SOUTH AFRICA – Norfund, the Norwegian Investment Fund for Developing Countries, has invested US$8m in South Africa-based raisin processor and distributor, Redsun Dried Fruit and Nuts.
The equity investment will be channelled towards expanding Redsun’s operations with two new state-of-the-art facilities that will help it grow its market share in the healthy snacks market.
As part of the plan, growth investment by Norfund will enable Redsun to double its current capacity by building the sole raisin processing facility in Vredendal, the fastest-growing frontier for raisin production in South Africa.
Vredendal provides diversification and logistical benefits due to it being based in a different intake region with a unique climate that is close to Cape Town, one of Africa’s main ports.
Established in 2009, Redsun is based in Keimoes (Northern Cape), where approximately 90% of the country’s raisins are produced.
Meanwhile, the company is also diversifying its dried fruit and nut offering by building a new pecan wet cracking facility adjacent to its Keimoes raisin facility as it entrenches itself in the fastest growing crop along the Orange River.
This will be one of the first wet cracking facilities in the southern hemisphere. The technology has been used for more than 10 years in the US and provides higher yields than the current dry cracking technology used in South Africa.
South Africa is the third largest producer of pecans in the world; however, it does not have a major pecan wet cracking facility operating in the country, which is due to the pecan production historically being too little to be financially viable for wet cracking.
However, the country’s pecan production more than doubled from 2014 to 2021, with production estimated to triple by 2030.
The twin investments are expected to more than double Redsun’s current employees from 163 and add 200 new jobs and support more than 6,000 indirect jobs.
“This investment in Redsun fulfils our mandate by creating jobs and increasing value in the company. It is also in line with our strategy to create jobs by processing agriculture locally.
“The new pecan wet cracking facility and raisin processing facilities are going to be instrumental for the company and the region. We are excited to partner with an experienced management team and to benefit from 1K1V’s access to Three-Dimensional Capital,” said project manager André Kemp.
The company is at an advantage at a key juncture in the international raisin and pecan industry, as the US production level is shrinking, but demand is growing worldwide.
South African raisin production has seen strong growth the last 10 years, and the trend is expected to continue.
Norfund will take an active shareholder role at Redsun and obtain a board seat as part of the investment, joining One Thousand and One Voices (1K1V), a private equity fund.
1K1V invested growth capital in Redsun in 2015, enabling Redsun to expand its operations and increase its production by over 160%, supported by sourcing product from 270 farmers in Southern Africa annually.
Since the 1K1V investment, Redsun’s revenue has almost tripled and its market share has nearly doubled.
Today, Redsun is one of the leading raisin producers in Africa, exporting 95% of its produce to Europe, the Americas and Asia.