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XSML backs Qualicoff in debt financing deal

Marking its second deal in Uganda, XSML Capital is backing Qualicoff, an exporter of coffee beans, in an undisclosed, long-term working capital debt financing deal. The transaction is being made through the African Rivers Fund, the Central Africa-focused private equity fund manager’s second fund, which closed with $50 million in commitments earlier this year.

Qualicoff, which was founded by Andrew Ssettimba in 2010, buys green Robusta coffee beans from small holders through a network of small merchants which are then cleaned, graded and sorted before being bagged for export to specialty roasters in Europe and the United Arab Emirates. While coffee is Uganda’s largest export product, smaller Ugandan exporters have struggled to compete effectively with the larger commodity trading houses  due to poor access to finance. The capital will help Qualicoff expand its network of small holder producers to more than 1,000 and help the firm achieve its goal of operating its own coffee processing facility.

“Our financing will help to achieve a step-change in the company’s growth as it can now triple export volumes,” Jarl Heijstee, XSML’s Managing Partner said. “Smaller coffee exporters have only access to short term finance, limiting their export volumes and their ability to compete effectively with the larger coffee export houses. With our financing of Qualicoff we hope to break this mould.”

Qualicoff is the latest in a string of deals undertaken by XSML in the last few months. By our calculation, the transaction is the sixteenth for the African River Fund since it held its first close in May 2016.  The fund follows much the same strategy as its $19 million predecessor, and typically backs well-managed, growing small and medium businesses in the Democratic Republic of Congo, Uganda, Congo and eventually Burundi with debt, equity or mezzanine capital in deals ranging from $100,000 to $5 million in size.

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