The Abraaj Group has expanded its diary holdings with the purchase of a 100 percent stake in Fan Milk International, a West African dairy producer.
No value was disclosed for the transaction, but reports have suggested the deal could be worth around $350 million. It is the largest private equity transaction in FMCG (fast-moving consumer goods) in Sub-Saharan Africa, outside South Africa, according to a statement from Abraaj.
The transaction is expected to close by the end of November.
Established in 1960 by a Danish merchant with less than 30 employees, Fan Milk’s website notes it is the largest manufacturer of frozen dairy products and juices in West Africa. With operations in Ghana, Nigeria, Togo, Ivory Coast, Benin and Burkina Faso, it distributes its food and beverage brands across a total of 31,000 sales points. The company sells more than 1.8 million products daily across its main markets.
Its Ghanaian subsidiary, Fan Milk Limited, was the first foreign-backed company to list on the local stock market. “The company has a very solid brand and is a leader in its existing markets”, Jacob Kholi, a partner at Abraaj, told Private Equity International. “It gives us the opportunity to leverage its well-established distribution platform to introduce new products.”
Through the transaction, Abraaj hopes to tap fast growing consumer countries in Africa’s largest countries, most of which boast a young and increasingly urban population. “The considerable investment and growth plans we have for FMI mirror the scale and depth of investment opportunities that we believe are now abundant on the African continent. Africa is witnessing the rise of a burgeoning middle and consumer class”, Arif Naqvi, founder and CEO of Abraaj, said in the statement.
Private consumption is expected to grow between 4.2 percent and 9.9 percent in the next few years, according to the Economist Intelligence Unit, with overall GDP growth said to reach up to 8.3 percent across its most populated markets.
Abraaj has invested $2.2 billion in Africa since inception, in a total of 69 transactions. Its most recent investments on the continent include Brookside Dairy, the largest Dairy in East Africa, Vine Pharmaceuticals, the largest pharmacy retail chain in Uganda, and Athi River Steel, a Kenya-based steel producer.