February 2, 2023
Norfund invests in food ingredient producer Synercore to finance the company’s expansion, creating highly skilled jobs and promoting import substitution in South Africa.
Norfund, the Norwegian Investment Fund for developing countries, is investing ZAR 80 million in convertible debt in Synercore Holdings, a South African food ingredient manufacturer, formulator, and distributor to fast-moving consumer goods companies in Africa.
“We are happy to contribute to develop Synercore as a core local producer of food ingredients, and thereby creating more highly skilled jobs, while strengthening food security, increasing product shelf life, thereby reducing food waste, and promoting import substitution”, says André Kemp, Investment Manager at Norfund.
As part of the transaction, Synercore will acquire two other companies, Impilo and Sizwe. Impilo supplies soy flour to predominantly the baking, confectionary and culinary industries. Sizwe was established to extrude, roast, steam cook, pack and blend any type of grains in the baking, cereal, dairy and meat industries, both from GM or non-GM source.
“Through these acquisitions, we will expand capacity and improve efficiencies as far as blending and manufacturing is concerned. It will allow Synercore to backwards integrate to improve supply chain sustainability, and further diversify and expand on our service offering”, says Dr. Tertius Cilliers, CEO of Synercore.
South Africa has a well-developed food sector, but many large food companies have traditionally preferred to source ingredients directly from overseas suppliers. In 2019 the country imported more than USD 1bn of food ingredients. Synercore is one of few local formulators within the dairy and bread industries in South Africa. The company also sells to other southern African countries.
“By owning core ingredients in the baking and cereal industry, we believe Synercore will be able to formulate more tailored solutions to clients at the best price in the market, leading to further business development, that creates jobs and reduces imports”, says Kemp.
Synercore has a strategy of investing in the future of the agricultural and food industries, attracting the best food formulators, product developers research and development and application specialists to also promote food safety and security on the African continent.
“Through the involvement of Norfund, as a key stakeholder, we will be able to extend our reach even further, and we believe that we can inspire the next generation of farmers and scientists within the agriculture and food industry”, says Dr. Cilliers.