Billionaire entrepreneur Jannie Mouton can’t seem to miss. After the success of his own PSG Group and investments in Capitec and Curro, the Stellenbosch-based genius seems to have hit the motherlode once again with Pioneer Foods. After a patchy period when it admitted to bread price collusion and eneded upo settling a big fine with the competition authorities, the business has been on a rip. Mostly since former Tiger Brands executive Phil Roux eased into the hot seat at Pioneer. Given the disastrous venture which Roux’s former employers made into Nigeria, investors will be watching to see whether Pioneer’s CEO has applied any learnings he would have observed from that misadventure. With Mouton as a sounding board, I’d bet this is going to be one investment that comes up trumps. – AH(Bloomberg) — Pioneer Foods Ltd., a South African food and beverage producer, plans acquisitions in at least five more African countries after taking a majority holding in Nigerian competitor Food Concepts Plc.
“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.”
Pioneer Foods completed 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. The acquisition will enable the Paarl-based producer of baked goods, cereals and beverages to expand beyond South Africa, Govender said. Pioneer Foods sees Nigerian economic growth and its large, young population as a boost for the consumer market, he said.
Nigeria has a population of more than 177 million people, of which 44 percent is under the age of 15, according to data compiled by Bloomberg. That compares with 28 percent in South Africa.
“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.”
Nigeria Contribution
The currency has weakened about 18 percent against the dollar over the past six months, the worst performer among 24 African currencies tracked by Bloomberg. That’s partly due to a 50 percent fall last year in the price of oil, which makes up almost all of Nigeria’s exports. The country’s economic growth may slow to 4.75 percent this year from 6.3 percent in 2014, the International Monetary Fund said March 5.
Pioneer will develop a strategy 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.”
The South African company will focus on buying into existing businesses in Africa as starting completely new companies takes longer to deliver returns on investment, Govender said.
The shares have risen 22 percent this year in Johannesburg to 174 rand, valuing the company at 40 billion rand.
