Leading West African dairy company, Fan Milk International has been acquired by private equity investor, Abraaj Group for $300 million. The acquisition represents the largest ever African fast moving consumer goods private equity transaction outside of South Africa. Through the transaction, Abraaj Group would own a 100% stake in the company, Fan Milk International (“FMI”)
Fan Milk was founded in the mid 1950’s by Danish entrepreneur, Erik Emborg who realized that there was a market for locally produced dairy products in Ghana. By combining his own skills in trading with Danish knowhow in dairy science, he created one of the first dairy businesses in Ghana. Availability of fresh milk was limited in West Africa so the manufacturing principle was based on reconstituting milk from milk powder originating from surplus milk in Denmark.
The company was called Ghana Milk Company Ltd., but by 1962, the Fan Logo was introduced and the company changed its name and became popularly known as Fan Milk. As African countries gained their independence, Fan Milk evolved into a multi country business expanding into many West African countries.
The company offers unique frozen dairy products, juice and juice drinks to a total population of more than 200 million people inhabiting seven West African countries. FMI is West Africa’s frozen dairy products market leader and operates through its subsidiaries in Ghana, Nigeria, Togo, Ivory Coast, Benin and Burkina Faso. The company has successfully built an integrated regional manufacturing and distributing network that reaches over 31,000 end sale points. Through its subsidiaries, the company sells over 1.8 million products daily across West Africa.
Speaking on the deal, Arif Naqvi, Founder and Group Chief Executive of the Abraaj Group, said:
“This is a landmark deal for both African Private Equity and the Abraaj Group. The considerable investment and growth plans we have for FMI mirror the scale and depth of investment opportunities that we believe are now abundant on the African continent. Africa is witnessing the rise of a burgeoning middle and consumer class, so the acquisition of FMI is an extremely exciting and compelling investment opportunity. FMI’s portfolio of leading consumer food brands perfectly complements our African investment strategy. The Abraaj Group has now invested US$2.2 billion into sixty-nine partner companies across Africa making us one of the most active, long term investors on the continent. Abraaj’s deeply embedded environmental, social and governance principles will also ensure we create long term, social benefits for FMI’s local communities alongside the strong financial returns we aim to generate.”
“Having started as a family business more than five decades ago, we are extremely proud to have built both a strong business and a platform on which to take the company further on the African continent.”
The deal is expected to close by November this year with Freshfields Bruckhaus Deringer acting as legal advisors to The Abraaj Group and Norton Rose Fulbright acting as legal advisors to Fan Milk International.
Fan Milk International’s success as a business provides a best in class case study of what a successful home grown fast moving consumer goods company should look like and the level of success that can be attained. Through the deal, the Abraaj Group expects to make a significant return on the transaction by banking on Africa’s fast growing consumer markets.
The Abraaj Group is a leading private equity investor operating in the developing and growth markets of Asia, Africa, Latin America and the Middle East.
The Abraaj Group currently manages US$ 7.5 billion across 25 sector and country-specific Funds encompassing private equity (majority and significant minority investments with ticket sizes of between US$ 10 million to US$ 100 million) and real estate (primarily yield-generating) investments.
Funds managed by the Group have holdings in over 150 partner companies that create sustainable value in sectors including manufacturing, education, retail, aviation, oil and gas, financial payments infrastructure, healthcare and agribusiness. Examples of Abraaj partner companies in Africa include Brookside Dairy, the largest dairy in East Africa, Vine Pharmaceuticals, the largest pharmacy retail chain in Uganda and Athi River Steel Plant Limited in Kenya, one of the largest hot and cold rolled steel producers in the region.
The Abraaj Group has eight offices across the African continent – Ghana, Nigeria, Kenya, South Africa, Morocco, Algeria, Tunisia and Egypt.
- Previous story TED Video – Ushahidi’s Juliana Rotich speaks about Brck, an internet access modem built for Africa
- Next story Africa Roundtable: CPAfrica on this week’s “Dialogue at the Woodrow Wilson Center”