Midcap South African private equity fund PAPE Fund 3 has successfully acquired 45% of the equity in the DDS Group of Companies, an African beverage dispensing and refrigeration services provider.
The DDS Group of Companies provide beverage dispensing and refrigeration services on behalf of the multinational distributors, by the servicing of draught beer installations and coffee machines found in bars and restaurants.
DDS also specialises in the sale, installation and servicing of refrigeration systems, ventilation systems, cold rooms and air-conditioning units, as well as the sale and distribution of spare parts for these systems.
PAPE Fund 3 has also provided loans to key members of the management team to increase their equity stakes in the business.
DDS is an owner-managed business with an established record as an operator in the ancillary services segment associated with the beverage, dispensing and refrigeration industries.
The business was founded in 1995 and operates in South Africa, Mozambique, Nigeria, Botswana, Namibia, Malawi, Ghana, Lesotho, Uganda, eSwatini, Zambia and Ethiopia.
The group employs more than 400 people across the continent and manages about 130 000 assets on behalf of its customers.
“Our group has a conservative, focussed and assertive view on growing operations across countries in Africa and we are confident that the emerging middle-class in countries such as Ethiopia and Nigeria will create a really buoyant market for the beverages industry that it supports.
"Additionally, the growth in the fast moving consumer goods sectors in these countries creates a significant opportunity for DDS to provide and maintain refrigeration, ventilation, cold room and air-conditioning systems into cities and towns located across these countries,” says DDS Group CEO Travers Shaw.
PAPE Fund 3 is a South African broad-based black economic empowerment Level 1 private equity fund in which nine investor institutions and groups have provided R1.03-billion in capital commitments.
PAPE Fund 3 achieved first closing in July 2018 and final closing in January.
DDS Group is the fund’s fourth investment, taking total capital drawn down to about 50% in the first two years of the fund’s ten-year timeline.
PAPE Fund Managers focusses on investing PAPE Fund 3’s capital into midcap, unlisted and cash-generative South African businesses in which the portfolio company management teams are aligned and incentivised through own shareholding in the companies that they run.
“We are looking forward to working with the DDS management team to scale the group and to identify and capitalise on new opportunities linked to economic growth in selected countries across Africa.
"With its longstanding record of delivering high-quality services to pedigreed beverage companies like AB InBev, Unilever and others, DDS is ideally positioned to take full advantage of the burgeoning middle class consumer markets in countries like Mozambique, Botswana, Nigeria and Ethiopia,” said PAPE Fund Managers CEO and principal Dr Zuko Kubukeli.
“PAPE Fund 3’s mandate is to identify young, experienced and highly-motivated management teams and to back them with capital to realise greater levels of their potential. In the DDS Group we have found a credible team of young managers who have been in this business for years, have demonstrated their ability to grow the group’s revenue and bottom line and to successfully penetrate new African markets,” Kubukeli added.