AGRICULTURE/INVESTMENT NEWS

In a landmark transaction announced last Friday, Zeder Investments Limited, a South African listed agricultural investment company  is committing $46.7-million to acquire and expand an agricultural business in Nigeria that will be known as Chayton Africa. 

Farmers seen working on a rice farm in Zumba, Niger State of Nigeria.

Chayton Africa, which is focused on primary production, made its first investment in Zambia in 2010. To date, it has acquired six farms totalling just over 4,000 hectares with 1,250 hectares being farmed, and 430 hectares under irrigation, has said it is thinking on moving on to Cocoa  in  west African regions, e.g. Nigeria, Ghana  and Coted’voire  .

According to findings from the companies website, Chayton produces 10 percent of Zambia’s soya and 5 percent of the country’s wheat. Over the next 12 months, production will increase to at least 35percent and 15percent respectively. The firm has ambitious expansion plans for its Zambian operations, and intends to embark on a carefully constructed acquisition and irrigation development plan.

The deal, which is the first for Zeder in the rest of Africa, secures long-term funding in a creative structure that seeks to transform Chayton Atlas Agricultural Company (the “Fund”) – currently a private equity vehicle, into an agricultural operating company led by the existing Chayton Africa management team.

Chayton Africa is affiliated to Chayton Capital, a UK-based private equity firm founded by former Goldman Sachs executives, who started an agriculture fund called Chayton Atlas Agricultural.

“Because agriculture is a long-term investment that requires a certain degree of patience, the Fund faced challenges in operating within a private equity investor’s typical five-year investment cycle, and meet return expectations within that timeframe. Raising financing in the past two years has been difficult,” says Neil Crowder, managing director of Chayton Africa.

The investment by Zeder is viewed as a positive sign: an African investor reinforcing its faith in Africa as a viable investment destination and dispelling myths historically associated with the continent.

Chayton’s capable management and the Investment Promotion and Protection Agreement (“IPPA”) negotiated with Zambia’s government in 2009 are among the factors that attracted Zeder Investments to the firm. The IPPA provides various investment and tax incentives to Chayton’s Zambian holding company during its formative years.

The firm acquired $50-million insurance coverage from the Multilateral Investment Guarantee Agency – a first for any agricultural project in Africa – for its projects in Zambia.

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Source: NigeriaTrends