African Infrastructure Investment Managers (AIIM), Bauta Logistics and Mokobela Shakati Consortium have established a cold chain logistics platform, Commercial Cold Holdings (CCH) with the initial acquisition of CCS Logistics from Oceana Group.
Funds managed by AIIM intend to invest up to $150m in the platform, inclusive of the initial asset acquisitions as well as a pipeline of further acquisitions and greenfield development projects.
The transaction is subject to regulatory approval.
The transaction was financed by a mix of equity and debt financing.
AIIM, through its South African IDEAS Fund and pan-African AIIF4 Fund, will have a controlling 59.2% stake in CCH.
CCS has been operational for over 50 years and is an established leader in South Africa’s temperature-controlled logistics (TCL) market.
CCS currently operates about 100,000 pallets of storage across six facilities in Johannesburg, Cape Town and Walvis Bay, Namibia.
AIIM Investment Director Damilola Agbaje said the cold chain logistical infrastructure sector is underdeveloped, and in places non-existent, across Sub-Saharan Africa and this investment diversifies AIIM’s current portfolio into a high growth and high impact area.
“South Africa, which possesses the continent’s most advanced TCL infrastructure at 13m3 of cold storage per 1,000 residents, lags comparable economies such as Egypt and Brazil, which have 105m3 and 83m3, respectively our research has indicated,” said Agbaje.
“TCL infrastructure is critical for both improving Sub-Saharan Africa’s food security; allowing domestic producers to meet the standards required to participate in global trade; and creating higher value jobs through more formal food retail and wholesale models.”
He noted that with current population growth rates mixed with the rapid rate of urbanization, the regional deficit in temperature-controlled logistics was expected to worsen.
CCH would focus on acquiring and developing facilities with strategic physical locations and/or integration with market-leading food producers, wholesalers, and retailers.
“Anchoring CCH’s strategy with such an established player is crucial for the platform’s regional expansion. New market entries will leverage CCS’s technical expertise and operational track record to secure strategic customer relationships,” he said.
Agbaje said that AIIM recognized that cold stores were energy intensive and would leverage its extensive track record in energy investment across the continent to drive efficiency and improve the CCS generation mix.
“Recently, in South Africa, the power grid has experienced reliability issues. Any worsening of the current supply situation poses a risk and constraint to the TCL sector. By deploying captive renewable energy generation and battery storage with AIIM partner companies, CCH expects to reduce the risk of grid reliability constraints and drive growth,” Agbaje said.
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This marks the third investment signed by AIIM’s fourth generation pan-African infrastructure fund, AIIF4, a thematic investor with a strategic focus on the mobility and logistics, energy transition and digital infrastructure sectors.
“AIIF4 is delivering on its mandate to construct a diversified portfolio of highly impactful, attractive, growth-oriented platforms across our themes. Food security in the current global and African context is a topic of increasing importance, and we believe the CCH platform will play a role in addressing these critical matters. We look forward to further announcements as AIIF4 continues to expand its portfolio,” said Olusola Lawson, Managing Director & Co-Head of AIIM.