Sir Bob Geldof Leads Private Equity Firms To Invest $80M In Nigerian Biscuit Maker
Rock star Sir Bob Geldof has led a group of private equity investors in investing $80 million in a Nigerian biscuit maker Beloxxi Industries, a deal described as a bet on the company’s ability to meet the rising demand of a budding middle class in one of Africa’s largest economies.
Nigeria has one of the continents fastest growing consumer class despite the economic challenges the West African nation has faced in recent years due to falling oil prices, its main export commodity that account for more than 70 percent of government revenue.
The country’s biscuit sector is growing at an annual rate of 10 to 15 percent driven by population growth, rising disposable incomes and increasing urbanization, along with the growing popularity of biscuits as a convenience snack, Reuters reported.
Large Nigerian cities such as Lagos and Abuja have had strong growth in the snacks market, which is now attracting interest from foreign investors such as Geldof’s 8 Miles — named after the closest distance between Africa and Europe, According to Financial Times.
8 Miles bills itself a “hands on” investment firm in Africa.
Other private equity firms involved in the Beloxxi deal include Nigeria-focused African Capital Alliance and DEG, the German development finance institution.
Beloxxi employs about 2,300 people and operates through a network of some 400 distributors. It has one of the best selling cream cracker brands in Nigeria with a significant market share.
Rising inflation this years has forced many manufacturing countries in operating in Nigeria to increase their prices, which has made them expensive for their consumers.
Obi Ezeude, chief executive of Beloxxi, told Financial Times that the biscuit maker had reduced its dependence on imported raw materials and was striving to keep the prices of its biscuits affordable for Nigerian consumers.
He however said the comopany had been forced to increased the price of its smallest-sized product — a three-biscuit package of 21 grams that costs the equivalent of less than $0.05.
Geldof’s fund 8 Miles, which plans to acquire more stakes in African companies before the end of the year, is seeking to tap into an expanding pool of consumers on the continent.