FINANCE: Afgri Lets Cape Book Go
Recent Western Cape Business News
AFGRI, the JSE listed agricultural business, appears to have given up its ambitions to be a big player in the Cape after announcing its intention to sell off its Western Cape debtors book for R372 million.
CBN readers will remember that Afgri caused quite some consternation in Western Cape agricultural circles about six years ago when it launched a takeover bid for Boland Agri.
Afgri were fobbed off, and Boland Agri was instead tucked up WPK to form Kaap Agri (see separate story in this issue).
While Afgri has enjoyed considerable success as a diversified agri-business, the company never really seemed to have gained enough traction in the Western Cape.
Afgri’s Western Cape debtors book – which comprises various credit products to farmers in the Western Cape – will be sold to Capital Harvest, a Stellenbosch-based financial and business solutions company that is focused on the agricultural sector.
Capital Harvest is headed by Johan du Toit, a former farm manager that turned his hand to banking (via BoE). Du Toit was also formerly acting CEO of Groot Winterhoek Cold Stores as well as Western Cape director of the JSE listed company, Spectrum Shipping.
It seems Capital Harvest was formed by Du Toit and fellow BoE banker Faan Roos in conjunction with Afgri Financial Services in late 2006.
Essentially Capital Harvest provides financial solutions to farmers through a number of financial products - including long, medium and short-term loans, bridging finance, production finance and product-specific loans. Shades of the old Boland Bank…one might say.
The Afgri sale – which, in effect, looks like a management buyout of sorts – comprises debtors in or around the Western Cape region, assets and liabilities as well as the transfer of staff.
Afgri CEO Chris Venter says it is the company’s stated intention to remain focused on the grain producing regions of South Africa. “Since this Western Cape business unit provides credit to farmers in non-grain producing areas, it makes more sense to Afgri to concentrate on business opportunities which better fit our grain value chain.”
He says the sale takes Afgri another step closer to its strategic focus and re-alignment of the business towards being an integrated grain value chain operator.
According to Afgri’s latest financial statements the Western Cape debtors’ book contributed some R17 million to group revenue and R2 million to pre-tax profits in financial year 2009.
While the transaction is not great shakes in Afgri’s life (the business has an annual turnover of R4 billion), CBN thinks it may be worth monitoring the progress of Capital Harvest in the years ahead.
Certainly the business is making its presence felt in Western Cape agricultural circles. Would it even be amiss to consider the possibility of a savvy agri-business investor like Zeder taking an interest?
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