Zebu Investment Partners GP Limited (ZIP) through its sophomore fund, The Africa Food Security Fund, has successfully closed its investment in South African Ag-Tech company IQ Logistica (IQL). IQL is the owner and developer of a cloud-based platform used to collect, collate, and aggregate data for the purposes of tracing agricultural outputs and related key data as these progress through the value chain. The AFS Fund focuses on food production and processing across Africa, underpinned by the assertion of the positive impact which investing in the agricultural value chain can have for food security. This investment represents the fund’s first foray into the Ag-Tech sector.
The genesis of IQL in 2015 was ignited by an effort to improve the South Africa cotton industry’s capacity and competitiveness and was supported by multiple stakeholders including the Department of Trade and Industry (DTI). This big data platform which has been built, has enabled complete value chain visibility within the cotton industry of South Africa (from farmer to retail store), with the ability to expand across various other agricultural value chains and countries. This presents an opportunity for high-growth and meaningful impact on a continent where Agriculture plays a pivotal role in providing livelihoods and contributing to GDP. It is well documented that the use of technology within the Agricultural sector can transform the industry and drive tangible impact for smallholder farmers and small and medium enterprises. The CEO and founder of IQ Logistica, Thomas Robbertse, believes that the Company has the potential to revolutionize the industry, “IQL sits at the center of a disruptive movement – where farmers can be judged by their performance and not their balance sheets. IQL is enabling farmers to raise their profiles while providing services such as dedicated market access, competitively priced inputs, and access to finance and insurance. All these services reduce cost, remove uncertainty, and put more money back in the pockets of these essential workers”.
The AFS Fund will acquire a majority stake in the Company, through equity funding.
In commenting on why the Company chose a private equity fund this time around, Thomas Robbertse asserted “when we began our search for growth capital for IQL, we all agreed that it was imperative that any funder would have to understand the nuances of African agriculture. Zebu as a private equity team understands the journey of agriculture from farm to retail – we look forward to leveraging the relationships of Zebu as well as sharing ours to grow our ecosystems together. The additional resources such as the TAF (Technical Assistance Facility) will extend our reach to farmers, small or large across the continent, which is really exciting for the team”; he further added, “this investment allows IQL to scale up our business quickly while enabling us to carry the upfront cost of customer acquisition and development in Africa’s nascent ag-tech sector”.
The AFS Fund’s Technical Assistance Facility (TAF), once fully funded, will explore the possibility of funding inclusive projects targeting agricultural input suppliers and smallholder farmers within the respective value chains.
ZIP Senior Managing Partner, Dennis Matangira, said in a statement “at a time when the Covid-19 pandemic has further illuminated the need for traceability and transparency within food value chains, IQL presents us with an opportunity of not only resolving these pertinent issues; but also addressing the challenges of primary agriculture in Africa such as facilitating access to finance, and enabling efficient markets based on information symmetry”, he also highlighted “AFS Fund’s value creation team will be working with IQL to ensure successful expansion of the platform within other agricultural value chains and regions, empowering us to deliver on our impact mandate of food security, diversity, and improving livelihoods- all whilst ensuring attractive and sustainable risk-adjusted returns for our LP’s. We look forward to the partnership with IQ Logistica in unlocking the power of big data within the African agricultural landscape”.
The AFS Fund achieved first close at US$84 million in 2018, with final close expected in December 2020 at a target of US$100 million.
The AFS Fund TAF is in the process of first close and will be managed and implemented by TechnoServe.