Private equity Phatisa buys ‘significant’ stake in General Plastics

Money Markets

Unilever’s Blue Band margarine at a retail outlet in Nairobi. General Plastics manufactures packaging materials for large companies including Unilever. PHOTO | FILE  NATION MEDIA GROUP

By JOHN GACHIRI, jgachiri@ke.nationmedia.com

In Summary

• Both parties declined to disclose the value of the investment in one of Kenya’s largest manufacturers but the deal indicates growing foreign interest in Kenya’s consumer sector.
• The manufacturer said it would use the funds to expand its packaging products.
• Phatisa invested in General Plastics through African Agriculture Fund. The 10-year fund invests in agribusinesses and companies that support them by providing services such as storage, packaging and logistics.

A private equity fund has bought a “significant” stake in General Plastics (GPL), a Nairobi-based family business that makes packaging for food, cosmetics, beverage and agro-chemical companies.

The investment is the eighth for Phatisa and brings total commitments from its $246 million (Sh22 billion) African fund to more than $123 million (Sh11.2 billion). Both parties declined to disclose the value of the investment in one of Kenya’s largest manufacturers but the deal indicates growing foreign interest in Kenya’s consumer sector.

Phatisa makes a typical investment of between $5 million (Sh459 million) and $24 million (Sh2.2 billion) in exchange for a majority or a significant minority equity stake and board representation.

General Plastics, founded in 1977, currently has 900 employees.

The company makes packaging for manufacturers such as Bidco Oil Refineries, InterConsumer Products — earlier acquired by French firm L’Oreal — Excel Chemicals, Pz Cussons, Kenya Shell (Vivo), Unilever and Menengai Oil.

The manufacturer said it would use the funds to expand its packaging products.

“The partnership with Phatisa will allow us to reinforce our plans to expand into the region,” said General Plastics managing director and founder Rashik Shah in a statement.

“Local and regional consumer demand is increasing for functional packaging that is affordable, convenient and suitably branded. With this new capital injection, we believe GPL is well placed to benefit from these growing trends.”

Phatisa invested in General Plastics through African Agriculture Fund. The 10-year fund invests in agribusinesses and companies that support them by providing services such as storage, packaging and logistics.

READ: SA investor to build estate in Kikuyu

ALSO READ: Phatisa to build Sh9.95m one-bedroom homes

“Good-quality packaging is essential for extending the shelf-life of food and minimising spoiling. This ensures a significant reduction in food waste, thereby positively impacting African food supply and sustainability,” said Phatisa in a statement. “Therefore, adding quality packaging as a resource to ensure sustainable food security is an opportunity not to be missed.”

Phatisa confirmed buying “a significant stake”, but did not disclose amounts involved.

The packaging industry has been attracting other foreign investors including Nigerian GZ Industries which began construction of Sh1.3 billion can factory in Sultan Hamud in mid-2014.

Nampak, a South African packaging firm, is looking to expand its Kenyan operations and has begun exploring the possibility of setting up a plant. The firm said it was evaluating the viability of investing in a glass furnace.