BUSINESS DAY: Mandatory sale of Bank of Athens adds another string to AFGRI’s bow

Bank of Athens’ parent, the National Bank of Greece, was compelled to sell its 99.81% interest in the bank as part of an agreement with the European Stability Mechanism

The South African Bank of Athens’ parent company was forced to offload its South African subsidiary, which had R1.5bn in deposits and R2.3bn in assets at the end of 2016, in terms of European Central Bank (ECB) conditions.

Afgri has snapped up the Greek bank’s interest, but declines to say at what price.

The agricultural services company is unwilling to divulge its plans for Bank of Athens, which Reserve Bank records show obtained the bulk of its deposits from the private non-financial corporate sector and households, while its two largest asset groups comprise residential mortgages and commercial and other mortgage advances.

This differs from Afgri’s R12bn debtors’ book, built up through Unigro Farmer Lending, Unigro Insurance Brokers and GroCapital Financial Services on behalf of the Land Bank. The Land Bank provides financial services to agribusiness.

Afgri CEO Chris Venter could not comment on how Bank of Athens’ clients complemented Afgri’s offering before the deal won regulatory approval.

“We … require all approvals. Afgri views this as a change in the holding structure, which will provide benefits to our clients.”

Afgri said on Tuesday that it had applied for regulatory approvals from the Reserve Bank, the minister of finance and the competition authorities.

Bank of Athens’ parent, the National Bank of Greece, was compelled to sell its 99.81% interest in the bank as part of an agreement with the European Stability Mechanism, which injected €2.71bn in capital in December 2015 after the ECB found a €4.6bn capital shortfall at the bank.

The ECB required National Bank of Greece to “dispose of noncore assets outside Greece” as a condition of the bail-out.

The rest of the shortfall was covered through “private means” and bolstered by the bank’s positive third-quarter results for 2015.

The National Bank of Greece is regarded as one of that country’s four systemically important financial institutions.

It expects the deal with Afgri to close within the second half of 2017 and enhance its liquidity by about €55m.

Venter said Afgri was impressed with the strides Bank of Athens had made in specialised offerings, especially in “the application of technology and innovative solutions”.

“Afgri, through its 94-year history, prides itself on knowing agriculture and agricultural cycles … [and is able] to use this knowledge in affording clients access to finance that will assist them through their production cycle,” said Venter.

“This acquisition provides an additional retail and alliance banking platform to current and prospective Afgri customers where deposit-taking and lending is possible.”

BUSINESS REPORT: AFGRI Holdings buys SA Bank of Athens

Agricultural services and food processing group Afgri Holdings announced on Tuesday that it had bought National Bank of Greece Group’s (NBG’s) 99.81 percent stake in the South African Bank of Athens (Saba) for an undisclosed amount.

NGB, the second largest Greek bank by total assets, said in a statement that the deal was part of the bank’s restructuring plan agreed with banking regulators to boost its capital position.

It said the deal, expected to close in the second semester of this year, was subject to various conditions including regulatory approvals from the South African Reserve Bank, Finance Minister Pravin Gordhan, the Competition Commission and the Competition Tribunal.

Afgri said it was liaising with the Reserve Bank and preparing the prescribed applications for the regulatory approvals.

“Afgri values the support of clients, depositors and banking partners of the Saba and commits to continue to provide the service excellence they are accustomed to,” said Afgri chief executive Chris Venter.

Afgri said its indirect controlling shareholder, Fairfax Africa Holdings Corporation, supported the transaction.

Saba, established in 1947, provides banking services to medium-sized local businesses. It offers comprehensive traditional business banking such as lending, transaction banking, treasury and foreign exchange. Afgri, on the other hand, is an agricultural, financial services and food processing company operating in South Africa and 14 other countries in Africa.

Afgri said Saba was also focused on the development of niche transactional banking.

“We’re impressed with the strides Saba has made in specialised banking, especially as these pertain to the application of technology and innovative solutions,” said Venter.

He said the acquisition of Saba provided an additional retail and alliance banking platform to current and prospective Afgri customers where deposit taking and lending was possible “and in this way enables Afgri to continue with its focus of innovation and an enabler to food security”.

The deal follows NBG’s sale late last year of its Bulgarian subsidiary, United Bulgarian Bank, to Belgian bank KBC Group for e610 million. At the time, NBG said the transaction would strengthen its capital and liquidity position, allowing for the redeployment of resources to support the Greek bank.

NBG chairman Louka Katseli said in the 2015 annual report that the group was a pillar of stability and certainty for the Greek economy.

“The main intention of the NBG Group is to maintain its leadership profile and play an active role in supporting investments that can foster a resurgence in economic activity,” said Katseli.

BUSINESS DAY: AFGRI pursues Bank of Athens’ SA stake

Afgri CEO Chris Venter says the 94-year-old business was constantly evolving and looking at ways to better service its customers

Afgri is seeking to acquire the South African portion of Bank of Athens. The deal would give Afgri, which has long been a financier of farmers in partnership with the Land Bank, a banking licence.

Afgri CEO Chris Venter said the 94-year-old business was constantly evolving and looking at ways to better service its customers. The group has a partnership with the Land Bank called Unigro, which offers loans and crop insurance to farmers. Afgri also has a subsidiary called GroCapital Financial Services, whose services include trading futures contracts for farmers.

“Since the early 2000s we have aggressively expanded our financial services offering. We manage a R12bn debtors’ book through Unigro and GroCapital. The move reiterates the core focus of the group which is to ensure food security across the continent. We will be better placed to help our customer base grow their business. The management team at the bank will be staying,” said Venter. Afgri will gain the right to accept deposits, something its existing relationship with the Land Bank does not provide.

Venter would not disclose the value of the deal. “That’s one of the benefits of being unlisted.”

Afgri delisted from the JSE in April 2014. Its shareholders include Fairfax, the Public Investment Corporation, empowerment consortium Bafepi Agri and management.

Venter said the deal had the backing of the group’s shareholders. “We still need the necessary approvals from the South African Reserve Bank and all relevant authorities. I would hope the deal would be done later this year, but it is difficult to provide a timeline. This is a journey about which we are excited. We hope we can conclude the deal as soon as possible.”

The South African Bank of Athens provides business banking services to medium-sized local businesses, as well as niche transactional banking to the broader market.

 

BUSINESS DAY: AFGRI seeks Reserve Bank’s permission to buy Bank of Athens SA

Afgri says the deal is not expected to change the group’s partnership with the Land Bank, called Unigro, which offers loans and crop insurance to farmers

Former farmers co-op Afgri is seeking to acquire the South African portion of Bank of Athens for an undisclosed amount.

The deal would give Afgri, which has long been a financier of farmers in partnership with the Land Bank, a banking licence.

Afgri is seeking permission from the South African Reserve Bank to acquire all but 0.09% of Bank of Athens SA from its holding company National Bank of Greece Group.

Vanessa Rech, of investor relations company Keyter Rech, said the deal was not expected to change the group’s partnership with the Land Bank, called Unigro, which offers loans and crop insurance to farmers. Afgri also has a subsidiary called GroCapital Financial Services, whose services include trading futures contracts for farmers.

“All we envisage at this stage for Bank of Athens is a change of holding company. It won’t make a difference to its customers or ours,” Rech said.

Something Afgri will gain from the deal is the right to accept deposits, something its existing relationship with the Land Bank does not provide.

Historically known as OTK — the Afrikaans acronym for Eastern Transvaal Co-operative — Afgri was listed on the JSE until 2013 when it bought out minority investors in a deal financed by Canadian private equity firm Fairfax, the Public Investment Corporation, an empowerment partner and management.

Afgri’s acquisition of Bank of Athens is supported by Fairfax, it was noted in Tuesday’s statement.

AFGRI acquires stake in bank and broadens financial offering

AFGRI Holdings Proprietary Limited (“AFGRI”), the leading agricultural services and food processing company is pleased to announce the potential acquisition of the National Bank of Greece Group’s stake in the South African Bank of Athens Limited (“SABA”), corresponding to 99.81% of the issued share capital (the ‘’Transaction”) of SABA .

The Transaction is subject to customary closing conditions, including, regulatory approvals from the South African Reserve Bank (“SARB”), the South African Minister of Finance as well as the South-African Competition Authorities. AFGRI is liaising with SARB in this regard and is in the process of preparing the prescribed applications for the regulatory approvals under the guidance of appointed advisors.

“AFGRI values the support of clients, depositors and banking partners of the SABA and commits to continue to provide the service excellence they are accustomed to,” said AFGRI CEO, Chris Venter. He went on to say that acquisition would be a further enabler to both AFGRI and SABA customers.

Fairfax Africa Holdings Corporation, the indirect controlling shareholder of AFGRI, has provided its support for the proposed transaction.

SABA was established and has been operational in South Africa since 1947. It offers comprehensive traditional business banking such as lending, transaction banking, treasury and foreign exchange. It is further known for its focus on the development of market leading niche transactional banking offerings in partnership with businesses.

“We are impressed with the strides SABA has made in specialised banking offerings especially as these pertain to the application of technology and innovative solutions,” indicated Venter.

Venter concluded by indicating that the acquisition provides an additional retail and alliance banking platform to current and prospective AFGRI customers where deposit taking and lending is possible and in this way enables AFGRI to continue with its focus of innovation and an enabler to food security.

BUS BYWAY: Large South African Presence at Agritech Expo in April Indicates Strong Interest in Zambia’s Agri Sector

Chisamba, Zambia, March 05, 2017 – “Zambia is an exciting market to explore, not just for South African suppliers to the agriculture sector, but also for South African farmers,” says Liam Beckett, commercial director for the upcoming Agritech Expo Zambia. The award-winning event is owned by the Zambia National Farmers Union (ZNFU) and returns to Chisamba for the fourth time this year from 27-29 April.

He adds, “In certain sectors the South African market has become saturated and many South African companies are looking to branch out across the border, in order to continue their business growth in Africa. In Zambia, there are approximately 400 registered commercial farming professionals, which represents a very lucrative potential market. The Zambian farming sector is also far more advanced than other neighbouring countries and farming methods are also similar to South Africa. Therefore, South African brands and products, such as implements and agro chemicals, are all applicable in Zambia.”

More international pavilions
Last year Agritech Expo Zambia drew a record-breaking attendance of 17 605 visitors. This year even more small-scale, emerging and commercial farmers are expected to descend on the GART research farm in the heart of Zambia’s agri-hub Chisamba, where the latest farming products and services will be showcased. The three-day expo will furthermore feature an even greater international presence with international pavilions from Germany, Zimbabwe, Czech Republic, the Netherlands, the UK and France already confirmed.

Says Liam Beckett, “Just judging from the big increase in international pavilions at Agritech Expo this year, the global interest in Zambia as an agri market is obvious. Already there is major international investment in the country at present as well as projects being planned and if a South African company wants to establish a footprint in Zambia, they need to make sure they grab this business development opportunity now before they miss out.”

The South African companies that have so far booked to exhibit or sponsor at Agritech Expo Zambia include AGRICO, Gallagher Power Fence SA Pty Ltd, Hydraform, Kempston Agri – Claas, Lindsay Africa, Neptun Boot, Organico, Senter 360, Teejet and ROFF. Many other suppliers have headquarters in South Africa, but they are exhibiting as the Zambian branch.

Liam adds, “For South African farmers, Zambia is of interest as there are many new technologies, agro chemicals and commercial farming methods that are available in Zambia that they can learn from. They can also explore renting land on a 99-year lease to expand on their existing South African operations.”

Agritech Expo Zambia will also offer free workshops again, as well as live machinery and product demonstrations and crop trials. New for this year will be specialised agri-sector industry zones and mowing and baling demonstrations.

Multi-award winning Agritech Expo
Agritech Expo Zambia recently won two coveted awards at the ROAR Organiser and Exhibitor Awards in Johannesburg which honour excellence in the exhibition and events industry on the continent. The awards were organised jointly by the Association of African Exhibition Organisers (AAXO) and the Exhibition & Event Association of Southern Africa (EXSA). Agritech Expo won for Best Trade & Consumer Exhibition +12000 sqm and for Distinction in Social Responsibility.

The expo also has an outreach programme at the local Golden Valley Basic School, where, with the assistance of numerous event sponsors, it is assisting the school with much needed infrastructure upgrades, equipment supplies and management of the school’s farm.

As in previous years, Agritech Expo enjoys extensive support from the agri industry with well-known suppliers AFGRI and John Deere returning as platinum sponsors again. Confirmed gold sponsors are Action Auto, Agricon, BHBW, Case Construction, Case Agriculture, Gourock and SARO.

Agritech Expo Zambia is organised by Spintelligent, leading Cape Town-based trade exhibition and conference organiser, and the African office of Clarion Events Ltd, based in the UK. The event is owned by the Zambia National Farmers Union. Other well-known events by Spintelligent include Agritech Expo Tanzania and Agribusiness Congress East Africa.

Agritech Expo Zambia 2017:
Dates: 27-29 April 2017
Location: Gart Research Centre, Chisamba, Zambia

Contact Information:
Agritech Expo Zambia
Annemarie Roodbol
+27217003558
Contact via Email
www.agritech-expo.com

BUSINESS DAY: Fairfax bullish on SA and has cash to deploy

Fairfax Financial Holdings, a Canadian-based investment holdings business with predominantly insurance and reinsurance assets, says it has $500m to deploy in Africa.

The group, listed on the Toronto Stock Exchange and led by billionaire Prem Watsa, is also bullish on SA.

“We happen to be really quite optimistic about SA. We take a long-term view and we believe SA is uniquely positioned,” said Mark Cloutier, a Fairfax representative and incoming chairman of Bryte Insurance, formerly Zurich Insurance Company SA.

Fairfax raised the $500m in equity capital (housed under Fairfax Africa) via an initial public offer for subordinate voting shares, private placements and a commitment from its parent, Fairfax Financial.

Fairfax Africa would seek investments with a view to acquiring control or significant positions of influence, the group said. Its investment objective was to achieve long-term capital growth by investing in debt and equity instruments of businesses primarily conducted in Africa, it said.

Fairfax bought Bryte Insurance, the new brand of Zurich Insurance in SA and Botswana, from the Zurich Insurance Group in 2016 for R1.8bn. Also in SA, Fairfax has bought a 7.15% stake in reinsurer Africa Re and a 50% stake in specialist liability underwriter Camargue, through another of its subsidiaries, Brit Insurance.

Fairfax made its first investment in the country in 2014, when AgriGroupe Investments, in which it is the largest investor, acquired a 60% stake in agricultural and foods group Afgri.

Cloutier, who is executive chairman of Brit, said Fairfax was in “early-stage discussions” with two private insurance businesses in SA.

There was significant growth potential for insurance in the country as the transformation agenda progressed, he said.

Short-term insurers have struggled to grow premium income in a country with economic growth below 1%.

But Cloutier said the country would resemble other emerging markets from a demand standpoint, as people increasingly acquired assets that needed to be insured.

SA had a strong culture of insuring valuable assets, which was not the case in all countries, he said.

“We continue to make investments in SA and explore opportunities in the insurance and reinsurance worlds,” Cloutier said.

Watsa founded Fairfax in 1985, earning net insurance premiums of $10m that year. In 2015, it earned net premium income of $7.5bn.

Fairfax’s net earnings amounted to $642m in 2015, a 61% decline on the previous year due to larger losses from claims. Figures from September 2016 indicate that the company has a $44bn balance sheet.

Watsa — referred to as “Canada’s Warren Buffett” by the likes of Forbes, Irish Times and Financial Post — is adept in financial markets. He sold nearly $5bn in US Treasury bonds ahead of that country’s recent election, saving a lot of money, Forbes reported, as bond prices fell sharply on the news of Donald Trump’s election.

Giving Bryte its independence and “putting Fairfax’s financial strength behind it” would give the company an advantage in SA, Cloutier said.

East Africa recognises AFGRI’s contribution to food security

AFGRI Uganda was recognised by the East African people as the largest contributor towards food security at the annual East Africa Book of Records (EABR) awards.

At the handover ceremony recently held in Uganda, attended by members of AFGRI’s management team, EABR honoured AFGRI with the award for Responsible Consumption and Production in recognition of its sustainable contribution to agriculture in the region.

Jacob de Villiers, Managing Director, Grain Management at AFGRI, says the award proves that AFGRI’s initiatives to assist small scale farmers in the region are paying off.  “AFGRI’s Grain Management business in Uganda began in 2013 with the purpose of managing grain for food security and to prevent post-harvest losses on grain commodities.”

Across the African continent, AFGRI assists farmers to develop subsistence farms into semi-commercial farms in its efforts to ensure food security. AFGRI Grain Management in Uganda incorporates Farmer assistance and mentoring services, grain handling, grain storage and grain marketing.

The EABR aims to inspire ordinary people into doing extraordinary things in line with the United Nations Sustainable Development Goals. At the annual awards ceremony, the EABR recognises ground breaking achievements in various categories and records such achievement by awarding certificates to the winners. Companies in East Africa have been enthusiastic about the possibilities in harnessing the unique appeal of being a record breaker. Previous winners of the East African Award include the President of Uganda Yoweri Museveni and other distinguished individuals and companies.

At the 2017 ceremony, the awards were handed over by the Burundi Ambassador to Uganda standing in for the Speaker of Parliament, Honourable Rebecca Kadaga.

De Villiers concluded by saying that this is a tremendous accolade for AFGRI in support of its vision of being an enabler to food security across the continent.

AFGRI is committed to the future of agriculture and how innovation can play a role in ensuring the future.

The AFGRI Innovation team spent three days with some of the greatest minds from South Africa, Africa and all over the globe at the SA Innovation Summit. The event covered broad spectrum of topics, a recurring focus of the event was on the agricultural sector and enabling food security across the globe. The world is looking to us to move forward and pioneer innovation in the Agricultural sector.

The event was supported by a partnership from the Swiss Economic Development minister Marie-Gabrielle Ineichen-Fleisch and the Swiss ambassador to South Africa Helene Budliger Artieda who have committed to working with South African corporate innovators and entrepreneurs in building the economy.

Raw and processed agricultural exports. With consumption rising in markets throughout sub-Saharan Africa and Asia, South Africa could triple its agricultural exports by 2030. This could be a key driver of rural growth, benefiting the nearly one in ten South Africans who depend on subsistence or smallholder farming. Capturing this potential will require a bold national agriculture plan to ramp up production, productivity, and agroprocessing.” Source: http://www.africa.com/mckinsey/

The event focussed on topics such as renewable energy technologies, biotechnology, consumer trends, artificial intelligence and robotics, self-driving cars and battery technologies, the ‘Internet of Everything’ and very importantly AgTech (i.e. agricultural technology).

Listening to global CEO’s, CIO’s and entrepreneurs and global futurists reminding us to broaden our minds and to not be blindsided by the global changes that are underway, we cannot do things as we always have in order to remain competitive … “Innovation is how we bring humanity forward…The future is ours to create”.

AFGRI is committed to the future of agriculture and how innovation can play a role in ensuring the future.

Innovative financing needed for growth in demand for farming equipment

AFGRI, one on the largest distributors of agricultural machinery in South Africa, predicts subdued growth in the market for agricultural machinery to 2020, provided farmers can get access to financing.

The market for agricultural machinery in South Africa is expected to grow by between 3% and 5% over the next four years.
Patrick Roux, Managing Director at AFGRI Equipment, says in South Africa the growth in the market for agricultural machinery will be supported by the rapid expansion of technology that will improve yields and make farming more cost effective.

Globally, the agricultural machinery market is expected to grow at a compound annual rate of over 7% during the period 2016-2020, according to global research company Technavio.

In its latest research report on the agricultural machinery market (released in June), Technavio says globally growth will be driven by growing urbanisation, and different initiatives from governments regarding agricultural activities. Many governments, especially in developing countries, are offering credit facilities and subsidies to farmers, which help them in purchasing advanced machinery.

Roux says the growth in the market for agricultural machinery in South Africa will largely depend on cyclical factors, especially seasonal rains, whilst the consolidation in the sector due to the drought of the past few years will also play a role.
He expects a more robust growth in Africa, where the commercial farmers are less mechanised than their counterparts in South Africa. “The high demand for mechanisation will definitely play a role in the growth in the agricultural machinery market on the African continent. The vast new developments in Africa on clearing bush for arable land will force the mechanisation route for all farmers and innovative plans for structured deal making on equipment will also play a role.”

AFGRI has taken the lead with innovative finance schemes in Zambia and Uganda.
In Zambia, AFGRI’s John Deere dealership, in partnership with Zanaco and the Zambia National Farmers Union (ZNFU), provide agriculture asset finance to help farmers mechanise their operations.

In Uganda, the Abba Mechanisation Circle, through AFGRI’s Agricultural Development Services Division, provides farmers with access to mechanisation, which is purchased by AFGRI and made available to them through rental agreements.
Much more is needed in Africa to drive the agricultural sector and increased demand for agricultural equipment. To assist farmers in Africa to increase their yields through the use of modern equipment, government involvement is crucial, and so is the availability of financing for agricultural equipment, says Roux.

According to Roux, this will require the banking sector to take some calculated risks.
He says as Africa is the lowest mechanised continent, the growing demand for mechanisation will drive the market for agricultural equipment. According to the Technavio report this will be supported by the announcement that agricultural departments across the continent will allocate more than US$ 48 million in subsidies to small farmers during 2015-2017.

Roux says in some countries, notably Zambia, there is good support to make finance available for farmers to buy mechanised equipment, but the difficulty to access finance can hamper the growth rate.
Technavio expects that Asia Pacific (APAC) will continue to generate the bulk of the revenue for the global agricultural machinery market. In APAC the market is expected to reach US$74 billion by 2020 compared to US$46 billion expected in North America. APAC has a larger share of the market mainly due to the growing population in this region, which gradually boosts the demand for food. Increased mechanisation is supported by government initiatives such as subsidies for agriculture and credit availability.

In contrast to this rapid growth, the agricultural machinery market in North America has reached maturity and is expected to witness slow growth due to a decline in the price of commodities and a weak forecasted economic cycle in North America.