Fanisi Capital has invested in Nairobi-based pizza-maker European Foods Africa Ltd (EFAL) as private equity firms increasingly target the growing middle class’ appetite for processed foods.
This is the second such investment by Fanisi in the last few months. The firm invested both debt and equity but a breakdown was not disclosed.
EFAL, distributor of Dr Oetker pizza, said it will use the Sh193.2 million ($2.1 million) to expand processing and distribution of frozen pizzas and whole berries and fresh berry beverages to supermarkets, grocery chains and restaurants in Nairobi and Mombasa counties.
“Fanisi’s support and resources will drive the business to differentiate its brand through quality frozen products, offering a stable and reliable cold chain system,” said EFAL chief executive Stephan Belzer.
The funding will also go towards strengthening the company’s operational systems and ensuring stability.
The food processor is looking at expanding its business to the East African market whose combined population is forecast to hit 290 million in the next four years. EFAL, though, targets a niche market and Fanisi said this is one of the main attractiveness of its business model.
“We are supporting a strong entrepreneur who has developed a good understanding of the evolving local consumer preferences over several years and has identified a niche product whose demand continues to grow,” said Fanisi managing partner Tony Wainaina.
The investment in EFAL is the second by Fanisi in a Kenyan food processor following the Sh221 million funding of Ngare Narok Meat Industries Ltd in exchange for a 40.15 per cent stake in late 2014.
The Laikipia-based firm operates a modern slaughterhouse, meat processing and rendering plant that also targets the high-end market.
The other food processing company that Fanisi has invested in is ProDev Group Holdings, a Rwanda-based flour milling and distribution company.
Fanisi typically invests between $50,000 (Sh4.6 million) and $15 million (Sh1.38 billion) in companies for periods of between three and six years through its $50 million (Sh4.6 billion) fund.
Investments are usually for periods between three and six years in agribusiness, IT, education, healthcare and Fast Moving Consumer Goods (FMCG) sector.
Increased urbanisation in major towns in Kenya and the East African region has created demand for the retailers which is a boon for food processors.
Listed firm Flame Tree Group has also invested in the FMCG sector with its recent acquisition of Chirag Kenya, a local company that processes nuts, crisps, spices and bakes biscuits.
The group that bought the food processor early last month said the decision was also made easier since Chirag’s brand products are distributed in supermarkets and convenience stores making them easier to sell.
“The acquisition provides Flame Tree Group an established platform for growth in the food space,” said Flame Tree chief executive Heril Bangera at the time.
Fusion Capital, an investment and private equity, bought a 45 per cent stake in GAL Bakeries for Sh245 million in March last year.