Markets & Finance

Private equity Phatisa buys ‘significant’ stake in General Plastics


Unilever’s Blue Band margarine at a retail outlet in Nairobi. General Plastics manufactures packaging materials for large companies including Unilever. PHOTO | FILE

A private equity fund has bought a “significant” stake in General Plastics (GPL), a Nairobi-based family business that makes packaging for food, cosmetics, beverage and agro-chemical companies.

The investment is the eighth for Phatisa and brings total commitments from its $246 million (Sh22 billion) African fund to more than $123 million (Sh11.2 billion). Both parties declined to disclose the value of the investment in one of Kenya’s largest manufacturers but the deal indicates growing foreign interest in Kenya’s consumer sector.

Phatisa makes a typical investment of between $5 million (Sh459 million) and $24 million (Sh2.2 billion) in exchange for a majority or a significant minority equity stake and board representation.

General Plastics, founded in 1977, currently has 900 employees.

The company makes packaging for manufacturers such as Bidco Oil Refineries, InterConsumer Products — earlier acquired by French firm L’Oreal — Excel Chemicals, Pz Cussons, Kenya Shell (Vivo), Unilever and Menengai Oil.

The manufacturer said it would use the funds to expand its packaging products.

“The partnership with Phatisa will allow us to reinforce our plans to expand into the region,” said General Plastics managing director and founder Rashik Shah in a statement.

“Local and regional consumer demand is increasing for functional packaging that is affordable, convenient and suitably branded. With this new capital injection, we believe GPL is well placed to benefit from these growing trends.”

Phatisa invested in General Plastics through African Agriculture Fund. The 10-year fund invests in agribusinesses and companies that support them by providing services such as storage, packaging and logistics.

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“Good-quality packaging is essential for extending the shelf-life of food and minimising spoiling. This ensures a significant reduction in food waste, thereby positively impacting African food supply and sustainability,” said Phatisa in a statement. “Therefore, adding quality packaging as a resource to ensure sustainable food security is an opportunity not to be missed.”

Phatisa confirmed buying “a significant stake”, but did not disclose amounts involved.

The packaging industry has been attracting other foreign investors including Nigerian GZ Industries which began construction of Sh1.3 billion can factory in Sultan Hamud in mid-2014.

Nampak, a South African packaging firm, is looking to expand its Kenyan operations and has begun exploring the possibility of setting up a plant. The firm said it was evaluating the viability of investing in a glass furnace.

The equity investment in General Plastics is the second for Phatisa in the last two months.

In November it announced that it planned to build a Sh800 million apartment block in Westlands, Nairobi.

The 80 one-bedroom apartments are being financed through the $41.95 million (Sh3.85 billion) Pan African Housing Fund that intends to invest in lower- and middle-income housing in the urban areas of Kenya, Zambia, Rwanda, Mozambique and Uganda.

The housing fund is also putting up 66 apartments in Kikuyu, through a development that is estimated to cost Sh500 million.