Block Commodities taking 21pc chunk of South Africa fertiliser firm VIPA

Block Commodities has entered into an agreement to acquire a strategic 21% equity stake in VIPA Holdings, a South African wholesale distributor of fertiliser and speciality plant and animal nutrition products, it announced on Wednesday.

The company described VIPA as one of the leading providers of fertilisers and raw animal feed materials to South Africa's agricultural industry, adding that it shared Block Commodities' business ethos of supporting farming communities, and as such would provide it with access to high quality and specialised agricultural products.

It said the Acquisition, when completed, would form the procurement platform for the firm’s strategy to develop commodity ecosystems in Africa based on blockchain technology, the initial such ecosystem being based on the Company's existing fertiliser business.

The acquisition would be effected by a combination of a subscription for new shares in VIPA, and the purchase of existing shares in VIPA.

“We are delighted to enter into this transaction with VIPA as it gives Block Commodities access to the wholesale market and revenues of the South African fertiliser market, as well as securing a significant relationship with an established procurement operation that will underpin our own trading business,” said Block Commodities executive chairman Chris Cleverly.

Block Commodities said the consideration payable for the acquisition would consist of a cash subscription of $0.15m for new ordinary shares to be issued by VIPA , and payment of $0.61m to existing shareholders of VIPA for the acquisition of existing shares, to be satisfied by the allotment of 748,463,318 new ordinary shares in Block Commodities.

Completion of the acquisition remained subject to satisfactory due diligence, and all necessary third-party approvals being obtained in all relevant jurisdictions to enable the parties to complete the acquisition.

“VIPA is a highly organised and focused agricultural business that is exporting large volumes of what is termed beneficiated fertilizer products into Africa,” said VIPA chief executive David Smillie.

“Based in Durban and with offices throughout South Africa, VIPA has the ability to provide first class trade execution services throughout the continent.”

Smillie said entering into the agreement with Block Commodities would help guarantee the closure and completion of large-scale agricultural contracts, and provide access for product to thousands of small scale farmers in the region.

“VIPA and Block Commodities will also collaborate in the development of strategic software to help streamline logistics and payments from clients across Africa.”