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Home›Agribusiness›PHATISA AND PARTNERS ACQUIRE SOUTHERN AFRICAN AGRICULTURAL SOLUTIONS PROVIDER FES

PHATISA AND PARTNERS ACQUIRE SOUTHERN AFRICAN AGRICULTURAL SOLUTIONS PROVIDER FES

By Brandon Moss
April 22, 2020
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22 April 2020

Phatisa Food Fund 2 (PFF 2) and a group of co-investors – Norfund, Mbuyu Capital and DEG – have acquired integrated agricultural solutions provider Farming and Engineering Services Limited (FES). The investment will support FES’s long term growth strategy, assisting the company to expand its successful business model to neighbouring countries.

FES, established in Malawi in 1967, caters for a broad customer base of commercial and emerging farmers. It is the single largest investor in Malawi’s agricultural equipment industry and the sole distributor of several well-known and trusted brands, including Massey Ferguson, Komatsu, AJ Power and Toyota Forklift. The company provides a wide range of high-tech agricultural solutions including precision and low-till farming; drone technology for crop analysis and crop protection; irrigation systems including water management solutions; and contracting services. AgriLab, an FES initiative, is Malawi’s first independent soil- and leaf-testing facility which allows farmers to test, manage and control their soil, leaf and water quality. This initiative contributes to improved yields and crop quality, increased revenue and reduced input costs.

FES’s impact objectives of mechanising African agriculture, ensuring food security and enhancing farmer profitability are aligned with the UN Sustainable Development Goals. Located in a region where resources are limited and input costs high, FES has expanded its offering to include a comprehensive range of climate-resilient precision agricultural solutions.

As part of the new owners’ expansion strategy, FES is acquiring (subject to normal conditions precedent) the business assets of agricultural equipment supplier BHBW Zambia. On the back of this, AGCO has agreed to award FES the Massey Ferguson and Challenger franchises for Zambia. FES intends to replicate its successful model of equipment dealership with precision contract farming and other agricultural solutions in Zambia.

The consortium bought the FES stake held by Phatisa’s inaugural food fund (African Agriculture Fund) while the company’s management maintained their shareholding.

Lize Lübbe, deal leader for Phatisa, commented: ‘We are excited about FES’s growth prospects into new markets. PFF 2 is backing a proven management team who are pushing the boundaries of technology and professionalism in the region’s agricultural sector. Apart from the regional expansion, new product offerings such as the nascent drone operation and the agricultural lab will lay the foundations for the future and keep FES at the forefront of its industry.’

Olav Akrawi, Senior Associate – Scalable Enterprises at Norfund, said: ‘FES is a world-class operation in a developing country. This investment is fully in line with Norfund’s mandate to support economic growth and development impact in these countries. We look forward to being an active, strategic minority investor in FES and supporting its regional growth ambitions.’

Michiel Timmerman, Managing Partner of Mbuyu Capital Partners, noted: ‘FES is a leader and innovator in bringing precision-farming and agritech to Africa. New product development and expansion in the region can be expected to benefit the company’s growth as well as its customers, including smallholder farmers, by increasing yields, optimising use of inputs and improving climate resilience.’

Christof Gross, Vice President – Africa Equity at DEG, added: ‘DEG supports FES’s vision to mechanise agriculture in developing African economies through increased access to yield and productivity enhancing equipment. From improving local farming practices to contributing to food security, our investment will have positive developmental effects.”

Mike Aldworth, Group Managing Director of FES, stated: ‘This transaction is a vote of confidence in the entire FES team. Over the years we have evolved from purely an equipment supplier to an integrated agricultural solutions provider that continuously looks at ways to expand our offering to assist our clients. With the support of our new partners, FES looks forward to the new growth chapter that awaits us.’

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