DOB Equity, a Dutch family office, has acquired a minority stake in Kenyan food wholesaler Twiga Foods as it continues to expand its activities in East Africa, Private Equity International has learned.
Twiga Foods allows vendors in Nairobi to buy fruit and vegetables through their mobile phones, and delivers supplies directly to retailers’ stalls. The business simplifies and shortens supply chains of key food items, reducing costs and minimizing waste, DOB said.
Having proven the business model with bananas, Twiga has recently expanded to tomatoes and onions and is looking to broaden its product base further. DOB’s investment will enable Twiga to expand its supply capacity, allowing them to reach 7,350 vendors in Nairobi selling to 1.5 million Kenyans living in low and middle-income neighbourhoods.
The market value of consumable goods sold through small informal vendors in Nairobi is over $700 million annually, DOB said.
Set up in 2007, DOB Equity is backed solely by the de Rijcke family to make direct investments in East Africa. The 12-strong team operates through offices in the Netherlands, Nairobi and Tanzania.
DOB typically invests a minimum of €1 million to acquire stakes of 25-49 percent in companies that will “positively contribute to a more social and sustainable society and deliver long-term profitability,” according to its website.
“We’re quite flexible in terms of how we structure our deals,” DOB Equity chief executive Brigit van Dijk-van de Reijt told PEI. “These are all tailor-made with a focus on equity, but we can also offer debt or other financial structures that suit the growth of the company.”
Van Dijk-van de Reijt declined to disclose the exact amount of capital available to DOB Equity for investment, but said it is “very substantial”.
DOB Equity currently has nine investments in its portfolio, including M-KOPA, a Nairobi-based mobile technology company, Tanzanian dairy processor Tanga Fresh, and Prothem, a tea factory in Burundi.
DOB Equity invests across sectors, and currently has exposure to the renewable energy, agriculture, logistics, education, online retailing, and supply chain sectors.
“In dairy we see large opportunities for growth,” van Dijk-van de Reijt said. “It’s all about innovation and the ability to scale up. That’s really how we feel we can create impact to the economies.”
Not tied into the same time frame as a closed-ended private equity fund structure, DOB Equity generally aims to hold companies for between five and 10 years. The flexible time horizon allows for investment in early stage companies as well as more mature businesses, van Dijk-van de Reijt said.
“What we really like to do is take a small exposure and then grow with the company,” she said.
Having expanded its team in Tanzania and Kenya, DOB Equity has been taking a more active role as a shareholder in its portfolio companies, which imposes a limit on the number of companies it can invest in due to available resources, van Dijk-van de Reijt said.
However, DOB is expecting to add “at least” another two members to its Africa team in the next year, as well as another two portfolio companies.
“We are quite ambitious and I expect us to grow our teams on the ground here in East Africa. That’s in line with our ambition to grow our portfolio.”