Agri-Vie, a sub-Saharan private equity fund investing in food and agribusiness, said this week that it has invested $5 million in Kariki Group, a fast-growing Kenyan company that exports cut flowers to such countries as Europe, the U.S. and Japan.
“It’s a strong competitive industry,” Agri-Vie CEO Herman Marias told CNBC Africa. Marias added that his fund typically invests in agriculture projects around the continent but was especially drawn to Kariki’s unique business in one of the country’s largest exports.
Kenya is one of the world’s leading flower exporters with an estimated 38 percent market share in Europe.
The country's flower industry really started to boom in the 1980s, when farmers realized the advantages of year-round growing conditions and optimal sunlight. By contrast, European companies have to spend a great deal to fund artificial light and heat if they want to grow in off-seasons.
Kenya's horticulture industry, which generates about $1 billion a year and employs more than 30,000 people directly, contributes about 1.6 percent to the country’s gross domestic product, according to the Kenya Flower Council.
Nearly 800 million flowers were sent this year to Europe from Kenya in the runup to Valentine's Day, Feb. 14, the Guardian reports.
Within two days of being cut, flowers from Kariki Group locations are transported to the airport in Nairobi and sent to Holland, where nearly two-thirds are sold at the Dutch flower auction at Aalsmeer. After that, the flowers move on to other destinations, including Sweden, Russia, Japan and the United States.
Although Kariki Group isn't the largest player in the Kenyan flower industry, the company has made a name for itself from its socially and environmentally responsible business practices.
“Their standards are extremely high,” Dave Douglas, an investment adviser at Agri-Vie, told website How We Made It In Africa.
Douglas said the fund was impressed by how Kariki's staff was involved in the business at all levels. “It’s profitable and correctly structured," he said. "All those things together we felt was a very impressive formula for us.”