Luxembourg-based private equity firm is exploring the sale of a Kenyan tea plantation it bought from Unilever last year amid workers’ unrest and sexual harassment claims.
The Financial Times reported that CVC Capital Partners Fund VIII is eying the deal which will see it dispose of the tea estates that Unilever rebranded as Ekaterra and sold to CVC in July last year.
The UK publication said three people familiar with the matter confirmed the development which comes months after investigations by BBC Africa exposed the sexual exploitation of staff by senior management in the Kericho-based estates.
CVC, which has a strict investment policy, bought the estates as part of its €4.5billion (Sh704.5 billion) acquisition of Unilever’s tea business and renamed it Lipton Teas and Infusions.
A Lipton spokesperson told the Financial Times the company had “received a number of unsolicited inbound expressions of interest in our estates” and would “review this strategic question at the right point in time”.
BBC exposé left CVC in a difficult position since the PE fund had in December 2021, said it had carried out “extensive ESG due diligence” on the site, including sending a team of environmental, social, and governance (ESG) specialists to Kericho.
CVC has been a signatory of the UN-backed Principles for Responsible Investment (PRI) since 2012. Signatories of PRI commit to publicly demonstrate commitment to responsible investment
The Fund is committed to implementing PRI’s six principles that include ESG, aligning its investment management and advisory activities with the interests of wider stakeholders.
In addition, CVC says on its website that it considers 10 principles of the UN Global Compact in its due diligence of target companies before its funds invest.
“CVC teams assess ESG-related risks and management standards relevant to a target company when evaluating investment opportunities which, for example, may include factors such as health and safety, diversity, environment and climate change, ethics and anti-bribery and corruption,” reads CVC investment policy in part.
“If CVC concludes that the ESG risks of a target company are too great and cannot be appropriately mitigated in a reasonable timeframe, no investment is made.”
Having Lipton, which has also witnessed workers burn down tea harvesting machines as a move to protect their jobs, has therefore put its responsible investing policy to the test.
The BBC found more than 70 women had been abused by their managers at plantations operated for years by two British companies—Unilever and James Finlay.
The exposé showed abuses and other legal disputes at the estates happened before the PE firm bought the operations from Unilever.
Lipton had responded to the report by firing some individuals, blocking others from accessing the estates and setting up an oversight committee to monitor operations.
CVC’s ESG report released on July 31 said Lipton launched “a thorough and independent investigation” into the allegations and is in the process of implementing, a comprehensive plan to address key areas for improvement.
“Even when companies have comprehensive programmes in place to manage ESG and mitigate risks, adverse incidents can occur,” says CVC in the report.
“When material incidents occur we engage with companies to get sufficient comfort that they have the resources and management oversight to ensure they are appropriately addressing and remedying the underlying issues.”
