Equity firm Pearl Capital buys minority stake in Eldoville

Pearl Capital Partners, a private equity firm, has bought a minority stake in Eldoville Dairies Limited for Sh200 million.

Eldoville is a family-owned business established by Lucy Karuga in June 1985 and mainly processes cheese, butter and yoghurt.

Horizon Africa Capital advised Eldoville Dairies Limited on the transaction.

The fresh capital injection will be used to build a new dairy facility in Ol-Joro-Orok, Nyandarua County, where the dairy is based.

“We expect this investment to provide good financial returns and the new processing facility to create jobs and significant increases in household income for thousands of smallholder farmers in Nyandarua County,” said Pearl Capital Partners managing partner Tom Adlam.

New facility

Construction of the new facility has already begun and is expected to be completed by the end of this year.

The investment firm said the new facility targets to process between 50,000 and 70,000 litres of milk per day. Eldoville is also planning to diversify its product range and expand to other markets in the East African region.

“The confidence shown by Pearl in us fulfils a long term ambition we as a company have had to deliver more of our products to existing and new customers,” said Mrs Karuga.

Eldoville is the second food processor from Nyandarua County that Pearl Capital Partners has invested in.

In January last year the firm injected Sh200 million in Midlands Limited, a potato processing plant, through a mix of debt and equity.

Pearl Capital bought a 16 per cent equity stake in Midlands for Sh100 million and extended a Sh100 million loan to the firm.

Other firms in which the private equity fund has made an investment are Freshco, a maize, vegetables and drought-resistant tree seeds distributor; and Willmar Flowers, a cut flower exporter located in Thika, Kiambu County.

Pearl Capital invests between $250,000 (Sh21.6 million) and $2.5 million (Sh216 million) in partners.

The milk industry has been attracting mergers and acquisitions as firms move to get a share of the growing formal market.

Brookside Dairies bought Buzeki Dairy, the maker of Molo Milk and Kilifi Gold in late 2013 for Sh1.1 billion.