11 Oct 2012 Rhodes Food Group acquired by management-private equity groups

Rhodes Food Group (RFG) has set its sights set on growth, with the backing of private equity firms Capitalworks and Morgan Stanley Alternative Investment Partners, which have partnered with its senior management to acquire the 110-year-old firm from the Ivor Ferreira Trust.

MD Bruce Henderson (above) says financial details of the deal have not been disclosed, mainly at the request of the seller.

According to the competition commission, SA-based Capitalworks is the primary acquiring firm. Capitalworks, which already has eight acquisitions to its credit, has $250m in funds under management.

“We will allow six months for the deal to settle,” says Henderson. RFG will then go on the acquisition trail. “There are a lot of opportunities,” he says.

RFG has annual sales of about R2bn, says Henderson. This makes it about half the size of Tiger Brands’ grocery products division, which has operating profit of about R560m.

RFG’s interests are spread across a broad spectrum and include fruit canning, a sector in which it and Tiger Brands are the only SA players. RFG acquired US firm Del Monte’s SA interests in 2010, boosting its market share to about 30% at the time.

“Worldwide exports play the biggest role in our canned fruit operation,” says Henderson. “We are doing particularly well in China.”

Adding to RFG’s line-up are canned vegetables, jams, prepared meals, dairy products and pies.

“In SA our sales are spread evenly across these products,” says Henderson. “We also have a nice spread between our own brands and [retailer] house brands.” Woolworths is a major customer, he adds.

As a midsize firm, Henderson says, RFG is also positioned to take market share from big-name food players. “We are making solid inroads,” he says.

Established as a fruit farming business, Rhodes Fruit Farms, by Cecil Rhodes in 1902, RFG has been owned by various companies, including Anglo American, which bought control in 1969.

In 1999 Anglo sold RFG to the Ivor Ferreira Trust, which, says Henderson, has a long history in Swaziland’s fruit growing and canning sector. The Swaziland assets are included in the deal.

Source: Business Day