Joining the scramble into Africa's agricultural sector, Pembani Remgro Infrastructure Fund (PRIF) has teamed up with US private equity firm Carlyle to invest US$210m in Export Trading Group (ETG). Headquartered in Dar es Salaam, Tanzania, ETG is one of Africa's foremost integrated agricultural firms.
"ETG offers a unique combination of strong management and access to the agriculture supply chain in Africa and key markets in China and India," says Herc van Wyk, CEO of PRIF.
The $210m represents new money invested in ETG and secures a minority stake in the firm, says Van Wyk. He is not at liberty to disclose the size of the stake or the split between PRIF and Carlyle.
Providing some insight, UK bank Standard Chartered acquired a 14,5% stake in ETG in January for $74m. The deal, the bank disclosed, then valued ETG at over $500m. In its year to March 2012 the privately owned ETG reported revenue of $884m and a net profit of $47,3m.
Van Wyk says the ETG deal is the first for PRIF since its recent formation by Remgro and Phuthuma Nhleko, chairman of investment firm Pembani Group and former MTN CEO. "He [Nhleko] was responsible for rolling MTN's services out in Africa," says Van Wyk. "He knows Africa."
ETG was formed in 1967 and acquired in a management buyout in 1981 by Kenyan-born Mahesh Patel, its current CEO. Patel has overseen the building of an infrastructure complex procuring and distributing smallholder farm produce which today employs 7000 people and operates 22 processing plants and 600 warehouses in 30 African countries.
ETG also operates in India and China, where it has a total of 51 warehouses and 10 processing plants.
In the year to March 2012, ETG procured and distributed 1,38Mt of 25 produce types including wheat, rice, beans, sugar, coffee and tea.
In 2006 ETG extended its vertically integrated model through its direct entry into farming. Active farming operations span 70000ha and in Tanzania include Africa's largest rice plantation and in Zambia Africa's largest wheat farm. ETG owns a further 305000ha of undeveloped farmland, primarily in Tanzania and Mozambique.
Pembani Group chairman
Pembani Remgro/ Carlyle deal with ETG provides access to one of Africa's leading agricultural firms
ETG has strong trade links with India and China