DOB Equity’s keen eye for investment opportunities in Africa has identified another business. The Dutch impact investor, who has expanded its agricultural assets in recent months, announced in December a mid-sized equity and debt deal that acquires them a “substantial minority stake” in Kenya’s Coconut Holdings. DOB will assume a seat on Coconut Holdings’ board, to be filled by an as-yet-undetermined representative.
DOB has been growing their agricultural portfolio, focusing on health-conscious, zero-waste companies like previous investment Ten Senses Africa, a certified organic and fair-trade Kenya-based company that produces, processes, and trades macadamia nuts. Coconut Holdings, owners of the Kentaste brand of coconut-based products, also fit the bill.
Kentaste is a resolutely local business, “[sourcing] all [their] fruits locally from coastal Kenyan farmers,” while processing, packaging, and distributing in the country with a Kenyan staff. The company, who is the largest producer and seller of “coconut oil, milk, and cream in Kenya,” distributes food and personal use products via its two coastal facilities. The 2,000-plus farmers (around 1,500 of whom are organic and fair-trade certified) who work with the company have benefited from increased income through the relationship.
According to DOB Equity’s website, employment benefits have extended “throughout the value chain from harvesting to processing.” Hayo Afman, Portfolio Director at DOB Equity, touted the “nutritional and functional uses” for the coconut tree, which “can provide food and drink as well as a livelihood.” “Coconut processing results in multiple by-products that can be used as input for other value chains, such as natural fibers for ropes, brushes or mats, coco peat for nurseries and charcoal for filters or fuel,” said Afman.
Maximizing the value chain is a major goal, explained Kyle Denning, CEO of Coconut Holdings. “We are very pleased and looking forward to working with DOB Equity on the expansion of our business,” enthused Denning. “We have an ambitious growth trajectory and to unlock the full potential throughout the value chain, we need a financing partner that understands what it takes to secure sourcing, improve the process and enter new markets.”
Agricultural investments in Africa are proving to have substantial social impact and positive financial returns. Coconut farming and processing has the potential to be one of the next great growth sectors on the continent – the Kenyan government has called it a “sleeping giant” and a possible source of $249 million in annual revenue. With a rising worldwide demand for healthy products, investors in companies like Kentaste stand to reap real benefits.