The Abraaj Group invests in leading South African FMCG manufacturer, Liberty Star Consumer Holdings (Pty) Limited

08 Oct 2014

 

    • Abraaj continues its investment focus on market-leading African businesses targeting the rising middle and consumer classes

 

    • Acquisition demonstrates Abraaj’s continued commitment to execute proprietary African private equity investments



Johannesburg, South Africa, 8 October 2014: The Abraaj Group (‘Abraaj’ or ‘The Group’), a leading investor operating in global growth markets, today announced the acquisition, through its Funds, of a majority stake in Liberty Star Consumer Holdings (‘Libstar’ or ‘the Company’), one of the largest unlisted food and personal care manufacturers in South Africa. Abraaj completed the buyout of Libstar from its existing shareholders including Metier, Old Mutual Private Equity, Development Partners International and Lereko.

Established by Metier, Andries van Rensburg and Robin Smith in 2005, Libstar and its subsidiary companies manufacture a broad range of quality private label and own-branded products for the rapidly growing South African food, fast-casual dining, household and personal care markets. The Company’s range of products cover cheeses, sauces and condiments, packaging supplies, baking aids, herbs and spices, beef and chicken products, pasta, imported European deli products, confectionery snacks, and detergents and washing powders. Some of Libstar’s most prominent customers include McDonald’s South Africa, Woolworths, Shoprite, Pick n Pay, Spar and Tiger Brands.

Libstar operates nationally through 23 business units located in five of South Africa’s nine provinces and employs about 4,200 people with nationwide manufacturing, supply and distribution capabilities. Since its inception, Libstar’s industry-experienced management team has pursued a successful buy and build strategy, growing and diversifying its product offering. Libstar’s key business units include Cape Herb and Spice which is the primary provider of private label spices, Finlar, the sole and exclusive provider of beef and chicken products to players in the QSR sector, Lancewood Holdings, a prominent manufacturer of soft cheese in South Africa, Rialto, the exclusive supplier to leading retailers of imported food products from Asia and Europe, and Dickon Hall, the leading producer of condiments in South Africa.

The acquisition of Libstar represents an attractive investment opportunity for Abraaj given the large, non-cyclical markets and industries that Libstar targets. The US$ 56 billion South African grocery retail market and US$ 14 billion food services market are estimated to grow at 7% and 9.5% per annum respectively to 2018. Furthermore, the Company’s private label manufacturing, supply and distribution business has strong organic growth potential given Africa’s low market penetration rates for private label products as well as the rising popularity of fast-casual dining across the continent.

This transaction is a further demonstration of Abraaj’s focus on investment opportunities arising from the growth of large consumer and middle classes across its target markets of Africa, the Middle East, Turkey, Asia and Latin America. Abraaj will continue with financial and operational support to Libstar’s pan-African growth strategy which includes the introduction of new product lines and the upgrade and expansion of existing Libstar plants. Abraaj will continue to support Libstar’s successful buy and build strategy across South Africa as well as in Sub-Saharan Africa.

Davinder Sikand, Partner and Head of Sub-Saharan Africa for The Abraaj Group, commented: “The acquisition of Libstar represents another exciting African investment partnership for us. Metier, along with the Libstar management team and employees, has built an impressive market position as one of the leading manufacturers and providers of high-quality products and services to the African foods service and retail industry. We look forward to adding our deep experience in helping accelerate the growth of our numerous FMCG and food businesses, not only across Africa but from our other growth markets as well.”

Sandeep Khanna, Managing Director at The Abraaj Group, added: “In partnership with Libstar’s management team who have reinvested substantially, we believe we can help transform the company to become a truly pan-African leader in the food and retail services market. The market opportunity for food and other consumer staples in Africa promises huge potential for growth, driven by rapidly changing trends in consumer tastes and demand, as well as ongoing developments within the FMCG industry itself, such as the increased use of private labels.”

Thierry Dalais, Executive Chairman of Metier, said: “Libstar’s strategy originated in 2005 when we, along with Andries van Rensburg and Robin Smith, articulated an ambition to create and grow Libstar. We have been integrally involved in Libstar’s development and today are proud of what has been achieved. As private equity investors there comes a time when we need to pass the baton on and trust that Abraaj will run hard and be worthy owners of the business. We wish them all the very best.”

Andries van Rensburg, Chief Executive Officer and Robin Smith, Commercial Director of Libstar, added: “We are very proud of the success Libstar has achieved over the last decade and would like to record our appreciation of the support we have received from our partners, Metier, Development Partners International, Lereko and Old Mutual Private Equity. We are confident of jointly executing on the next phase of our pan-African strategy with Abraaj and look forward to this exciting stage in the company’s growth trajectory”.

For more, please see here.

Source: The Abraaj Group.

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