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INVESTMENT APPROACH
INVESTMENT FOCUS

We are a mid-market investor in businesses involved in inputs to, processing, marketing and distribution of products derived from agriculture, aquaculture and forestry:

Agri-Vie’s definition of “agriculture” includes but is not limited to:

  1. Horticulture, Fruit & Vegetables
  2. Livestock & Dairy
  3. Cereals, Beans & Nuts as well as other commodities
  4. Fibres such as cotton, sisal
  5. Fisheries & Aquaculture
  6. Niche products in the above categories
  7. Alternative energy sources.

As an investor focused on agribusiness, Agri-Vie only in exceptional cases invests directly in stand-alone primary production/ farming.

In the context of integrated rural development, Agri-Vie’s  mandate includes investments in ecotourism and ventures related to cultural  crafts.

INVESTMENT FOCUS – Transaction parameters

Agri-Vie invests equity and quasi-equity in transactions broadly meeting the following parameters:

  • Nature of transactions: Business expansion and consolidation (‘buy-and-build’), corporate unbundling, privatisation,  MBO’s in combination with one of the above transaction types;
  • Preferred equity position: 25% - 75%;
  • Prudential limit: Agri-Vie normally does not provide more than 75% of the business’s expansion capital required;
  • Debt funding can be arranged by Agri-Vie.

Agri-Vie is open to syndication and co-investment.

INVESTMENT FOCUS – Investment Criteria

Business-related criteria

We pay particular attention to the extent to which potential investee companies meet the following investment criteria:

  • The track record of the business: profitability, cash flow, balance sheet;
  • Sufficiency of forward cash flows;
  • Attractive growth prospects;
  • Competent management who shares in the investment risk;
  • A sustainable competitive advantage;
  • Export performance/ potential;
  • Extent of vertical integration;
  • Quality of corporate governance;
  • Attractive entry values and good exit potential.

Development related criteria

Agri-Vie’s mandate requires that its transactions also meet the following criteria:

  • A demonstrably positive impact in general on rural socio-economic development: wealth creation, rural employment, entrepreneurship;
  • Participation by local entrepreneurs and shareholders in ownership & management;
  • Utilisation of local resources;
  • Environmentally responsible.

With regards to South African investments, the prevailing codes on black economic empowerment (BEE) apply to each transaction.

INVESTMENT FOCUS – Investment Process

Initial contact leads to a two page information requirement;

Should an in principle decision be taken to engage, the Agri-Vie management team will undertake a substantive evaluation process, including a review of:

  1. industry and sector status, prospects;
  2. business robustness and growth prospects;
  3. quality of the management team;
  4. capital structure and pricing;
  5. sustainability of development impacts of the investment;
  6. terms for a shareholders agreement.

Agri-Vie’s investment committee meets on an ‘as needed’ basis to decide on investment proposals from the investment management team.

A mutually acceptable term sheet is followed by in-depth business, financial and legal due diligence.

The above steps typically involve a period of 12-16 weeks.

INVESTMENT PERIOD

Agri-Vie invests with a view to realise its investment in 7-10 years by way of one of the following mechanisms:

  • Strategic (trade) or financial sales;
  • Sales back to management or other shareholders;
  • Listing on a main or alternative stock exchange;
  • Appropriate dividend policies.

AGRI-VIE’S PARTNERSHIP COMMITMENT

As a long term equity partner, Agri-Vie commits to the following in addition to the long term capital it provides:

  • Board participation by experienced directors;
  • Business development support in the form of:
    • strategic marketing inputs;
    • financial, structuring and general business planning advice;
    • access to extensive business networks;
    • general business guidance;
    • active, hands-on management support when needed.
  • Sticking with its investee companies through the inevitable ups and downs of business cycles.

BLACK ECONOMIC EMPOWERMENT

In the broader Sub-Saharan context, Agri-Vie supports BEE through its focus on the involvement of local entrepreneurs and shareholders in the ownership and management of its investee companies.

In the context of South Africa, Agri-Vie is committed to the BEE principles and practices as embodied in the prevailing Codes on Broad Based Black Economic Empowerment. Moreover, each South African investment of Agri-Vie represents a ‘targeted investment’ in terms of the Financial Sector Charter. This is the result of Agri-Vie’s focus on agribusiness and its commitment to include the support of emerging farmers in its transaction structures. Agri-Vie’s governance and management structures furthermore reflect active participation by previously disadvantaged individuals.

Against the above background, Agri-Vie’s South African transactions reflect:

  • Equity participation by historically disadvantaged persons;
  • Participation by historically disadvantaged persons in the management and control of investee companies;
  • Benefits to emerging farmers;
  • Measures to improve the possibility of representation of investee companies’ employee base in keeping with the demographic profile of South Africa;
  • Workable initiatives towards work force skills development and training;
  • Application of appropriate procurement practices;
  • Participation in social corporate investment.



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