GOING FOR GROWTH
Tiger Brands appoints first Venture Capital Fund director
The once high-flying, fast-moving consumer goods group is pursuing a strategy of growth and innovation to regain its mojo. Investing in small start-ups may not move the needle, but it does send a good message.
Tiger Brands has put its money where its mouth is and appointed Barati Mahloele as director of the company’s Venture Capital Fund, launched in mid-2021.
The fund is viewed as a future pillar of growth, with a R100-million mandate to invest in start-up businesses that align to Tiger Brands’ growth platforms of health and nutrition, snackification and economical food options, and to grow these businesses alongside the entrepreneurs who run them.
Mahloele has considerable experience in both consumer products and private equity. A commerce graduate from the University of KwaZulu-Natal, she joined Unilever, working in South Africa, Kenya, the UK and Australia. Having completed an MBA at Oxford’s Said Business School, where she was a Said Foundation African Scholar, she migrated to private equity, with Tshiamo Impact Partners. There, she focused on fundraising as well as investment appraisal of high-growth, early-stage ventures in education, healthcare and the green economy. In 2018, she joined Zebu Investment Partners, which invests in food production and processing across Africa.
Expectations will be high. Tiger Brands, which celebrated its centenary last year, has had a bumpy time of late – in fact, ever since the listeriosis outbreak in 2018, which killed more than 200 people in South Africa.
Last year, the group was forced to recall millions of canned KOO vegetable products after defective cans were discovered.
Under CEO Noel Doyle, who assumed the role in 2020 after Lawrence MacDougall retired, the company has accelerated its quest to transform itself into one that is more agile, makes better decisions, is closer to the ground, more cost-conscious, growth-orientated and a lot more innovative.
Despite – or perhaps because of – having 11 ‘billion-rand brands’ in its basket, including Tastic, Purity, Jungle Oats, All Gold and Oros, a culture of arrogance and complacency set in over the last decade. This was compounded by poor executive decision-making, resulting in massive shareholder destruction at the once high-flying group.
In early 2018, ahead of the listeriosis disaster, shareholders began to grow weary of management promises, and the share began a steady march downhill. By February 2021, it had shed almost 60% of its value, reaching a low of R166.
However, despite disappointing results for the year to September 2021 – which saw headline earnings per share fall by 6% – the share has halted its downward trajectory and is hovering at around R182. It takes more than riots and several own goals to down a tiger that chooses to fight back.
The company is armed with a strong, ungeared balance sheet and generates attractive cash flows. In 2021, cash generated from operations increased 34% to R4-billion and it ended the year with net cash of R2.2-billion.
This puts it in a good position to drive growth through investment into its existing business, brands and innovation, as well as returning cash to shareholders.
As Doyle pointed out in September, it also provides Tiger with the flexibility to make acquisitions and self-fund many initiatives, including the recently launched Venture Capital Fund.
This is where Mahloele comes in.
While the fund has been overseen by members of the board’s investment committee, it has received more than 500 expressions of interest since its launch – temporarily closing the door to new applications. Applications reopen in February.
Meanwhile, the group is expected to make its first investment within the next week or two, and is assessing at least nine other opportunities. Strong leadership will be welcomed in this regard. BM/DM
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