Zungu Investments Company (Zico), the vehicle started by prominent black economic empowerment (BEE) activist, Sandile Zungu, is venturing ‘deeper’ into the food manufacturing sector in what could be seen as a sign of times.
Zico announced yesterday that is has acquired a 30% stake in Gauteng-based premium meat business Seemmann’s. This comes after Zico invested into a Nigerian manufacturer and distributor of fruit drinks and non-alcoholic beverages, Vital Products.
The Seemmann’s investment is interesting. Seemann’s specialises in “quality meat products and import delicacies, particularly from Germany”.
The company produces a wide variety of quality processed meat products which are sold under the Seemann’s brand and under the own-label brands of various national retailers. The business further supplies premium fresh meat products to the retail and catering industry,” said the statement released by Zico last week.
The deal comes amid heightened corporate activity in the South African food and the broader agricultural produce sector. Foreign investors are circling the local agricultural sector which is recognised for its world class expertise and now the potential to launch from the south, Africa wide operations. Two weeks ago North American investors, acting via a vehicle called AgriGroupe, announced intentions to buy JSE listed AFGRI. They flagged the sub Saharan region as a key attraction. The attraction is Africa’s potential to take off in industrial scale agricultural production. South Africa is in parts is seen as a gateway into the sub Saharan region.
Announcing its Seemmann’s deal Zico said it targets sectors with high growth potential where it can display leadership and have significant influence, including mining and resources, outsourced and operational services, media, automotive, infrastructure and manufacturing.
Charl Ferreira, Executive Director of Zico, said “This acquisition provides Seemann’s with the required working capital and a solid partner to assist with its expansion plans in a sector in which we as investors see great potential and increased activity– food manufacturing.”
“This partnership provides the management of Seeman’s, who are significant shareholders in the business, with a strong base from which to grow vertically and horizontally within the sector,” said Ferreira.
Seemann’s operates from two manufacturing facilities in Gauteng, including an on-site deli and factory outlet which sells all the processed and fresh meat products, as well as breads, cheeses and other condiments. The Company has further commenced with a franchising model under the Seemann’s brand through the conversion of Company owned “Deck & Deli” restaurants into franchised stores.
Martin Gericke, CEO of Seemann’s, said the deal further provides a powerful opportunity for the organisation to significantly improve its empowerment credentials as well as management capabilities. “We are excited that this deal has been concluded with a visionary BEE partner that shares our long term strategy to become a significant player in both the South African and export food industry.”
The tagging of BEE in this deal is interesting. BEE is somehow tagged as a bonus which perhaps reflects maturity of Zungu’s investment company Zico.
Zico has participated in a number of prominent and classic BEE deals, where black partners are largely positioned as charity cases. In this deal, speaks as a pure private investor. The BEE angle is positioned as a bonus.