ECP’s initial $30 million investment to help develop one of largest salt reserves in worldadmin
Emerging Capital Partners (ECP), an international private equity firm focused on investing across the African continent, today announced a U.S. $30 million initial investment in Salt Investment S.A. (SI). The company is a new Djibouti-based salt production and export company that will harvest, wash and export salt extracted from Lake Assal, the largest undeveloped salt reserve in the world. The investment was made through a Mauritius special purpose vehicle, which will hold a controlling stake in the company.
The investment will finance SI’s operations, specifically purchasing production equipment, and constructing or renovating facilities, storage units, a shipping platform and housing sites. The salt production will be predominantly used for deicing, chemical applications and industrial feedstock.
“The salt industry is attractive because growth in the Middle East and Asia is resulting in a shift toward high-quality production that is required for chemical manufacturing,” said Hurley Doddy, chief operating officer of ECP. “Economic conditions in Djibouti are also favorable. GDP growth is high, inflation is low, and the government is supportive of economic growth and job creation.”
Lake Assal has ideal conditions for salt production including high evaporation rates, high temperatures, and a pure brine feed from the Red Sea. The result is that many of the key elements for salt production occur naturally in the environment. ECP estimates that SI could produce and export about four million tons of salt a year by 2012, which would place the company among the five largest salt producers in the world.
“In addition to its plentiful sea salt reserves, Djibouti is strategically located with good access to shipping lanes,” said Vincent Le Guennou, executive vice president of ECP. “We expect SI will build a significant export business for the country around one of its most important natural resources.”
SI is led by chief executive officer Daniel Sutton. Sutton has more than three decades of experience running industrial facilities — including salt extraction facilities similar to those planned for Lake Assal — for prominent players such as Cargill Salt, United Salt Industries and Virginia Gas’ salt operations. Ali Guelleh, a prominent local businessman whose family has been involved in salt production for decades, is the chairman of SI and a significant shareholder. Other investors in SI include Iroko Securities (UK) and Hardtech Group (Spain).
The initial SI investment was made through ECP’s U.S. $523 million ECP Africa Fund II and provided an opportunity for the fund to further diversify its portfolio in terms of industry and geography. Africa Fund II was established in December 2005 to capitalize on the numerous investment opportunities throughout Africa in sectors such as telecom, natural resources, financial services, agribusiness, transportation, and power and water.
Emerging Capital Partners (ECP) is the first private equity firm to raise more than U.S. $1.2 billion to invest in companies across the African continent. The ECP team has an eight-year track record of pan-African investing through six successful funds. The firm’s investment strategy is focused on delivering consistently above-market returns to investors that are uncorrelated to the U.S. and other global economies. For more information, please see www.ecpinvestments.com.
Source: Emerging Capital Partners