Agri-Vie Fund exit from Fairfield sees investors reap over three times in returns

Investors in the $100-million Agri-Vie Fund I have scored big with the fund today announcing its first exit, from one of South Africa’s most respected dairy companies Fairfield Dairy.

A private investment trust linked to the Lang family which founded the diary has agreed to buy Agri-Vie’s stake in the KwaZulu-Natal-based dairy producer.

While the fund would not disclosed the sale figure, Agri-Vie co-founder and managing partner Herman Marais said the return on the investment exceeded the fund’s objectives — which is usually to return to investors between 2.5 to 3 times of the invested capital. The fund’s initial investment of about $4-million in Fairfield diaries was made in 2009.

Marais said Fund 1 is fully invested, with 12 investments. A second $175-million would likely close two deals this year, he said. The fund is managed by pan-African private equity investment firm Exeo Capital.

He said the fund typically looks to invest in small to mid-sized agribusinesses which have an annual turnover of between R400-million and R1-billion. The fund usually takes an equity stake of between 25% and 49% in investee companies, but at times also seeks out a majority stake.

Kevin Lang, founder and major shareholder of Fairfield Dairy, said the diary had substantially strengthened its operations and reputation as a dynamic and innovative dairy company.

‘Agri-Vie brought both risk and capital having actively worked with management to improve both revenues and profitability’

“Partnering with Agri-Vie was definitely a contributing factor to our expansion and success over this period as they brought additional skills and expertise to the business.

“Through vertical integration, we now produce 50% of our own milk supply, which has given us far better security of supply and tighter control throughout the process. Furthermore, we have managed to find our niche, namely the higher-end product market.

“As we spend a great amount of time and effort on innovation and always try to stay on the cutting edge of what’s happening in the global dairy industry, having an experienced partner was helpful in executing the decisions that lead to this expansion,” said Lang.

Lang said his long-standing partnership with Agri-Vie has been one of overwhelming success. “Agri-Vie brought both risk and capital, as well as many other valuable contributions to the business, having actively worked with management to improve both revenues and profitability over the investment period.”

EXEO Capital partner Izak Strauss said Agri-Vie had seen considerable market interest in the Fairfield investment asset prior to the conclusion of the transaction, which is now only subject to approval from the Competition Tribunal.