Multi-Country Livestock Investor Landscape Study Presentation at the AFSF, September 4, 2024 g By: Kristin Girvetz OVERVIEW OF THE KENYA LIVESTOCK INVESTOR LANDSCAPE STUDY LIVESTOCK INVESTOR CONVENING AND PITCH EVENT ▪ Livestock Investor Landscape Study to identify high potential livestock investors, priority funding areas, and constraints to investment. ▪ Interviews with promising investors to understand investment strategies and requirements to inform pitch event and for business matching. BUILD RELATIONSHIPS WITH INVESTORS ▪ Country-scanning through key informants and networks to identify investable livestock solutions. ▪ Vetting and application of criteria to select innovators for capacity building. BUILD PIPELINE OF INVESTABLE LIVESTOCK SOLUTIONS ▪ Webinar to share insights from the Investor Landscape Study and to provide advice to businesses on obtaining finance. ▪ 1:1 support to develop investment ask, pitch deck and presentation for the pitch event. BUILD CAPACITY OF BUSINESSES AND OTHER INNOVATORS The Country Solutions Exchange Process 2LIVESTOCK INVESTORS’ COCKTAIL A program of GLAD (Global Livestock Advocacy for Development) implemented with funding support from the Gates Foundation Kenya Livestock Innovator Webinar: Results 3LIVESTOCK INVESTORS’ COCKTAIL 770 Registered attendees in attendance, a high registrant: attendant rate 320+ attendees represented businesses +50% on average Level of satisfaction: 8.5/10 Likelihood to attend another webinar on livestock finance: 9.2/10 Represents scaled capacity building at a low cost Publication: Webinar Presentation presenting the results of the Kenya Livestock Investor Landscape for a business audience https://cgspace.cgiar.org/items/6a5d0652-f04f-4388-b183-8dc2af95e029 Kenya Livestock Investors' Convening and Pitch Event: Results 4LIVESTOCK INVESTORS’ COCKTAIL Publications/documentation: ▪ 10 pitch decks ▪ Investment Teasers for Investors ▪ Brief: Unlocking Investment for the Kenya Livestock Sector 108+ Attendees including 32 Investors Impactful agenda with strong and relevant presentations High profile panel members Business panel: 4 prominent livestock businesses Investor panel: 6 investors including impact investors, DFIs, banks and donors with diverse views on livestock investing 8 businesses and 2 research-led PPPs with solid pitch docs and presentations Overall very positive feedback on panel sessions and pitch event Businesses well-prepared Best ag pitch event! Insightful panels Well organized Key point: Large appetite in Kenya for livestock investing and engaging in a community of livestock practitioners RESULTS • Most businesses received loan offers from banks; 50% had interest from impact investors; one is likely to close a deal this year • Businesses highly valued the pitch development support • Businesses universally want more support including investor linkages Kenya Tanzania Malawi Senegal Nigeria Zambia Focus Countries 5LIVESTOCK INVESTORS’ COCKTAIL First….Multi-Country Livestock Investor Landscape Study Overview of the Study OVERVIEW OF THE KENYA LIVESTOCK INVESTOR LANDSCAPE STUDY Livestock Opportunity To become agriculture' s top contributor Contributes 30%-80% to countries’ agric. GDP Supports over 350 M livelihoods Demand to far exceed supply by 2030. The Problem Livestock is a chronically underfinanced sector. Example: since 2015, <10% of deals in agriculture in Kenya were in the livestock sector. In a poll conducted during an investment webinar for livestock businesses, only 40% of these businesses accessed formal funding, 60% rely on family and friends for capital*. Our approach GOAL: Determine how to unlock more investment for the livestock sector. Overview: Sub Saharan Africa Livestock Investor Landscape 7OVERVIEW OF THE STUDYLIVESTOCK INVESTORS’ COCKTAIL *Kenya Livestock Investment Webinar held on 30th January 2024. 76 Impact Investors 28 DFIs Impact Investor & DFI longlist Investor analysis (including historical investments) using primary + secondary data, investment databases, investor websites and other documentation, personal contacts and industry expert input We assessed investors based on their likelihood to invest in livestock and prioritized the higher potential investors Impact Investor & DFI shortlist 50 Impact Investors 18 DFIs Virtual interviews Impact Investor, DFI & Bank Interviews 23 Impact Investors 4 DFIs Investors in agriculture with geographic scope in targeted countries Investors with livestock investments + other investors assessed as likely to invest in livestock Investors actively building pipeline in selected countries and likely to invest in livestock 8OVERVIEW OF THE STUDYLIVESTOCK INVESTORS’ COCKTAIL DFIIMPACT INVESTORS Shortlisted Investors 9OVERVIEW OF THE STUDYMULTI-COUNTRY LIVESTOCK INVESTOR LANDSCAPE STUDY Historical Livestock Investment Analysis: SSA OVERVIEW OF THE KENYA LIVESTOCK INVESTOR LANDSCAPE STUDY DFIs and impact investors have invested in diverse livestock subsectors spread across Africa since 2013 *The “other” category includes animal textile, meat distribution, mixed livestock production and livestock inputs & services. Other* Subsectors Covered Subsector No. of Deals Poultry Dairy Meat Processing Beef Piggery 22 20 5 4 3 Total 75 Animal feed 9 Integrated livestock businesses 6 6 11 Livestock Subsectors 41 Investors Type of Investor Impact Investors 31 DFIs 10 75 Deals Instruments Utilized Equity 27 deals VS Undisclosed deals: 15 Debt 31 deals 20 Countries in Africa In which Countries? Countries with investments 11OVERVIEW OF THE STUDYLIVESTOCK INVESTORS’ COCKTAIL Quasi-equity deals: 2 DFIs 10 Impact Investors 31 DFIs invested more and have much larger ticket sizes than impact investors *N represents the population of investment transactions included in the specific graphical analysis 12HISTORICAL LIVESTOCK INVESTMENT ANALYSIS: SSALIVESTOCK INVESTORS’ COCKTAIL Average funding amount per transaction DFIs have larger ticket sizes (>$11M) than Impact Investors (<$3M) *N = 46 Impact Investors $2,954,596 DFIs $11,077,301 Total invested in 44 disclosed deals DFIs invested 4x as much as impact investors *N = 46 Impact Investors $68 M DFIs $255 M ▪ Disclosure of funding amounts is significantly higher among DFIs (96%) compared to impact investors (43%) ▪ 45% of the DFI funding was consolidated in one company i.e., Zambeef PLC KE Y TA KE AW AY S: ▪ Despite their small ticket sizes, impact investors were the most active accounting for 67% of the total transactions KE Y TA KE AW AY S: 29% 27% 12% 8% 7% 5% 4% 3% 3% 1% 1% Poultry Dairy Animal feed Integrated livestock business Meat processing Beef Piggery Mixed livestock production Livestock inputs and services Meat distribution Animal textile Investments by livestock subsector: Deals per subsector Dairy and poultry capture >50% of deals Deals per subsector N = 75 ▪ Poultry was the most actively invested subsector with 22 deals closely followed by dairy with 20 deals. These subsectors primarily received debt financing (59%), while equity was the main funding source for less active subsectors like animal textile, livestock inputs and services, mixed livestock production, and meat distribution. KE Y TA KE AW AY S: 13HISTORICAL LIVESTOCK INVESTMENT ANALYSIS: SSALIVESTOCK INVESTORS’ COCKTAIL More structured value chains with larger scale businesses received the most finance N = 46 Investments by livestock subsector: Funding by subsector Total funding amount per subsector (disclosed) ▪ Large-scale integrated livestock businesses, received 40% of total funding (83% coming from DFIs) despite representing only 6 out of the total 73 transactions. This led to the significantly high average funding amounts per transaction for this subsector in comparison to the rest. KE Y TA KE AW AY S: 14HISTORICAL LIVESTOCK INVESTMENT ANALYSIS: SSALIVESTOCK INVESTORS’ COCKTAIL $125.1M $98.0M $69.5M $9.6M $9.2M $5.0M $4.1M $2.1M $0.1M $0.05M Integrated livestock businesses Dairy Poultry Beef Animal feed Animal textile Piggery Livestock inputs and services Meat processing Mixed livestock production 1. Poultry 2. Animal feed 3. Dairy Tanzania Malawi Zambia Nigeria Deals Total Amount 8 Preferred Instrument Equity 1. Dairy 2. Animal feed 3. Meat processing Livestock Investments in Focus Countries* Kenya Senegal Preferred Subsectors $6 million $10 million $33 million $116 million $5 million $9 million 13 5 7 4 6 DFIs Impact Inv. Equity Debt/Equity Debt Equity Debt 50% 54% 40% 71% 50% 67% 1 2 4 2 1 7 9 2 2 2 3 1. Poultry 2. Dairy 3. Integrated bus. 1. Integrated bus. 2. Beef 3.Poultry 1. Animal feed 2.Poultry 3. Meat distribution 1. Dairy 2.Poultry 3. Animal feed *Investments made since 2013 to date 3 disclosed deals 8 disclosed deals 5 disclosed deals 5 disclosed deals 2 disclosed deals 4 disclosed deals 15HISTORICAL LIVESTOCK INVESTMENT ANALYSIS: SSALIVESTOCK INVESTORS’ COCKTAIL OVERVIEW OF THE KENYA LIVESTOCK INVESTOR LANDSCAPE STUDY Initial Take Aways Impact Investors Global DFIs Local DFIs Commercial Banks Funding amounts Instrument $50k - $3 million > $5-10 million Variable, can do less than $5 million Few thousands to >$10-20 million Some do both debt and equity, many specialize Debt preferred, but also do equity Debt preferred, but also do equity Primarily debt Risk appetite ✓ ✓ ✓ ✓ ✓ ✓ ✓ Subsectors Impact themes Primary production to processing. Current: poultry, dairy, feed, meat processing. Open to others. Potentially all subsectors, depending on mandate of DFI. Post-production. Current: dairy, integrated/mixed, poultry, feed. Open to others Current: dairy, poultry, beef (lesser extent). Open to others Smallholders, livelihoods, gender, youth Jobs, rural livelihoods, economic development, gender, youth Smallholders, jobs & livelihoods, economic development, gender, youth, ESG Less of a requirement to meet impact themes Investors are looking for good opportunities 17INITIAL TAKE AWAYSLIVESTOCK INVESTORS’ COCKTAIL Lack of formality and structure in value chains So, what is preventing investment? This is what investors are telling us Risks at primary production level Lack of traceability & quality standards Lack of visibility of investable businesses Lack of investment ready businesses 1 2 3 4 5 18INITIAL TAKE AWAYSLIVESTOCK INVESTORS’ COCKTAIL OVERVIEW OF THE KENYA LIVESTOCK INVESTOR LANDSCAPE STUDY Recommendations Challenge What investors can do What donors + other enablers can do What businesses can do Lack of structured offtake markets + informality in the sector ▪ Test innovative business models connecting producers + offtakers more formally ▪ Develop efficient, transparent payment systems ▪ Invest in information transparency and access ▪ Formalize payment systems through a bank so revenues can be tracked ▪ Enter enforceable, contractual agreements Risks at the primary production level ▪ Where technical assistance facilities exist, provide advice and support to businesses to improve risk management and resilience ▪ Provide technical and financial support to businesses to implement risk mitigation measures ▪ Develop practical industry best- practice guidance based on feasible approaches demonstrated elsewhere ▪ Work with government to strengthen sector resilience ▪ Be able to answer investor questions about the key risks in their industry (e.g. production, trade). ▪ Take action to mitigate these risks. E.g. for production, put in place industry standard biosecurity measures. Lack of traceability + quality standards ▪ Support policy + initiatives to test and implement traceability + quality standards ▪ Implement industry standard food safety and quality solutions (e.g. HAACP) 20RECOMMENDATIONSLIVESTOCK INVESTORS’ COCKTAIL Investors, Enablers, Businesses Can Take Steps towards More Investment Challenge What investors can do What donors + other enablers can do What businesses can do Cannot easily find good investment opportunities ▪ Invest in pipeline building ▪ Fund pipeline building initiatives, and link investors to investable opportunities (e.g. through online platforms, investor forums, accelerators) ▪ Identify and target investors based on business model and investment needs Lack of “investor ready” businesses ▪ Co-create innovative financial mechanisms – for example: ✓ Invest in a dedicated livestock accelerator program or a dedicated livestock investment fund ✓ Invest in de-risking and incentivizing mechanisms through blended finance (e.g. loss guarantee for loans) ✓ Create clearer guidance for businesses on the investor requirements and provide support if needed to guide businesses on developing the required documentation ▪ Have accounts audited regularly. ▪ Develop a robust business plan with realistic growth projections. ▪ Ensure impact is clear (e.g. smallholder farmers, environment, climate, social equity) ▪ Keep all investor required documents up to date and professionally designed and edited. ▪ Consider hiring a business advisory firm Investors, Enablers, Businesses Can Take Steps towards More Investment 21RECOMMENDATIONSLIVESTOCK INVESTORS’ COCKTAIL ▪ Investor interviews for the Multi Country Livestock Investor Landscaping. ▪ Investor panel participation at the Poultry Futures Forum for Southern Africa in October. ▪ Publish and circulate the landscaping study. BUILD RELATIONSHIPS WITH INVESTORS ▪ Select 1-2 countries for pipeline development. Continue pipeline expansion in Kenya. ▪ Generate funding partnerships to expand the work in more countries. ▪ Poultry deep-dive for southern Africa in partnership with the Food Action Alliance. First: Tanzania. BUILD PIPELINE OF INVESTABLE LIVESTOCK SOLUTIONS ▪ Webinar to share the results of the Multi Country Landscape. Regional approach starting with southern Africa. ▪ 1:1 capacity building with pipeline businesses, to be selected. ▪ Continue to support Kenya pipeline businesses. BUILD CAPACITY OF BUSINESSES AND OTHER INNOVATORS Next Steps for the Solutions Exchange 22INVESTOR AND DONOR CONTRIBUTIONSLIVESTOCK INVESTORS’ COCKTAIL Contact Us Michael Victor Head, Communications and Knowledge Management, ILRI M.Victor@cgiar.org CONTACT USOVERVIEW OF THE KENYA LIVESTOCK INVESTOR LANDS KENYA LIVESTOCK INVESTMENT WEBINAR Kristin Girvetz Director, AgThrive kristin@agthriveadvisors.com mailto:M.Victor@cgiar.org mailto:Kristin@agthriveadvisors.com Slide 1: Multi-Country Livestock Investor Landscape Study Presentation at the AFSF, September 4, 2024 g By: Kristin Girvetz Slide 2: The Country Solutions Exchange Process Slide 3: Kenya Livestock Innovator Webinar: Results Slide 4: Kenya Livestock Investors' Convening and Pitch Event: Results Slide 5: Focus Countries Slide 6 Slide 7 Slide 8 Slide 9: Shortlisted Investors Slide 10 Slide 11: DFIs and impact investors have invested in diverse livestock subsectors spread across Africa since 2013 Slide 12: DFIs invested more and have much larger ticket sizes than impact investors Slide 13 Slide 14 Slide 15 Slide 16 Slide 17 Slide 18 Slide 19 Slide 20 Slide 21 Slide 22: Next Steps for the Solutions Exchange Slide 23: Contact Us