SOUTH AFRICA – Norfund, the Norwegian investment fund for developing countries, is investing ZAR 80M (US$4.7M) in convertible debt in the expansion plans of Synercore Holdings, a South African food ingredient manufacturer.
Established in 2016, Synercore has a specialty in the formulation and manufacture of food ingredients which it sells to fast-moving consumer goods companies, precisely in the dairy and cereal industries.
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 and non-GM sources.
Synercore is confident that this expansion will expand its ingredient portfolio as well as provide affordable products to the dairy and cereal industry within and outside South Africa.
Dr. Tertius Cilliers, CEO of Synercore revealed that these acquisitions will expand capacity and improve efficiencies as far as blending and manufacturing is concerned.
Synecore is among the few companies in South Africa which produce ingredients for the dairy and bread industry.
Despite the country’s food sector being well developed, most of the players in the industry prefer to import their ingredients from manufacturers in Europe.
According to the country statistics, in 2019 the country imported more than US$1bn in food ingredients.
Norfund is optimistic that the investment will play a crucial step in attracting major food companies who prefer to import food ingredients despite the country having a well-developed food sector.
“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 and reducing imports”, said Kemp, Investment Manager at Norfund.
With the investment, Norfund is also confident that Synercore will be able to create more highly skilled jobs and contribute to food security by providing solutions that increase product shelf life.
Dr. Tertius also added that it will allow Synercore to backwardly integrate into improving supply chain sustainability, and further diversify and expand the service offering.
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.