STELLENBOSCH-based Zeder Investments, which has just clinched a deal to sell its valuable stake in consumer brands giant Pioneer Foods, looks set to accelerate growth its 95.3% controlled seed development business Zaad Holdings.
Over the past number of years Zeder has ploughed money into establishing and positioning Zaad – headed by former Zder boss Antonie Jacobs – as a strategic holding company that invests and operates in the specialised agri-inputs industry. The focus is firmly on emerging markets, especially Africa, and at this stage business written outside South Africa already outweighs the volume of local dealings.
Zaad, in a nut-shell, owns, develops, imports and distributes a broad range of agricultural seeds in Africa, Europe and other international emerging markets.
More recently, Zaad has also added strategic plant nutrition and agrochemicals via the acquisitions of the Farm-Ag and Hygrotech businesses.
Only last month Zaad concluded an agreement to acquire a 40% stake in the EAS group of companies in Kenya. This important deal – which should open up the vibrant East African and central African agricultural markets for Zaad – comes with an option to acquire an additional stake in EAS in the future. EAS has business operations in Kenya, Uganda, Rwanda, Tanzania and Zambia.
These transactions have seen Zeder commit another R300m investment into Zaad.
Zaad is already a sizeable business, generating some R1.6 billion in revenue in the year to end-January. Profits were around the R200 million mark with bottom line earnings a chunky R191m. Zeder has placed estimated value of R2.2 billion on the business– which speaks volumes for the longer term potential of this specialist business.
At the moment, Zaad does not stand out in Zeder’s portfolio – which includes other well-known Cape-based businesses like Capespan, Kaap Agri and The Logistics Company.
Half year numbers to the end-July showed revenue of R570m yielding headline earnings before interest, tax, depreciation and amortisation of only R20m and a headline loss of almost R9m.
But Zeder directors are at pains to stress that the interim performance should not be extrapolated for a full year performance.
Zeder CEO Norman Celliers inferred that the summer season activity would ensure a strong second half – predicting that of full-year profits will be acceptable.
Significantly, after the close of interim period Zeder invested another R130m into Zaad by way of a rights issue. The funds raised will help Zaad fund the first instalment of the acquisition of the remaining 50% in Gap Chemicals.
