Target entity: Vert Ltd
Sector: Fresh vegetables for export, fruit pulp for local market
Investment: Construction of new factory on newly acquired land and acquisition of pulping machinery
Total estimated capital expenditure: 1,800,000 EUR
Investment type: Straight equity combined with a subordinated loan
Kampani’s equity investment: 371,458 EUR (in Kenyan Shilling)
Kampani’s subordinated loan amount: 128,542 EUR
Co-investor: Grameen Credit Agricole, contributing 500,000 EUR, fully aligned with Kampani
Investor loan: 800,000 EUR by Fefisol and Alterfin
In portfolio since: November 2016
Deal sourced by: Alterfin
Founded in 2000, Vert is specialized in the sourcing, grading, packing and export of fresh vegetables: French beans, snow peas, baby corn, baby carrots, etc. In 2019, it decided to diversify and expand its business to produce mango and passion fruit pulp for the domestic and regional market.
Vert aggregates some 2,000 smallholder farmers by organizing them in community-based organizations and supporting them along the production process. Vert’s founders want to improve smallholder farmers’ living conditions by oﬀering them reliable access to new market channels, technical support and pre-financing services. Herein also lies the social impact which motivated Kampani to invest. The founders’ commitment in this regard has been codified in a Social Business Charter.
Up until the arrival of COVID-19, Vert shipped several tons of produce daily to Amsterdam on KLM flights, with some produce for sale in Belgium, specifically in Delhaize. It is Vert’s hope to recommence these shipments when air travel recommences. Fortunately, their decision to diversify into fruit pulp for domestic sales has enabled them to offset these losses in early 2020.
One of the farmers supported by and producing on behalf of Vert.
The pulp processing market has seen tremendous growth over the last eight years in East Africa. But Kenya currently imports a large amount of soft drinks, Vert’s goal is to help substitute imported products by producing mango and passion fruit pulp that will be locally sourced and processed. This new activity has enabled Vert to work with more farmers (around 8,000 to date), including in rural areas where poverty alleviation remains a real challenge.
The pulp processing plant became operational in 2019 and they sold 732 that year. In the first quarter of 2020, Vert has sold 1,637 drums and signed a deal with Del Monte to be one of their suppliers.
In November 2016, Kampani completed the transaction with a Kenyan SME, “Vert”. The investment helped provide for the construction of new factory on newly acquired land and acquisition of pulping machinery.
Vert successfully raised the 1.8 million EUR in equity and debt in order to enter the pulp processing business and have since moved their vegetable business from the original rented facility to a new site. The funding has also been used to finance the related capital expenditure and working capital.
This investment is a co-investment between Grameen Credit Agricole and Kampani, each contributing 500,000 EUR. Both equity investors are equal partners and are fully aligned. Most of the remaining financing has been secured via a Fefsol/Alterfn investment loan.
The social impact
Translated to a European setting, Vert would be called a social business. The Kenyan entrepreneurs, who founded Vert, have demonstrated a strong commitment to raising the living standard of smallholder farmers, formalized via a Social Business Charter. Furthermore, Kampani holds a veto power over decisions aﬀecting the smallholder farmers.
Vert strongly believes that sourcing raw materials directly at the farm level can reduce the disruptive eﬀects of brokers and secure a consistent supply of quality raw materials while giving smallholder farmers access to stable and predictable prices year round and enabling them to professionalize their agriculture practices.
The company will contribute to poverty alleviation and livelihood improvement in Kenya through developing an inclusive value chain in the fresh vegetables and fruit pulp sub-sectors. The establishment of the pulp line has allowed them to reach an additional 8,000 farmers. There continues to be significant room for growth, increasing production and reach.
Vert supports smallholders farmers to become more professional growers and thus to reduce their vulnerability.