The Capital Quest | AgDevCo, others back sponsor of African poultry firms EthioChicken, Uzima

On Sep 27, 2022

AgDevCo, a specialist investor in early-stage African agribusinesses structured as a permanent capital vehicle, that topped up its corpus with $90 million of new funding from three investors early this year, has joined other co-investors to back Flow Equity, a sponsor of separate poultry businesses in sub-Saharan Africa.

Flow Equity has raised a $14 million funding round with participation from AgDevCo, AHL Venture Partners, Acumen Resilient Agriculture Fund (ARAF) and the Bill & Melinda Gates Foundation. The company mainly operates in Ethiopia via its investment in EthioChicken, and Rwanda and Uganda via its subsidiary Uzima Chicken.

Replicating its business model, the company is set to enter new markets in Africa.

According to the World Bank, sub-Saharan Africa has the highest rate (33%) in the world of children under the age of five who face stunting due to food insecurity and protein shortage. Eggs and poultry meat are among the most complete and affordable sources of animal protein for rural households.

Flow Equity was co-founded by David Ellis and Joseph Shields.

The company’s primary product is high-yielding day-old chicks (DOC), sold in a package including feed and vaccines to its network of agents who grow the chicks for a month and then sell it to smallholder farmers.

Founded in 2010, EthioChicken has become the industry leader in Ethiopia selling over 25 million chickens per year. It has also received funding from international impact investors, including the IFC and FinnFund.

Uzima Chicken was floated in 2017 starting with Rwanda and later entered Uganda. Last year Uzima received mezzanine debt funding from AgDevCo.

AgDevCo is owned by a not-for-profit company limited by guarantee. Its investments typically range between $2 million and $10 million. It invests across the agricultural value chain, from inputs to logistics, and in all sub-Saharan African countries except those with upper middle-income status.

AgDevCo works in a variety of sectors and crops, including high-value export crops like avocados and macadamias; nutritious food industries for domestic markets and affordable meat protein like poultry and fisheries. Its portfolio companies are involved throughout the food sector from primary production, through processing to retail.

Since starting in 2010, AgDevCo has invested in 80 agribusiness across sub-Saharan Africa. Its current portfolio comprises over 40 companies (including a number of small, legacy investments) with a total value of around $150 million. These companies are spread across nine countries—Ghana, Cote D’Ivoire, Kenya, Tanzania, Uganda, Rwanda, Zambia, Malawi and Mozambique.

Early this year it received a top up from BII (formerly CDC Group) that committed $50 million in equity capital. Norway’s Norfund put in $20 million as equity while US International Development Finance Corp pitched in with $20 million as senior debt.