Capital Group Private Markets has acquired The Abraaj Group’s stake in Koba International Group S.A. No financial terms were disclosed. Koba is a discount retailer and supermarket chain operator in Columbia.
Bogota, Colombia, 12 September, 2016: The Abraaj Group (“Abraaj” or the “Group”), a leading investor operating in global growth markets, today announced it has sold its investment in Koba International Group S.A. (“Koba” or the “Company”) for an undisclosed amount to Capital Group Private Markets, an experienced emerging markets private equity group and part of the Capital Group Companies, a global investment management organization with over 85 years of asset management experience.
Abraaj made the exit through its ALAF I Fund. Koba is the fifth exit from the Fund, which invested predominantly in Mexico, Colombia and Peru. Capital Group Private Markets made its investment through CIPEF VI, a $3 billion fund focused on building a diversified global emerging markets private equity portfolio.
Koba operates the highly successful chain of D1 supermarkets in Colombia and it is the leading hard discount retailer in the country, providing high quality basic staples at the lowest prices. The hard-discount model has been well-received in Colombia, where consumers are increasingly opting for proximity over full-service supermarkets. Colombia’s high urbanization rate, equivalent to 75% of the total population, together with heavy traffic and insufficient transportation infrastructure, drives consumer preferences towards smaller grocery stores closer to their homes. Given its strong growth, D1 is at an important inflection point and is well-positioned for significant gains in market share in the Colombian retail sector over the coming years.
D1 stores offer around 500 different high-quality products (“SKU”). Koba locates these stores in densely populated areas predominantly in middle income neighborhoods across several cities in Colombia. The low prices are achieved through its high buying power per SKU, its own distribution network, low operating costs and by applying simple management principles at the stores and across all functions.
Abraaj invested in Koba in 2010 when the Company had just started operations with approximately 20 stores. During its tenure as a shareholder in Koba, Abraaj introduced significant corporate governance and organizational enhancements, bringing in other institutional investors to help fund the accelerated growth of the Company. Today, Koba has almost 500 stores, over 5,000 employees and serves close to 10 million customers per month. Six years on from Abraaj’s investment, Koba is one of the most dynamic players in the Colombian retail space.
Commenting on the exit, Daniel Wasserman, Managing Director of The Abraaj Group in Colombia, said: “It has been a privilege partnering with Koba. Helping the Company grow over the last six years and seeing it become what it is today has been incredibly rewarding. Our exit supports the Abraaj investment thesis of combining our financial and operating experience across growth markets with well managed companies who are positioned for success. Koba’s accomplishments have been exceptional and we wish our former partners, management, and Capital Group Private Markets every success for the future.”
Commenting on the investment, Martin Diaz Plata, Managing Partner of Capital Group Private Markets, said: “Koba and D1 are very well positioned to build on their existing success. There is a tremendous opportunity for D1 to continue to expand across Colombia, given its strong local brand, impressive track-record on execution, and customer recognition. We are glad to have the opportunity to work with Koba as it enters this important next stage of growth.”
About The Abraaj Group
The Abraaj Group (“Abraaj”) is a leading investor, purpose-built for operating in the growth markets of Africa, Asia, Latin America, the Middle East, and Turkey. Employing over 300 people, Abraaj has over 20 offices spread across five regions with hubs in Dubai, Istanbul, Mexico City, Nairobi and Singapore. The Group currently manages c. US$ 10 billion across targeted investment strategies.
Abraaj has realized US$ 6.3 billion from over 80 full exits, and Funds managed by the Group have made over 170 investments across a range of sectors including consumer, energy, financials, healthcare and utilities. The Group is committed to the highest environmental, stakeholder engagement and corporate governance standards and is a signatory to the United Nations-backed Principles for Responsible Investment and the United Nations Global Compact. Abraaj’s founder, Arif Naqvi, was appointed to the United Nations Global Compact Board by UN Secretary-General Ban Ki-moon in 2012 and to the Interpol Foundation Board in 2014.
This publication is issued by Abraaj Capital Limited (“ACLD” or the “Firm”), a member of The Abraaj Group that is authorised and regulated by the Dubai Financial Services Authority (“DFSA”). Several Group members are regulated by a number of international regulatory authorities including the DFSA under whose rules ACLD has issued this publication.
About Capital Group Private Markets
Founded in 1992, Capital Group Private Markets has invested over $5 billion in more than 80 companies across global emerging markets from its six emerging markets private equity funds. Capital Group Private Markets is an experienced leader in emerging markets private equity and a pioneer of the global approach to building a diversified emerging markets portfolio. As an active investor across Latin America, Capital Group Private Markets has been investing in Colombia for over 15 years.