British multinational tea bottler Global Tea & Commodities sold an equity stake to three European financiers, raising funds for the expansion of its Kenyan unit, which packages the Kericho Gold and Baraka Chai tea brands.
The three companies – French development finance institution Proparco, Danish sustainable investment fund IFU, and London-based investment and advisory firm Si Advisers LLP – did not disclose the amount invested or the size of the equity they are taking.
However, they said most of the money will go to Global Tea’s packaging unit in Mombasa, with the rest being deployed to its Malawi operation.
“The proposed investment will help Global Tea build a new tea bottling plant in Mombasa and support the group’s expansion plans in Africa,” the firms said in a joint statement.
The closing of the transaction is subject to regulatory approvals, they added.
Global Tea was founded in 1992 by Indian businessman Nadeem Ahmed as a trading company, which later expanded into tea blending and operated coffee and macadamia plantations in East Africa.
Ahmed said the new fundraising round will complement other recent capital injection moves as the company seeks to expand its presence in Africa and improve its value-added capacity at existing factories.
“This commitment by European development finance institutions follows an increase in debt that we concluded from the International Finance Corporation (IFC),” he said.
Tibor Asboth, Proparco’s deputy chief equity officer for Africa and the Middle East, said the fund expects its investment to benefit small farmers who supply tea globally and consumers of its products.
The French fund has been actively lending to Kenyan companies in the recent past, including a 10.8 billion shillings loan issued to Equity Bank in October last year for future loans to small and medium-sized enterprises (SMEs).
In August 2020, it also made a Sh2 billion ($ 18.7 million) loan to Kenya Nut Company, aimed at expansion and short-term cash flow needs.