Goldman Sachs has acquired a stake in Kenyan start-up, Twiga Foods, following a Sh2.44 billion ( $23.75 million) deal with the agro-based firm.
The deal, which is expected to be made public today (Monday), was inked on Friday and underlines Goldman Sachs’ quest for deals in Africa and international institutional clients looking to invest in the continent as the investment bank grapples with a slump in revenue.
“Goldman Sachs is getting a stake and it will be the lead institutional investor in Twiga. It is providing the bulk of the $23.75 million,” said Peter Njonjo, who became the company’s chief executive in March after stepping down as president of Coca-Cola West and Central Africa.
The money will go towards helping Twiga Foods spread across the country and Africa. The US bank will provide funding to the start-up together with three other Twiga Foods existing investors -- International Finance Corporation (IFC), venture capital firm, TLCom Capital, and French private equity fund Creadev.
“This funding enables us to invest in our technology and organisation to tackle the inefficiencies in Africa’s domestic food production and distribution," he added.
Twiga, one of Africa’s most successful start-ups, buys produce from a network of farmers and delivers it to thousands of informal vendors. Recently it has become a magnet for foreign investors, making it one of the most funded start-ups in the region.
It was established in 2014 and runs a cashless platform where it receives fruit and vegetables from 17, 000 farms for direct delivery to more than 8,500 vendors.
Goldman Sachs reckons that food distribution will be big business in Africa given that its population is set to double over the next three decades, creating the need for affordable food sources and guaranteed markets for farmers.
"We are delighted to be backing Peter and the highly capable team as they scale operations and drive sustainable access to lower-cost quality food on the continent." said Jules Frebault, the Africa head at Goldman Sachs in a statement.