Zeder looks for a big payback from two new greenfield ventures
With large new opportunities proving elusive, PSG-controlled agribusiness investment company Zeder is looking for a big payback from two new greenfield ventures.
CEO Norman Celliers said at the annual general meeting on Friday that while Zeder was still determined to find one or two substantial new investments, there would be a focus on building on smaller-growth investments. "We have been in a position where we looked at substantial new investments … but … price expectations were unrealistic, and we walked away."
Zeder’s main value store is in its 27% stake in Pioneer Foods, but it was new developments at subsidiary companies Zaad, a seed marketing business, and Capespan, a fruit exporting and logistics group, that were highlighted at the AGM.
A new urban farming venture is also under way.
Celliers said Capespan’s operations had been restructured, refocused, realigned and reinforced over the past three years. The company now operated as two focused divisions. The fruit division concentrated on procurement, exporting and more recently farming.
Celliers said the investment in farming was critical in demonstrating to clients that Capespan was close to its fruit procurement efforts. "Clients don’t just want to deal with a middleman," Celliers said.
The logistics segment, which includes a valuable port and terminal operation, has been successfully diversified from handling mainly fruit exports to include general cargo.
The logistics division had invested in a start-up company that offered technology solutions to transport operators. The Logistics Company (TLC) offered transport management and fuel management solutions for Capespan as well as third-party logistics groups.
"TLC is digitalising the agri-transport industry, allowing cargo owners to choose instant quotes from quality transport companies. We see it as an Uber version of the transport industry," he said.
Although rapid growth was possible, Zeder acknowledged the venture capital-type investment risk in providing seed capital, Celliers said.
While the initial focus was on SA, a global application was possible, he said.
Zaad had strong intellectual property in a very attractive industry. Zeder had invested R145m in Zaad during financial 2018 and had recently invested R200m more via a rights issue.
"Our goal is to build a leading global hybrid seed group of companies with market leadership in emerging markets."
Zeder had also partnered with Can-Agri, a specialist in smart farming facilities in urban areas. Can-Agri offers farming solutions in areas where agricultural land is on the decline or where environmental damage has prompted a rethink of traditional farming methods.
Celliers said Can-Agri was a venture capital investment that allowed Zeder to test a new concept. "It’s at an early stage, but we think this is a concept that has legs. There could be global applications too."
Zeder had committed to funding the construction of a full-sized commercial farming unit in Pretoria, with the first crop planting set for September.