08 April 2019 – 20:07 Larry Claasen
Agri-business brings in institutional investors.
Unlisted agriculture business Afgri Group said its new investment vehicle, which allowed institutional investors to invest in its grain silo properties, has given it the capacity to expand its operations.
Afgri Group CEO Chris Venter said the company wanted to significantly grow the business but the pace of this growth would be limited if it had to depend only on its own financial resources.
The creation of the investment vehicle, Grain Silo Company, enabled it to accelerate its growth as it opened a way for Izitsalo Employee Investments, Stanlib Infrastructure Investments, Wiphold, and the Land and Agricultural Development Bank of SA to invest R3.6bn in the group.
Venter said the plan was to increase storage capacity to between 4.7-million tonnes to 6-million tonnes. “This will allow us to not only cater for grain storage, but to expand into the storage of other types of commodities.”
“Afgri Operations will manage the storage facilities on behalf of Afgri Grain Silo Company in terms of an evergreen management agreement. This arrangement provides the strategic benefit of Afgri’s excellent track record in managing storage operations, and deep experience of the sector,” Venter said.
Venter said he hoped the deal would have a similar impact such as the one it had closed with the Land and Agricultural Development Bank of SA in 2011, where it sold its debtors book. At the time, the book was valued at R1.7bn and had since grown to R15bn.
The disposal of its debtors book had enabled the Afgri Group to expand its financial service offerings across all nine provinces, and to provide financing not only for grain production but various other commodities.
Venter said the sale of its debtors book and the creation of the Grain Silo Company was part of its broader strategy of offering a range of financial services in the agriculture sector. “Through the recent acquisition of the South African Bank of Athens — renamed GroCapital — we are today able to offer a wide range of additional banking products to farmers.”
This has seen it increase the number of loans it had made to farmers from the 1,290 it made in 2011, to 8,620.