Dubai’s Abraaj Group has confirmed its commitment to sub-Saharan Africa with the acquisition of the South African fast-moving consumer goods manufacturer Liberty Star Consumer Holdings (Libstar).
The private equity firm, however, did not disclose the price.
“In partnership with Libstar’s management team, who have reinvested substantially, we believe we can help transform the company to become a truly pan-African leader in the food and retail services market,” said Sandeep Khanna, the managing director at Abraaj Group.
“The market opportunity for food and other consumer staples in Africa promises huge potential for growth, driven by rapidly changing trends in consumer tastes and demand, as well as ongoing developments within the FMCG industry itself, such as the increased use of private labels.”
Established in 2005, Libstar is one of South Africa’s largest food and food services companies, with customers including the local food retailers Woolworths, Shoprite, Pick n Pay, Spar and Tiger Brands, together with McDonald’s South Africa.
The company has 23 business units located in five of South Africa’s nine provinces, employing about 4,200 people in nationwide manufacturing, supply and distribution.
Abraaj is hoping that its investment in the company will let it expand beyond its South African base into the wider sub-Saharan region, to tap into growing middle-class consumer markets across the region. South Africa’s grocery retail market is worth about US$56 billion, while its food services market is valued at about $14bn. These are expected to register growth of 7 and 9.5 per cent respectively a year through 2018, according to Abraaj.
“We are very proud of the success Libstar has achieved over the past decade and would like to record our appreciation of the support we have received from our partners,” said Libstar’s chief executive, Andries van Rensburg.
“We are confident of jointly executing on the next phase of our pan-African strategy with Abraaj and look forward to this exciting stage in the company’s growth trajectory”.
The Libstar acquisition is Abraaj’s first sub-Saharan investment of the year, following ones in Ivory Coast, Ghana and Kenya last year.
The Financial Times reported in June that the firm was also planning to announce acquisitions in Nigeria and Kenya before the end of the year in the financial services and logistics segments.
It has already signed several deals this year to acquire stakes in North African businesses, including the Egyptian hospital group Cairo Medical Group and the Moroccan confectioner Kool Food.
Abraaj announced its exit in August from its investment in the Angolan pipe manufacturer Fibrex, which it acquired in 2007.
jeverington@thenational.ae
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