Nairobi, Kenya — African fund management firm Phatisa has announced the first close of its successor fund to the African Agriculture Fund (AAF) - Phatisa Food Fund 2 (PFF 2), which has received capital commitments in excess of US$ 120 million.
Given the strong interest and with subsequent investors in different stages of their processes, the sector-specific fund manager says it will continue with rolling closings and expects to reach a final close target of US$ 300 million by mid-2019.
For PFF 2, Phatisa will continue its focus on the team's core skill set - the African food value chain - considering investments in mechanisation, inputs, poultry and meat production.
Other areas are food processing and manufacturing, logistics, aggregation and distribution across sub-Saharan Africa.
It targets buy-out and expansion transactions with an investment size of between US$ 15 million and US$ 25 million, building and exiting regional platforms.
As with AAF, by raising international capital to be invested into Africa's food value chain, PFF 2 is aligning itself with the United Nations' Sustainable Development Goals (SDGs), addressing in particular SDG 1: No poverty and SDG 2: Zero hunger, through its material contribution to food security.
With its investment into African businesses, Phatisa has already accounted for the production of over 2.6 million tonnes of food and food-related products with the management saying it will continue to mark its progress by measuring its impacts against the SDGs.
Together with TechnoServe, Phatisa is aiming to raise a second technical assistance facility (TAF) to work alongside PFF 2, building on the lessons learnt and TAF's success in AAF.
"The use of blended finance will enable the firm to increase the development impact as well as to enhance financial returns," the fund manager said in a statement.
The first close was timed to facilitate the completion of the Fund's first transactions, setting the anticipated investment pace.
Stuart Bradley, Joint Managing Partner said: "We are delighted to achieve this milestone. Re-investments from our first Fund account for 88 per cent of commitments, demonstrating strong support from AAF investors."
Phatisa Joint Managing Partner Stuart Bradely.
According to Bradley, the firm continues to attract the private sector, with a 70:30 split between commercial investors and development finance institutions at first close.
"With this round, we have now raised more than US$ 400 million for the African food and housing sectors, Bradley affirmed.
Currently, Phatisa is preparing to exit a number of AAF investments.
"We are tracking solid returns, which we plan to replicate in PFF 2 - especially around inputs, mechanisation, logistics and FMCG. This is where our team of industry specialists from Unilever, Afgri, P&G, SAB Miller, Diageo and Imperial, feel at home," said Duncan Owen, Joint Managing Partner.
Phatisa Chairperson Valentine Chitalu said: "We have built a great team that has been recognised through the support of our investor base. The team has demonstrated its ability to source and execute proprietary transactions and use our in-house industry skills to drive real value in our portfolio companies. I am very proud of what we have achieved and excited by the opportunity ahead."
Phatisa is a sector-specific African private equity fund manager located in and operating across sub-Saharan Africa.
The firm currently has three funds under management, totaling more than US$ 400 million, focused on food and affordable housing.
Phatisa comprises a team of over 40 dedicated staff and a solid track record of managing private equity funds and commercial businesses throughout the continent.
AAF is the continent's first private equity fund focused solely on the agriculture and food value chain, commenced operations in 2011 and reached a final close of US$ 246 million in mid-2013, and is now fully invested.
The portfolio consists of eight companies and one subsidiary fund investment, amounting to a footprint of 21 countries.