Emerging Capital Partners, a Washington, D.C.-based buyout firm that invests in African companies, has sold its minority stake in SOMDIAA SA, a producer of sugar, flour and animal feed in Central Africa, for $26 million. The firm’s investment, made in 2003, earned it a 2x return.
Emerging Capital Partners (ECP), an international private equity firm focused on investing across the African continent, today announced the sale of its entire minority position in SOMDIAA SA, a leading producer of sugar, flour and animal feed in Central Africa. ECP sold its stake to the company’s majority shareholders for total proceeds of approximately U.S. $26 million. When combined with dividends, this represents approximately 2.0x ECP’s initial investment, which was made in September 2003.
ECP’s investment provided SOMDIAA with working capital to expand its existing business, as well as funds to acquire flour milling companies in Cameroon and in Reunion Island. Since ECP’s investment, SOMDIAA’s sugar production has increased more than 15 percent, and flour production has more than doubled.
“Arable land is one of Africa’s most significant natural resources. When combined with abundant labor, African agricultural commodity producers, such as SOMDIAA, are able to be among the lowest-cost producers by global standards,” said Tom Gibian, chief executive officer of ECP. “In addition, outlook for growth remains positive as local and global markets continue to expand, more land is cultivated and developed, and agricultural yields and production efficiencies improve.”
Through its plantations in Cameroon, Chad and the Republic of the Congo, SOMDIAA produces approximately 80 percent of the consumer and industrial sugar sold throughout central Africa. The company was founded in 1970 by the Vilgrain family with its initial operation in the Republic of Congo. It currently employs more than 11,000 people on the African continent.
“Throughout ECP’s holding period, we helped SOMDIAA expand and increase the scale of its core sugar and flour businesses through capital investment and strategic acquisitions,” said Hurley Doddy, chief operating officer of ECP. “We also helped increase productivity and profitability by improving processes.”
The investment in SOMDIAA was made through ECP’s AIG African Fund Infrastructure Fund L.L.C. (Africa Fund I), which was established in March 2000. The $407 million fund made investments throughout Africa primarily in telecommunications, natural resources, agribusiness, transportation, and power and water. ECP’s previous investments in the agribusiness sector include the firm’s 3.4x initial investment divestiture from natural rubber company Societe Internationale de Plantations d’Heveas.
Emerging Capital Partners (ECP) is the first private equity firm to raise more than $1.5 billion to invest in companies across the African continent. The ECP team has a track record of nearly nine years of pan-African investing. The firm’s investment strategy is focused on delivering consistently above-market returns to investors that are uncorrelated to the U.S. and other global economies. For more information, please see www.ecpinvestments.com.