South African private equity company, RMB Corvest and Zico, a black empowerment group, have bought a 25% stake in Nigerian food company Vital Products.
Zico Capital MD Tshego Sefolo made the disclosure yesterday stating that the partnership with RMB Corvest was the first going into an African country outside SA. He said the move was prompted by the growth opportunities Nigeria presents. However, the sum paid remained undisclosed.
Mr Sefolo highlighted that the company needed to be “cautious going into Nigeria.” He said, they had to make sure they partner with the right local partners and also hinted that the company would never go in as a “stand-alone investor.”
According to Businessday reports, RMB Corvest, formed in 1989, invests in medium-size companies across growth sectors and is steadily growing its African portfolio. Mike Donaldson, a director, recently said in an interview that RMB Corvest would invest in well-run medium-sized companies in Africa. It has dealt with Zico Capital in the past, when they partnered in 2010 to acquire a 100% interest in Autozone, a local retailer and wholesaler of automotive parts and accessories.
Vital was established in 1999 by Sanjeev Kapoor. The company has interests in pharmaceuticals, fertilisers, consumer products and lottery businesses. Headquartered in Lagos, the company also boasts regional offices across Nigeria. It began as a manufacturer and distributor of fruit drinks and nonalcoholic beverages including energy drinks, and but has since expanded its product portfolio.
Yesterdays transaction with Zico Capital strategically positions the company to respond to the rising demand in the Nigeria market as it would enable the company to expand its capacity in the juice, beverage and paste segments. According to Zico, plans are underway for a purchase of a new factory building, leading to improved capacity and higher sales volumes. The company will also aims at increasing the number of distributors and doubling the sales force in other to fully penetrate all 36 states.
Mr sefolo also touched on Africa’s huge potential for growth and its attractive investment opportunities.
Zico is exploring opportunities in the resource and mining sectors in the Southern African Development Community countries, starting with Botswana, Namibia and Zimbabwe.