Africa-Press – Eswatini. For the six months ended June 30, 2023, Inala Capital’s unlisted equity investment portfolio value remained stable, as business valuations are only undertaken by an independent valuation expert annually.
The valuation exercise commenced on December 31, 2023. According to Inala Capital Limited reviewed financial results for the half year which ended on June 30, 2023. The portfolio companies continue to deal with tough trading conditions induced by supply chain challenges, cost push inflation, elevated interest rates and diminishing disposable income, which have an outsised effect on consumer facing businesses. Nonetheless, Alliance Foods (trading as KFC Eswatini) has demonstrated robust performance for the first half of the year and continues to deliver strong results, with KFC Eswatini being the leading quick service restaurant brand in Eswatini.
General Africa Foods Eswatini (“GAFE”) (early growth stage investment) has experienced lower transaction volumes, as consumers shift spend away from discretionary goods towards necessities. While trading conditions at this point in the economic cycle continue to make it challenging for GAFE, the business is showing positive momentum in business activity. Inala’s fixed income investments continue to generate reliable and healthy yields for Inala. These instruments are short term in nature, to maximise the return on treasury capital and to allow Inala the flexibility to deploy capital to one or other suitable unlisted equity investments or follow-on investments into the current portfolio.
Volatility
The current unlisted equity portfolio is valued at E 32.40 million (no change from the results of December 31, 2022), and the fixed income investments are valued at E 24.05 million (an increase of E 1.33 million on the results from 31 December 2022 of E 22.72 million). The company mentioned that with inflation volatility subsiding and interest rates nearing the peak of their hiking cycle, there was an expectation that the economy will stabilise. This should provide much welcomed relief to consumers and stimulate general economic activity in the markets, within which we operate – a major tailwind for the investment portfolio companies. Over and above the structural macro fundamentals that should ease, KFC Eswatini will continue to benefit from consumers lifestyle habits, that are shifting towards fast, convenient, good quality and affordable food offerings. KFC Eswatini will also be opening up a new store in 2024 to further drive value accretion.
Investments
Inala is dedicated to ensuring that it delivers long term sustainable returns, as well as socio-economic impact in the Kingdom of Eswatini by investing in a diversified range of food and agricultural sector opportunities. As such, the Manager is currently exploring step-change investments for Inala to optimise and grow its current portfolio. The company is in negotiations to expand its equity interests in the food and Agri investments, aligning with its regional growth strategy. If successful, the acquisitions include obtaining all shares from Greystone Partners in Alliance Foods. In exchange, the company will swap a minority stake in General Africa Foods Eswatini and issue shares in Inala Capital to Greystone Partners.
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