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ACA buys Daraju stake as consumer deals eclipse N22bn

Private equity investor, Africa Capital Alliance (ACA), has invested an undisclosed amount in Nigeria-based consumer goods company, Daraju Industries, according to a statement on its website.

ACA buys Daraju stake as consumer deals eclipse N22bn

Daraju Industries is the producer of MYMY and Extreme brands of toothpaste, Fressia Brands of Soap, Fressia Brands of Petroleum Jelly, as well as MYMY, Soft & Clean and Rana brands of washing detergent.

Although no amount was given by ACA for the Daraju deal, ACA’s single investment size typically ranges from a minimum of $20 million to $80 million, according to data available on its website.

Daraju plans to ramp up its production capacity with the investment.

The Daraju deal takes the total number of deals involving the consumer goods sector in Nigeria this year to four.

Two of those deals were valued at N22 billion, while the other two are undisclosed.

Affelka’s N21 billion investment in 7up, last January, is the larger of the two deals, trailed by Dufil’s N775 million acquisition of Mimee noodles in April.

Echo venture capital’s investment in online fresh food shopping firm, Easy Shop Easy Cook and now ACA’s investment in Daraju make up the numbers for consumer goods deals in 2018 alone.

“Nigeria has a large population of about 190 million, and Daraju seeks to position itself to meet the needs of this population,” said Peeyush Garg, the company’s founder and chairman.

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“We are at the early stages of what we seek to achieve for and with the people of Nigeria, and with our partner (ACA), we hope to continue to provide high quality locally produced products which will rival any internationally imported personal care product,” Garg added.

The consumer goods sector in Nigeria has been tipped to continue to attract private equity interest, given the nation’s fast growing population which the UN estimates to hit 300 million by 2050, only behind China and India.

However, latest data from the Nigerian Bureau of Statistics (NBS) showed that in real terms, consumer spending fell 1 percent year-on-year in 2017, despite an 11.4 percent increase in employee income, the first increase since 2015.

“We believe there is a huge opportunity for good quality locally produced consumer products in Nigeria which can eventually be sold to neighboring countries,” Paul Kokoricha, a partner at ACA, said.

“Bringing customers good quality and affordable products is the thesis underpinning this investment in Daraju Industries limited but most importantly we seek to support the growth of local manufacturing to help in building local skill transfer and competency locally,” Kokoricha added.

Daraju Industries has produced local household and personal care products in Nigeria since 2008.

The company’s vision is to become a leading local household and personal care manufacturing company, according to founder, Garg.

“The company also seeks to build the local manufacturing capacity in Nigeria, train and impart valuable skills to the younger generation who will be empowered to build and grow other manufacturing businesses locally,” Garg added.

The company, Garg says, has invested significantly in its distribution and logistics network and is able to provide valuable products to all its suppliers and customers across hubs nation-wide.

Daraju’s funding will come from ACA’s CAPE IV fund designed to make equity and equity-related investments in high-growth target sectors in West Africa and the Gulf of Guinea region.

The Fund’s target sectors include Fast Moving Consumer Goods (FMCG), Business Services, Energy, Financial Services, and Telecommunications, Media & Technology (TMT).

ACA has over US$1 billion assets (at cost) under management.