Private Equity Investment Into Africa FMCG A Growing Trend
With consumers spending more on food and drink products and the development of organised retail gathering a head of steam from a very low base, one of the key trends we have picked up on has been the growing deal activity involving private equity as more funds search for returns through stakes or buys in well-positioned food, drink and wider fast-moving consumers goods (FMCG) firms. The latest such example saw the emerging-markets focused Standard Chartered bank's private equity arm take a 13% stake in the Botswana-based food retailer Choppies that is believed to be worth more than US$50mn, according to Reuters.
Choppies is the leading food retailer in Botswana, with more than 100 stores. It also has businesses in South Africa and Zimbabwe and looks well positioned to invest in more store growth and pursue efficiency initiatives with the equity financing on board.
For a long time, many investors were mostly interested in Africa for its resources or, more recently, land. The idea of investing in search of returns from the growing spending power of the end consumer is a relatively new phenomenon outside traditional stalwarts like the beer and soft drinks industries. Given how well many of the region's economies have performed relative to the global economy since 2008, Sub-Saharan Africa's most promising economies are going to provide some great opportunities.
|Steady Outlook Across Selected Markets|
|Selected African Countries Real Private Final Consumption Growth (% change y-o-y) - Historical & Forecast|