Spear Capital has made an undisclosed equity investment in Associated Foods Zimbabwe (AFZ), a Zimbabwean food processing company, to help it expand its operations. AFZ is a key player in the value addition of agricultural goods from local farmers, and it currently produces a variety of popular food items for the Zimbabwean market, including jams, peanut butter, snacks, cereals, and canned goods.
Following the investment, which was directed toward working capital and capital expenditure, the FMCG-focused investor became a shareholder of AFZ. Its primary focus will be to upgrade its systems and equipment, as well as expand its facilities, in order to reduce the manufacturer's environmental impact and increase capacity utilization.
In addition, AFZ will use the funds to purchase raw materials in order to meet rising product demand, with the goal of becoming Zimbabwe's market leader.
The current food segment revenue in the region is expected to grow at a 30% annual rate (CAGR 2022-2025), resulting in a projected market volume for the sector of US$41m by 2025, demonstrating the significant market demand for AFZ's products. AFZ is in line with Spear's ESG priorities by creating long-term jobs through farmer out-grower schemes, from which the company obtains raw materials.
"With this transaction with Spear Capital, AFZ is firmly placed on an accelerated growth path, allowing it to further build its presence in Zimbabwe and create a strong foundation for regional expansion." "In Spear, we have found a well-connected partner who shares our values and has extensive knowledge of the region, bringing additional expertise to the table," says AFZ CEO Simba Nyabadza.
Adding AFZ to Spear Capital's already successful portfolio in industries such as retail, food and beverage, manufacturing, and healthcare expands Spear Capital's opportunities to acquire meaningful stakes in industries and territories that provide a competitive advantage.
"AFZ is a company that partners with some of Zimbabwe's largest food suppliers and offers a safe entry into a high-growth market in Zimbabwe." "We are confident that by expanding our already successful portfolio of businesses in the food processing market, we will be able to supply goods to more consumers and take advantage of the lucrative market the region has to offer," says Nyaradzo Nyimo, Principal at Spear Capital.
The investor recently provided additional assistance to the Southern African plastics manufacturer Arkay Plastics. Despite the persistence of a COVID-19-related global economic downturn and the negative impact of geopolitics on the business environment, Spear increased its investment value by 48 percent in 2020.
The recent agreement will allow Arkay to become a leading player with cross-region market dominance in Africa's manufacturing sector, which is relevant to the growth potential of Southern African fast-moving consumer goods (FMCG) companies.
