclusive and sustainable growth. “[We aim to] address social and environmental challenges impacting some of the most marginalised people in Africa.”
The investment follows the success of Phatisa’s African Agriculture Fund (AAF), which has created more than 1,800 jobs and benefitted 86,000 farmers operating in over 20 markets across the continent.
Building on AAF, Phatisa Food Fund 2 will enable small-holder farmers and microentrepreneurs to develop their skills, broadening access to markets and economic opportunities.
The new fund will also address access to, and affordability of products among farmers and promote smart agricultural methods – enhancing crop resilience, reducing food loss and waste by 50% in the companies it finances, while increasing outputs, yields and incomes.
Olav Akrawi, project manager in scalable enterprises at Norfund said: “The Fund’s plans are aligned with Norfund’s strategy, directing its focus towards companies with strong financial prospects that will contribute to economic growth and improve the value chain in the food and agri-sector.”
Riikka Molander, associate director & head of funds at Finnfund, added: “Strengthening and increasing food supply, local production and distribution – enhancing food security and supporting small-holder farmers – is at the core of Finnfund’s mission. Particularly now, in the midst of the Covid-19 pandemic, it is extremely important to generate financing for agriculture and food production in the African continent.”
“Our support to Phatisa Food Fund 2 will help respond to some of the most important challenges facing Africa today,” said Paulo Martelli, chief investment officer at FinDev Canada. “Food insecurity is a major issue on the continent, compounded by the Covid-19 pandemic which threatens to push another 23 million African.”
The investment contributes to UN Sustainable Development Goals 1 (No poverty), 2 (Zero hunger), 8 (Decent work and economic growth), 5 (Gender equality), 12 (Responsible consumption and production) and 13 (Climate action).
Phatisa is a specialist investor within the African food value chain. The firm currently has three funds under management, totalling more than $400 million, focused on food and affordable housing.
Date published: 5 February 2021