Philafrica to spend up to ZAR 1.5bn on African food processing opportunities over next 24 months

Philafrica Foods, a South Africa-based food processing firm owned by agricultural services company Afgri, plans to spend about ZAR 1bn to ZAR 1.5bn (USD 73.5m to USD 110m) over the next 24 months on food processing opportunities in Africa, Chief Executive Officer Roland Decorvet said.

It is in the process of concluding a joint venture with a poultry producer in Northern Mozambique and the acquisition of a cassava processing company, also in Mozambique, he added.

Afgri decided to establish Philafrica as a focused vehicle for pursuing an aggressive growth strategy in Africa, said Afgri CEO Chris Venter. PhilAfrica will likely invest USD 100m in the next 18 months or so, Venter said.

Funding will come from equity contributions from its shareholders, said Decorvet. Afgri’s shareholders include Canadian investment holdings company Fairfax [FFH:TSE] and South Africa’s Public Investment Corporation (PIC).

Growth opportunities will comprise a mixture of acquisitions, joint ventures and greenfield projects in the food processing sector, said Decorvet, who previously held the position of CEO of Nestle [NESN:TSE] China.

The company plans to pursue roughly three to four opportunities per year as it looks to become a leading food processing company in Sub-Saharan Africa and will spend roughly USD 2m to USD 15m per opportunity, he said.

Philafrica will not concentrate on any specific food commodity or geographic market. “We are agnostic from a category or country point of view,” Decorvet said. Rather, its investment decisions will largely be informed by social impact potential, availability of strong local partners and profit, he added.

Social impact opportunities will include providing small-scale farmers with technical assistance, a route to market, and crop variety improvement.

Philafrica sees significant opportunity in being able to source locally grown food products that can replace imported products, said Decorvet. By way of example, in some markets there is significant opportunity to replace wheat imports with cassava products, he reasoned.

It currently holds 12 manufacturing plants in South Africa including maize mills, wheat mills, an oilseed extraction plant and animal feed manufacturing facilities.

Afgri was delisted from the JSE in 2014 following a takeover from Fairfax and the Public Investment Corporation. Afgri offers a range of agricultural services including grain management and storage, provision of equipment, financial solutions and retail services.