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EXEO Capital backs Zambian food distributor

Africa-focused private equity manager, EXEO Capital, has announced an investment of $6.4 million into Capital Fisheries, a Zambian food distributor that specialises in the cold-chain distribution of animal proteins.

The investment, which concluded in April 2018, was made by EXEO Capital’s Agri-Vie Fund II – a private equity fund focused on food and agribusiness investments in Sub-Saharan Africa.

Kennett Sinclair, EXEO Capital Partner, says that the decision to invest in Capital Fisheries was driven by the market prospects for this line of business in Zambia and the proven business model of Capital Fisheries.

More than half of the animal protein consumed in Zambia consists of fish, says Sinclair.

“Capital Fisheries already has a large market share in fish distribution in Zambia. The company’s innovative model of wholesaling frozen products from reconfigured, refrigerated shipping containers placed permanently at markets, small shopping centres and areas where people congregate, has been tremendously successful.”

Capital Fisheries’ Zambian founding shareholders, Damian Roberts and Gavin Thomas, say that consumer spending is expected to accelerate the company’s current growth.

“Zambia’s population is forecast to grow at 2.8% per annum to 2030, with an urbanisation rate of 4.8% per annum. We plan to double our wholesale depots and the supporting cold-chain logistics over the next two years.”

Sinclair echoes this sentiment, adding that Zambia’s GDP per capita is forecast to increase by 2.1% per annum to 2030.

“You have all the ingredients necessary for excellent further growth prospects for this company,” he says.

Capital Fisheries sells fish, sustainably harvested in Zambia, Zimbabwe and Namibia, mainly tilapia or bream and horse mackerel. More recently, it added smoked fish, as well as different cuts of Zambian beef and sausages produced from locally sourced fresh meat as well as certain imported products. The value-added products are processed in a modern fish and meat plant in Lusaka.

Roberts and Thomas add that Capital Fisheries looks forward to the business acumen and management to international standards that will be provided by Agri-Vie.

“We want to position our company as a business leader in sustainable corporate practices in Zambia in terms of governance, reporting and transparency, and in environmental and social management.”

Responding to this, Ellora Ghosh, Investment Associate at EXEO Capital, says that Agri-Vie’s policy is to bring about environmental and, especially, social benefits, whilst achieving a good return on investment.

“Approximately 3 000 female micro-entrepreneurs purchase wholesale from Capital Fisheries depots across the country and sell the products at informal markets. The company also purchases some of its locally caught fish directly from local women who have been trained in food hygiene and are supplied with packaging materials. We are working with Capital Fisheries to provide further support to these micro-entrepreneurs – a recognised way to bring about socio-economic benefits with a substantial multiplier effect.”

Lastly, Sinclair says that they are confident that this investment will build on EXEO’s previous investments in food and agribusiness in Sub-Saharan Africa via their Agri-Vie Fund I, and on the successful exits that were made over the past two years.

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