Provincial Agri Fund

We support the future

PAF (or the “Fund”) is seeking to raise USD $100 million USD (a first close of USD $50m) for an impact fund specializing in food security and empowerment in the agribusiness sector of southern Africa. PAF, with an initial USD $30m anchor investment from Deutsche Bank, offers a diversified portfolio of agricultural, beverage, food, grain and other agri-business related assets and infrastructure projects, with attractive returns in an investment vehicle to be managed by an experienced team. The unique value proposition of PAF is to reach attractive returns and quantifiable impact both with well-established as well as development companies by applying empowerment best practices increasing their financial and intrinsic social value by integrating in the empowerment supply chain.

Agriculture has undergone major changes during the past decade, particularly in South Africa, with the conversion from co-operatives to public companies. Where the co-operative’s objective was only to deliver good service and products at the lowest possible price to its producers, new agricultural companies' purpose, given the effects of globalization and the fact that financial institutions are the main providers of capital, has become more focused on attractive returns to shareholders. Sustainable agribusinesses of the future also need to provide social returns demonstrating empowerment policies providing equitable solutions in local markets, and thereby avoiding potential penalties and social disruption. Because of these trends, as well as recent governmental changes in South Africa, the agribusiness sector is an investment opportunity.

APAF will make investments with a long-term view to maximizing returns for shareholders in excess of benchmark indices. The investment approach will be value oriented and initially focus on listed agri-related companies that can expand and benefit from empowerment inclusion, as well as supply chain improving best practices. PAF will make direct investments in equity instruments, with no single investment to exceed 25% concentration in the total portfolio. Alternative investment instruments may be considered where the return warrants, and additional long-term attractively priced leverage will be considered from DFI’s and ECA’s as side-by-side funds to support expansion or development projects. Subject to the PAF Manco investment committee and PAF board approval, substantial stakes may be taken in companies in exceptional circumstances.

The Fund aims to provide investors with a developmental vehicle in agribusiness infrastructure, social, environmental and economic development in southern Africa, and incorporates a proven investment model to address socially responsible investments in sustainable rural development and agricultural initiatives that lead to:

Land development and conservation
Environmental reform
Employment
Housing
Education
Food security
Skills transfer

Teaming with Stellenbosch University, our unmatched sector knowledge and network of the managers allows for identification and sourcing of “below radar” transactions from a strong pipeline.

PAF will be managed by PAF Manco, a team of well qualified financial and agribusiness executives affiliated with Stellenbosch University, one of the preeminent agricultural institutions of higher learning in the region, to make investments in accordance with a well-defined criterion of empowerment and enhanced product improvements to capitalize on agribusiness trends and operation in the region. The Fund investment will be further augmented by additional long-term leverage for project-level support from Export Credit Agencies (ECA’s) and Development Finance Institutions (DFI’s) to improve the returns on the equity.