Development Partners International (DPI) expects to hear from the largest companies in the speciality chemicals sector when it comes to exit Solevo Group, a Geneva-headquartered distribution platform for Africa, Marc Stoneham, partner at DPI, told PE Hub Europe. An IPO on a major stock exchange could be another possible exit route.
London-based DPI, an Africa-focused private investment firm with more than $3 billion in assets under management, acquired Solevo alongside minority co-investors South Suez and DEG, on 18 April.
The overall value of the deal was $250 million, which includes some debt funding, PE Hub Europe understands. Private equity firm Helios Investment Partners was the seller.
DPI does not feel the next sale will be to private equity, however.
“Given the nature of this business – a multi-country platform with a very large proportion of its revenues in currencies that are pegged to the euro, riding very long-term attractive trends, with a very high-quality institutional management team and governance – this would be a very strong candidate for an IPO when the time comes or some of the largest players in the speciality chemicals space,” said Stoneham.
Several of those big companies have been wrapping up and consolidating similar companies in Latin America and are now looking at Africa as the next driver of their growth, Stoneham believes. In fact, he felt that DPI’s timing was “fortunate” as some were already mulling a bid for Solevo.
“The upheaval around the Russian invasion of Ukraine gave a few potential bidders other things to worry about,” he added.
Legacy
Aside from its Swiss headquarters, Solevo is active in Angola, Burkina Faso, Cameroon, Côte d’Ivoire, Ghana, Madagascar, Mali and Senegal.
“This is an African business with some members of the leadership team sitting in Geneva because it’s a logical place to cover many different markets, especially in the context of the volume of trading and procurement behind the business,” said Stoneham.
The company also has historical European links, as Helios, alongside Temasek, acquired it in 2017 via the carveout of French trading company Louis Dreyfus Company’s African Inputs business. But its flagship brand, La Cigogne or The Stork, has been operating in Africa for over 75 years.
The last few years have delivered double-digit growth, said Stoneham.
“The business is on a very strong path to be the acknowledged leader in speciality chemicals distribution across the continent. Solevo is undoubtedly unique in the sense of its sheer presence, years of operation and respect of its brand. Nobody else has such deep capillary networks, so many distribution sites, or so much focus on the value-add. Two thirds of our people are in sales, technical services, customer services and application expertise.”
DPI expects that growth to continue as the speciality chemicals business thrives amid African urbanisation.
“There are three really big themes in all of our markets,” said Stoneham. “One is urbanisation – we are seeing one of the fastest chapters of urbanisation, probably, in human history. Approximately 700 million people will make their home in African cities over the next decade. Two, the major markets of the continent are at an inflection point in terms of electrification, literacy, and the investment capacity required for industrialisation. Finally, somewhat as a result of the first two, a very large number of people are moving into the middle class.”
City life
As the middle class expands and urbanisation grows, people increasingly adopt urban lifestyles, shopping in the formal retail sector, adopting urban eating habits and building houses, Stoneham explained. That means the speciality chemicals can thrive across agriculture, food and nutrition, water treatment, packaging and more.
“Let’s say I’m a water treatment business,” he said. “I need a partner who really understands the range of products that are available to enable me to meet my objectives. Someone who can tailor the supply chain solution, give me the volume I need when I need it and give me the onsite tech assistance I need.”
DPI will aim to deepen Solevo’s reach within its existing market, expand organically and via M&A into other countries, deepen its product offering and achieve high standards of ESG, said Stoneham.
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