The Aureos Africa Fund has completed a US$5.35m investment in Bio-Plastics Limited, a fast-growing Ghanaian plastics manufacturer. The investment will allow the company to expand its capacity and start manufacturing biodegradable plastics. This will be the 14th investment by the $381.1 m Fund since its first close in September 2008.
Aureos Capital Limited is a private equity fund management company specialising in investing in small and medium sized businesses in emerging markets.
Bio-Plastics currently employs 70 people, and is one of the key suppliers of plastic products to the Ghanaian and West African markets. 38% of the company’s turnover is generated from exports to West African markets, including Togo, Benin, Burkina Faso, Mali and Niger.
The company’s main products are packaging for producers of sachet water – a cheaper alternative to bottled water, and promotional carrier bags. Bio-Plastics has a strategic alliance with a leading supplier of sachet water production machines in Ghana which gives it a competitive advantage over most rivals.
Bio-Plastics was established by Pradeep Govind whose previous company, Voltic, pioneered Ghana’s bottled water industry and was also an Aureos portfolio company. Voltic was successfully sold to global drinks giant SABMiller in 2009.
Bio-Plastics commenced production in 2009 and has grown from a monthly production capacity of 80 tonnes to 220 tonnes per month. Production is expected to more than double following the Aureos investment, reaching 500 tonnes by summer 2011. The number of employees will also increase substantially.
The company plans to use capital from the investment to introduce biodegradable plastics into the Ghanaian and West African market. As the production of biodegradable plastics in West Africa is currently very limited, Aureos is facilitating discussions with Tirta Marta – an investee company of the Aureos South East Asia Fund – to supply Bio-Plastics with its trademarked low-cost biodegradable resin Oxium.
Aureos has identified several trends that will support the growth of Bio-Plastics:
- Demand for packaging is rising faster in Africa than in developed markets: the market for plastic packaging has grown by an average of 8.1% in Africa over the last five years, compared to 3.6% in Western Europe.
- The use of biodegradable plastic in West Africa is still very limited. In Ghana, only one producer supplies biodegradable plastic on a very limited scale.
- Demand for biodegradable plastic products is likely to grow as companies, particularly multinationals, seek to boost their environmental credentials.
Jacob Kholi, Managing Partner for Aureos West Africa, comments: “Ghana, and West Africa more generally are a huge growth market for packaging, but with insufficient capacity at present, and virtually none in biodegradable plastics, making this a great investment opportunity.””Aureos has first-hand experience of Pradeep Govind and his management team’s expertise, having also invested in Voltic which achieved strong growth, generating new jobs for the region and good returns for our investors. We know that they are ideally placed to lead Bio-Plastics to the next phase of its growth.”
Pradeep Govind, Managing Director, BioPlastics added: “Aureos’ investment will allow Bio-Plastics to increase production to meet demand, while at the same time commence the introduction of biodegradable plastics. This will mitigate the environmental impact of the growing demand for plastic as well as giving Bio-Plastics a competitive edge.”
As part of the acquisition Aureos plans to construct a recycling plant to deal with non-biodegradable plastic waste. The plant will be supported by a plastic waste collection team.
About Aureos Capital Ltd.
Aureos Capital is a private equity fund management company which specialises in providing expansion and buy-out capital to small and medium sized businesses across Asia, Africa and Latin America. Since its establishment in 2001, Aureos has increased its funds under management to US$ 1.3 billion and extended its geographical footprint to over 50 emerging markets covering Asia, Africa and Latin America, by establishing 17 regional private equity funds. Investors in Aureos funds include institutional investors, bilateral and multilateral development finance institutions, pension funds, sovereign wealth funds, fund of funds, family offices and foundations and high net worth individuals.
Aureos West Africa
Tel: +233 302 770 212
Source: aureos, press release, 2011-06-16.