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Abraaj acquires South African firm

November 2014

THE Abraaj Group has acquired through its funds a majority stake in Liberty Star Consumer Holdings (Libstar), one of the largest unlisted food and personal care manufacturers in South Africa.

The Dubai-based company completed its buyout of Libstar from its existing shareholders including Metier, Old Mutual Private Equity, Development Partners International and Lereko. The group currently manages $7.5 billion across more than 20 sector and country-specific funds, encompassing private equity and real estate investments.

Libstar was established by Metier, Andries van Rensburg and Robin Smith in 2005

The company and its subsidiary firms manufacture a broad range of quality private label and own-branded products for the rapidly growing South African food, fast-casual dining, household and personal care markets. The company’s range of products cover cheeses, sauces and condiments, packaging supplies, baking aids, herbs and spices, beef and chicken products, pasta, imported European deli products, confectionery snacks, and detergents and washing powders. Some of Libstar’s most prominent customers include McDonald’s South Africa, Woolworths, Shoprite, Pick n Pay, Spar and Tiger brands.

 

WIDE OPERATIONS

It operates nationally through 23 business units located in five of South Africa’s nine provinces and employs about 4,200 people with nationwide manufacturing, supply and distribution capabilities. Since its inception, Libstar’s industry-experienced management team has pursued a successful buy and build strategy, growing and diversifying its product offering.

 

KEY UNITS

Libstar’s key business units include Cape Herb and Spice, which is the primary provider of private label spices; Finlar, the sole and exclusive provider of beef and chicken products to players in the QSR sector; Lancewood Holdings, a prominent manufacturer of soft cheese in South Africa; Rialto, the exclusive supplier to leading retailers of imported food products from Asia and Europe, and Dickon Hall, the leading producer of condiments in South Africa.

 

ATTRACTIVE INVESTMENT

The acquisition of Libstar represents an attractive investment opportunity for Abraaj given the large, non-cyclical markets and industries that Libstar targets. The $56 billion South African grocery retail market and $14 billion food services market are estimated to grow at 7 per cent and 9.5 per cent per annum respectively to 2018. Furthermore, the company’s private label manufacturing, supply and distribution business has strong organic growth potential given Africa’s low market penetration rates for private label products as well as the rising popularity of fast-casual dining across the continent.

This transaction is a further demonstration of Abraaj’s focus on investment opportunities arising from the growth of large consumer and middle classes across its target markets of Africa, the Middle East, Turkey, Asia and Latin America.




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