IFC to invest in PE-backed poultry company in East Africa

 IFC to invest in PE-backed poultry company in East Africa

International Finance Corporation (IFC), the private-sector investment arm of the World Bank, has committed to back an Ethiopian poultry company to help it expand its operations.

IFC will lend around US$10 million to EthioChicken Group, a producer of day-old-chick and poultry feed in Ethiopia that focuses on selling these input products to farmers.

EthioChicken will use the funding to construct two new breeding farms with a capacity of 60,000 birds each and one new hatchery facility, besides for working capital to purchase parent stock birds. It will also use the money to partially refinance an existing long-term loan.

The total project cost is expected to be US$16.2 million. IFC is looking to provide a loan in local currency—the Ethiopian Birr—subject to approval from the National Bank of Ethiopia. If the approval cannot be obtained, it will give a US dollar loan. Both options will include support from blended finance and the remainder of the financing will be via an equity infusion.

EthioChicken Group consists of three operating companies in Ethiopia: AGP Poultry PLC, Mekelle Farms PLC and Andasa Poultry PLC; and two holding companies in Mauritius: Agflow Ventures and Agflow Poultry. The holding companies are majority owned by the founder David Ellis’ investment vehicle Flow Equity (60.4%), which also counts other private investors as shareholders. The remaining 39.6% stake is held by private equity firm Arabica Investment.

Arabica, a Dubai-based investor that seeks to back companies in Sub-Saharan Africa, had picked up the stake in 2012. Other debt investors in the firm include impact investment firms such as Acumen and the Bill & Melinda Gates Foundation.

IFC will lend to the three operating companies while the two holding companies will be guarantors.

Vivek Sinha

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