Pioneer Foods Plans More Africa Purchases After Nigeria Deal
Pioneer Foods Ltd., a
South African food and beverage producer, managed the $7 million purchase of a
50.1 percent stake in Food Concepts, an operator of quick-service restaurants
and bakeries in Ghana and Nigeria, Africa’s largest economy. It also plans
acquisitions in at least five more African countries, thereby, enabling the
Paarl-based producer of baked goods, cereals and beverages to expand beyond
South Africa.
“We’re talking to
entrepreneurs for opportunities to expand our investments in the continent”
within the next five years, Thushen Govender, the company’s head of
international business, said in an interview in Lagos, Nigeria’s commercial
hub, on Tuesday. “Our focus is on larger economies with a higher population -
for example, Angola, Kenya, Ethiopia, Tanzania and Ghana.”
“Our approach to
investing in Africa is long term,” even if “over the short term there may be
concerns,” Govender said. “In the case of Nigeria, the exchange rate and growth
level could be of concern because of the dependence of the economy on oil,”
though “because of the younger population, we see a lot of opportunities.”
The currency which
has weakened by 18 % against the dollar over the past six months, could be
attributed to a 50 % fall in the price of oil, which makes up almost all of
Nigeria’s exports. As per IMF, its economic growth may be 4.75% this year as
compared to last year’s 6.3%.
Pioneer will ripen a policy
in coming months to develop the Nigerian business, Govender said. “In the early
period, there may not be material impact. In the future, we expect it to be
significant contributor to the group business.”
Govender stated that
the South African company is also considering to buy existing businesses in
Africa rather than rent using venturing new companies. Pioneer shares declined
0.5 percent to 173.14 rand as of 9:23 am in Johannesburg. The stock has gained
21 percent this year, valuing the company at 40 billion rand.
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