Standard Chartered’s Africa private equity team last week invested $74 million in ETC Group Mauritius (ETG), according to a company statement. Exact details of the minority stake were undisclosed, however the deal valued the entire business at more than $500 million.
ETG is a Tanzania-based agricultural business supplying soft-commodities such as maize to sub-Saharan Africa, India and China.
Ketan Patel, managing director at ETG said funding will go towards expanding the business into new geographies, more specifically eight West African countries including Nigeria and Ghana. ETG will also continue to supply its commodities to Asian countries including Japan, where it currently exports sesame seeds and coffee.
Ronald Tamale, director in the Standard Charter Africa private equity team, told Private Equity International that ETG is its second investment in the agricultural sector.
Tamale said in a statement: “Given that over 60 percent of the world’s arable land is in Africa, the African agri-sector holds considerable growth potential. ETG, with its East African origins, is a long-standing client of the Bank.”
Tamale is also optimistic that the business will have good exit options amidst a challenging backdrop of the private equity exit market in Africa. He said despite challenges of small stock exchanges limiting the opportunity to list on the continent, the size of ETG and the inherent value of agricultural worldwide mean it could float on many different exchanges, most favourably Singapore’s SGX.
StanChart’s investment comes only a few months after it hired a new private equity head for Africa. In September 2011, Private Equity International reported that Peter Baird had joined the bank in an effort to grow its private equity operations on the continent.
Baird is based in Johannesburg and joined from Vantage Capital, a Johannesburg-based mezzanine fund, prior to which he was a partner at McKinsey & Company and a principal at Brait Capital Partners in Johannesburg.
Standard Chartered’s current African investments include stakes in gas exploration development firm Seven Energy Nigeria, South African grape and citrus producer Afrifresh and Lodestone Brands, a pan-African “fast moving consumer goods” company.