The first investment made by CDC’s new equity investment team was made in the autumn of 2012 when CDC provided US$32.5m to the founders of Export Trading Group (ETG). ETG is an African agribusiness with operations in crop buying, warehousing, distribution and merchandising that employs over 7,000 people.
THE FIRST EQUITY INVESTMENT UNDER NEW STRATEGY
Making direct equity investment is a key pillar of CDC’s strategy from 2012. Such investments allow CDC to target its capital at businesses that provide significant employment opportunities and which have the potential for growth and the creation of even more jobs.
CDC’s US$32.5m of financing, made as half of a $65m finance facility, allows the founders of ETG to fund their further equity investment in the business. ETG was chosen because it combines strong development impact with a compelling investment case. Not only does ETG touch the lives of thousands of small holder farmers across sub-Saharan Africa, but the company is poised for strong growth, having begun to achieve scale after 30 years of hard work and investment by ETG’s founders.
It is a strong example of CDC supporting the building of businesses and making a lasting difference in some of Africa’s poorest countries.
REACHING SMALLHOLDER FARMERS
Founded in 1967, ETG owns and manages a vertically-integrated agriculture supply chain, transportation, distribution and merchandising. ETG’s 7,000 employees work across 30 African countries and operate 26 processing plants and 600 warehouses. Last year the company procured and distributed nearly 1.4 million metric tons of 25 different commodities.
ETG connects African smallholder farmers to consumers around the world by procuring, processing and distributing agricultural commodities including maize, pulses, wheat, rice, cashew nuts, soya, fertiliser, sugar, coffee and tea. 80% of its Africa-originated stock was procured from smallholder farmers who would otherwise have no opportunity to integrate into the global economy. The ETG model consolidates hundreds of thousands of farmers into a supply chain and creates the scale and efficiency necessary to be globally competitive.
In addition to purchasing and processing crops such as soya, corn, maize, coffee and rice, ETG also acts as a supplier of fertiliser products to small farmers across Africa, utilising its large-scale buying power to make the products available at highly competitive prices.
It is appropriate that CDC’s new Equity Investments team has made its first investment in an African agribusiness company. Not only does agribusiness have the potential to generate employment, but food scarcity is now frequently an issue of concern among the international community. CDC has a long history of backing the sector across Africa and agribusiness remains important.
INVESTMENT DATA
Investee Company Export Trading Group
CDC Commitment US$32.5m
Date of Commitment 2012
Location Pan-Africa
