Dubai’s Abraaj Group, an emerging-market private-equity specialist, has bought a majority stake in Liberty Star Consumer Holdings (Libstar), one of the largest unlisted manufacturer and distributor of private label and own-branded FMCG products in South Africa.
The deal comes as the $56bn South African grocery retail market and $14bn food services market are each estimated to grow at 7% and 9.5% a year, respectively, through to 2018.
Abraaj bought its controlling stake in Libstar from existing shareholders including names such as Metier, Old Mutual Private Equity, Development Partners International and Lereko.
Davinder Sikand, partner and Sub-Saharan head at Abraaj, commended the efforts of Metier and Libstar’s management team for building an “impressive” market position, while Abraaj MD Sandeep Khanna highlighted growth in both consumer and private-label sectors.
A long-term investor in West African markets in particular, Abraaj announced a step up of its investments in the continent’s emerging markets in June, and plans to spend $500m-$750m in capital on Sub-Saharan markets and deploy $200m-$300m within the next 12 months.
Libstar’s FMCG credentials could meanwhile tie into Abraaj’s existing interests in the food sector on the continent, led by its investments into Fan Milk Int., acquired for $360m in 2013 with Danone, and Brookside Dairy – prominent dairies in the West and East African markets.
Established in 2005 by Metier, Andries van Rensburg and Robin Smith, today Libstar employs around 4,200 people across 23 business units in five of South Africa’s nine provinces.
Abraaj manages around $7.5bn in diversified assets that beyond Sub-Saharan Africa recently involved a joint bid with TPG Capital for a majority stake in Kudu, a Saudi fast-food chain, a bid for a 51% stake in Egypt’s Bisco Misr and 80% takeover of Turkish dairy producer Yorsan.