Spear Capital invests in plastic production units in Zambia and Mozambique

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Spear Capital invests in plastic production units in Zambia and Mozambique

9:47 CAT | 08 Oct 2020

File - Arkay Plastics Mozambique, in Machava. Maputo province. [File photo: Arkay Plastics Moz / Facebook]

Southern African plastic manufacturer Arkay Plastics has received an undisclosed amount of investment from International private equity firm Spear Capital.

Zambian and Mozambican subsidiaries of plastics manufacturer Arkay Plastics will benefit from an undisclosed investment by Spear Capital, we learned from media sources. The resource will bolster the working capital needs of Arkay’s units and support plastics production.

Although the amount to be allocated by Spear Capital has not been disclosed, it is known that the firm invests between $2 and $10 million in companies operating in specific sectors in Sub-Saharan Africa. Spear Capital’s investment is motivated by Arkay’s business model and its expansion strategy in Southern Africa. According to Shaw Mabuto, a partner of Spear Capital, the financial contribution will strengthen the production and sales structure of Arkay’s subsidiaries.

In many southern African economies, the use of plastics remains high despite the willingness of some governments to reduce it because of its adverse effects on health and the environment, according to the Plastic Atlas 2020, published in March.

Kentan Kotecha of Arkay said, “We greatly welcome the capital injection and establishing a partnership between Arkay Plastics and Spear Capital.

“Spear’s management team will assist in overcoming Arkay’s working capital constraints while hastening its sustainable plastic manufacturing competitiveness with local and international customers.

“The investment will further our ambitions of achieving competitive pricing through economies of scale to increase our market share significantly in Southern African region.”

Spear Capital predominantly focuses on food and beverage, retail and wholesale and pharmaceutical sector in sub-Saharan Africa, providing between US$2- US$10 million in growth capital to consumer-based businesses which meet its mission and investment strategy.

“Arkay proved to be a natural investment for Spear Capita, owing to the company’s proven business model and expansion strategy in Zambia and Mozambique.

“Spear’s investment will bolster further expansion exploration and sales through the development of Arkay’s exports markets, while implementing sound governance structure – a vital component for manufacturers within Arkay’s market,” said Spear Capital partner Shaw Mabuto.

Incorporated in Malawi in 1997, Arkay has also established factories in Mozambique and Zambia and exports its products to Zimbabwe, Botswana and South Africa.

Source: Ecofin Agency / Food Business Africa