The AAF SME Fund invests in leading Zimbabwe agri-processing company

The AAF SME Fund, a private equity fund focused on African food production and processing, managed by Databank Agrifund Manager Limited (DAFML), has successfully closed its investment in Interfresh Limited, Zimbabwe. Interfresh is a leading agribusiness focusing on the production, processing and marketing of agricultural and allied products and services.

Interfresh is a Zimbabwe-based diversified agri-business company, engaged in the business of producing, processing and marketing agricultural and allied food products in both the local and export markets. The Company operates in five divisions:

• Citrus, a producer of citrus which is sold locally, processed into juice and juice concentrates and exported into the region and international markets;
• crops, which is involved in the production of cash crops, such as maize, soya beans and wheat;
• horticulture, a producer of vegetables for both formal retail and informal markets;
• beverages, which is a producer of fruit-based concentrates and oils for both local and international markets; and fast moving consumer goods, which focuses on importing a range of food and beverage products for the local market.

It also manufactures a range of products under the Marlon Fine Foods trademark.

The AAF SME Fund and senior management of the Company structured a management buyout (MBO) funded by a mix of equity and mezzanine funding. Given that Interfresh is publicly listed on the Zimbabwe Stock Exchange (ZSE),and in order to accommodate all current stakeholder interests, the final structure evolved over eight months and culminated with a share rights offer that resulted in the desired shareholding profile. The final MBO structure is compliant with Zimbabwean indigenisation laws and also provides an empowerment platform for management.

In conjunction with this investment, the AAF’s Technical Assistance Facility (TAF) will fund a €250 000 smallholder support scheme. This two-year development programme will integrate a minimum of 200 local smallholder farmers into the supply chain of Interfresh. The Company will process the produce purchased from the smallholder farmers before reselling it in the formal market. Through this project, farmers will benefit from guaranteed access to market, as well as business and technical training, while the company will be able to expand its supply base. As such, the project will be beneficial for both parties.

“Interfresh is an ideal candidate for our mandate to increase food security in Africa in an environmentally conscious way, while partnering with strong, committed management teams that are open to the value-add associated with private equity partners. The Company has unique citrus assets that require years and profound expertise to replicate,” DAFML Senior Managing Partner, Dennis Matangira, said in a statement. “The holistic approach of the AAF SME Fund to not only fund the Company, but insistence on finding ways to increase stakeholder involvement as well as extension programmes for outgrowers though TAF, made them a very attractive partner for Interfresh,” added Lishon Chipango, the CEO of Interfresh.

The AAF SME Fund is a sub-fund of the African Agriculture Fund (AAF), managed by Phatisa.

The AAF TAF is primarily funded by the EU, managed by the International Fund for Agricultural Development (IFAD) and implemented by TechnoServe. The project received additional donations from the Alliance for a Green Revolution in Africa (AGRA), Italian Development Cooperation (IDC) and the United Nations Industrial Development Organisation (UNIDO).