The AAF SME Fund, a private equity fund focused on African food production and processing, managed by Databank Agrifund Manager Limited (DAFML), has successfully closed its investment in Norish, one of the largest producers of fortified blended foods and animal feed in Ethiopia.

Funding from the AAF SME Fund included a mix of equity and mezzanine financing.

Norish’s animal feed facility has been in operation since 1965 and is one of the largest producers of animal and pet feed in Ethiopia.

Since 2007, Norish has partnered with relief and food agencies to provide highly nutritious corn soya blend (CSB) to impoverished communities across Ethiopia.

Over time, Norish has distinguished itself as the supplier of choice for several international organizations, including the World Food Program, USAID, and Medecins Sans Frontieres.

With a large local supply deficit and a growing population of over 90 million, of which 40% are children between the ages of 0-14 years, there is a crucial need to increase corn-soya blend production in Ethiopia.

Dennis Matangira, DAFML Senior Managing Partner, said: “Our partnership with Norish is crucial for the extension of Norish’s food products into commercial channels and the extension of animal feed consumption given the important role of livestock in the Ethiopian economic ecosystem.”

Ethiopia is home to Africa’s largest livestock population.

Growing urban population and rising incomes are also fueling demand for livestock products such as eggs, milk and meat.

The investment will support Norish’s working capital and capex needs as well as the expansion of its CSB product into the retail market.

In conjunction with this investment, the AAF’s Technical Assistance Facility (TAF) will initiate projects that will assist Norish in developing pack sizes for bottom of the pyramid consumers, particularly mothers, in addition to building Norish’s capacity in procurement and production planning.

Other projects will focus on providing agronomic assistance and inputs to the 1,000 smallholder farmers who form an important part of Norish’s supplier network.

Ammar Gafar Elyas, Norish Chairman, said: “Partnering with a PE firm like Databank with exceptional experience on the continent will allow Norish to leverage its existing platform well beyond the Ethiopian market alone.”

DAFML’s investment comes at a time of growing private equity activity in Ethiopia.

In June 2014, KKR announced a $200m investment in AfriFlora, an Ethiopian flower company.

Catalyst Principal Partners, an East African focused fund, similarly invested in a water business in Ethiopia in 2013, and UK based 8 Miles, bought Awash Winery in 2013.