L&Z farms to embrace new investors as Sahel Capital mulls exit

Agribusiness Insight can exclusively report that in 12 to 18 months, an opportunity will open for any willing and competent investor(s) to become part owner in L&Z Integrated Farms Limited.

The Kano based company, which is known for Yoghurt production, has since 2015 been a portfolio company of Sahel Capital Agribusiness Managers Limited that manages the $65.9 million Fund for Agricultural Finance in Nigeria (FAFIN).

“We are happy with L&Z’s performance, as it has doubled revenue since we invested, and we would be actively looking for the right partner to exit to, and take the company to the next level,” said Mezuo Nwuneli, Sahel’s managing partner in an exclusive interview.

Nwuneli explained that L&Z is one of Sahel’s first investments and the firm will likely be looking to exit to the right partner in 12 to 18 months. He would not discuss the company’s valuation for now, saying when the time comes, this information will be made public.

While L&Z has doubled revenue within the last four years, interestingly it is also the smallest of all the investments made by Sahel Capital till date.

According to Nwuneli, the dairy company sources milk from roughly one thousand pastoralists, which is processed into Yoghurt and other products. Giving some insight into the decision to invest in L&Z in the first place, he explained that the founder and his family, which at the time directly managed the business, had been able to grow it quite well, and Sahel also found the product offerings attractive.

“As the middle class grows, they consume more protein and generally nutritious food products and these products would feed into that growth of the middle class and its demands,” said Nwuneli, explaining another dimension of the business opportunities that informed the investment. “The company has doubled revenue since our investment, and there’s an even stronger professional team in place. Of all our investments, this is the one we would likely be exiting in 12 to 18 months,” he said.

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According to him, looking at the dairy space, Sahel envisaged it would be important long term for the large players to build some local supply chain. Sahel had the belief that at some point the different dairy players would want to build up that supply chain. At the time of Sahel’s investment, Nwuneli recalls only one large multinational was trying to build some (milk) collection, but now, smaller players like L&Z have stepped into the field of play.

The bottom-line for Sahel, is finding the right buyer and the right investor that will buy its shares in L&Z, who also has to be a right partner for the company and its future growth.