EOS Capital wants to raise N$500 million from the market by March next year for investment in agriculture production and value addition.
The money will be raised through the Euphrates Agri Fund that was launched last Monday.
According to Eos, the fund will boost local investment and enable inward investment from development finance institutions, regional and international investors.
Currently, the agricultural sector production is rain-dependent, with so much talk of de-risking the sector from rainfall production, however, investment wise the talk is not substantiated.
The fund will invest in agriculture projects with focus on economic growth, social upliftment, and job creation.
Eos indicated that the funds to be solicited will be channelled (invested) into unlisted vehicles – a special purpose vehicle is a company or trust organised and operated for the purposes of hold-ing unlisted investments on behalf of investors, and is registered in terms of Regulation 29 of Namfisa.
To achieve its agricultural mandate the special vehicle will then target sectors like agro-processing, distribution and logistics, commercial agriculture, retail, biomass, and manufacturing of chemicals, fertilisers, seeds, animal products and equipment.
The fund will buy into unlisted companies in the agricultural sector as a way of providing capital, at the same time offering debt-like buy-in funding.
This will facilitate the industrialisation of the agriculture sector, deliver social impact and at the same time provide medium-term returns to investors.
At this sector only Agribank is investing in the agricultural sector at a large scale through debt financing, however, their financing is also limited by their balance sheet. In the past five years Agribank never approached the capital market/Namibian Stock Exchange for more money. It has just been reliant on their balance sheet and other alternatives.
As part of the stimulus package treasury has pledged a guarantee to the bank to go seek around N$200 million to fund more agricultural activities in the country.
Managing partner at Eos Capital, Nicole Maske, said the fund is for those investors seeking diversification and hedging against inflation.
At the same time, it will enable the capital mobiliser to increase its contribution to the economy by enabling and enhancing agri-production.
Maske added that the Euphrates Fund will be a catalyst to industrialisation of the agricultural sector, in the long term. Various national documents have been flirting with structural economic transformation through value addition strategies in all sectors, particularly in agriculture and agro-processing, fish processing and mineral beneficiation.
Frederico van Wyk, senior associate at Eos Capital and an agriculture specialist, said the sector’s significance is highlighted by its potential for growth.
The Namibia Statistics Agency quarterly statistics report shows that agriculture, led by crop farming was part of only three sectors that recorded a growth in the second quarter of 2020.
“Agriculture and forestry’, information and communication and health sectors recorded growth rates of 47,2%, 11,0% and 6,0%, respectively. The positive performance in ‘Agriculture and forestry’ is due to a bumper harvest in cereal production resulting from good rainfalls experienced during the period under review,” the quarterly report said..
Van Wyk said the growth in agriculture can be enhanced through investing in technology and ingenious application of capital.
“This vision can be achieved in Namibia by creating a system for development between private and public sectors,” he explained.
The Euphrates Agri Fund is the third funding initiative from Eos Capital, first being the Allegrow Fund which is a growth and operational development fund to provide equity, debt and mezzanine finance to fast-growing local businesses.
The second initiative is the Namibia Infrastructure Development and Investment Fund (NIDIF), an infrastructure platform to develop, acquire, invest in, build, operate and hold infrastructure assets.
Various funds and capital mobilising companies are emerging in the financial market providing funding solution to the country funding gap which is dominated by debt financing and a shallow capital market – two more capital mobilising companies are registered with the NSX, mobilising funds locally and abroad to fund specific sectors.
Joining Anirep (elevated to the main board last week) as capital pool company are Mcube & Omajowa which got listed recently on the NSX.
Email: erastus@namibian.com.na
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