Pearl Capital injects cash into hybrid seeds distributor

“In Kenya, Pearl has invested $0.6 million in quasi-equity in Freshco Kenya Limited, a local seed business with operations in the country’s agricultural heartland and an expanded network of out-growers and agro-dealers across the country. The out-growers grow improved seed varieties including hybrid seed maize and the business markets the seed,” said PCP in a statement.

Freshco will use the money to expand its primary business of contracting farmers to grow seeds, which are then processed, packed and marketed.

“The money will be used for expansion and increase their working capital,” PCP’s Wanjohi Ndagu told the Business Daily but he did not disclose the loan terms citing non-disclosure agreements.

Freshco sells maize, vegetables, drought-resistant crops and tree seeds.

The money will be invested from the African Seed Investment Fund (ASIF), which has $20 million in commitments from the Alliance for a Green Revolution in Africa.

PCP is not a stranger to the seed business having invested $1 million in Western Seed, through a five-year loan similar to the Freshco loan back in 2007.

This was split into a $400,000 loan at a 9.5 per cent interest rate and a $600,000 loan at eight per cent rate, with a 5.5 per cent premium hived from after-tax profit.

The loan was later converted into a 20 per cent equity stake in Western Seed in 2008.

Other recent agribusinesses in which PCP has invested include Midlands, a Nyandarua County-based potato processor.

PCP put Sh200 million into the processor, equally split between a loan and an equity stake that saw it get a 16 per cent stake.

READ: Nyandarua food processor gets Sh200m injection

Exits include Africert, an accreditation and inspection firm that was sold for $450,000 in 2012, a three-fold increase from the $150,000 invested six years earlier through a blend of debt and equity.

PCP also announced a $300,000 (Sh25.8 million) convertible loan to Forestry and Agricultural Investment Management Africa (FAIM) Limited, a Rwandese firm that grows seedlings for crops and trees.

“We are pleased to have joined hands with Pearl Capital in order to accelerate the growth of the company through access to capital resources necessary for us to increase our production of quality disease-free plants in Rwanda,” said FAIM chief executive Steve Jones in a statement.
The latest investments were made in May.

Agribusinesses in the region have seen interest from investment funds and big financiers grow due to the rising population that is also having a bigger ability to pay.

The International Finance Corporation has proposed to invest $6.5 million (Sh560 million) in Pearl Dairy, a Ugandan-based dairy, through a loan,