Yield Uganda Investment Fund, an agribusiness impact vehicle managed by Pearl Capital Partners, has committed $2.5 million to Pura Organic Agro Tech Ltd, a Ugandan company set up by an Indian-origin entrepreneur.
The investment includes both equity and debt capital components and marks the impact fund’s eighth transaction in the Ugandan agriculture sector.
Pura was set up in 2011 by Ramesh Babu, who had worked at Indian state-run power producer NTPC Ltd before moving to Africa two decades ago.
The company, located in the Nakasongola district of central Uganda, has been developing its nucleus farm, expanding the acreage cover of its cassava portfolio and producing cassava cuttings for smallholder farmers over the past few years. It is now evolving into cassava processing and value addition.
Yield Fund’s investment will help Pura buy and instal a vertically integrated cassava processing plant to produce high-quality cassava flour, tapioca starch and Sago (an edible starch delicacy that is made from cassava).
Babu said that with the production of cassava starch, Uganda can use locally manufactured starch in the packaging industries and save a lot on foreign exchange. “Further, Pura intends to export Sago to India and other countries where it is a delicacy food for many, consequently generating foreign income in return.”
Pura has also obtained a grant of $225,250 managed by the International Fund for Agricultural Development (IFAD) to enhance both the technical and governance facets of the business as well as develop a cassava out-grower scheme, which will guarantee the company’s cassava supply to the new processing plant.
Yield Fund is an agribusiness impact fund set up in January 2017 by the European Union, through IFAD and the National Social Security Fund. The fund received follow-on investments from the Open Society Foundation and FCA Investments in June 2019.
Wanjohi Ndagu, partner at Pearl Capital, said: “Our eighth Yield Fund investment not only presents an opportunity to provide sustainable solutions to key challenges faced by cassava farmers but also to attain Uganda’s lofty development goal of decreasing her dependence on agro-processed imports.”
Pura founder Babu moved to Africa a couple of decades ago to start a business along with local partners under the banner of Kiboko Group. The group started as a distributor of roofing sheets and toilet papers. It went on to add pharmaceuticals, FMCG, lighting products and more. It also has products that it sells under its own brand.
Twelve years ago, Kiboko started manufacturing certain products like intravenous fluids itself. In 2018, Carlyle picked up a majority stake in this business, AK Life Sciences.
– Capital Quest