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Firm expands temperature-controlled logistics platform through acquisition

1st September 2023

     

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Leading cold chain logistics platform Commercial Cold Holdings (CCH), which is controlled by funds managed by African Infrastructure Investment Managers (AIIM) a subsidiary of Old Mutual Alternative Investments, is achieving significant milestones in its expansion within the temperature-controlled logistics industry. 

CCH last month announced that it had closed a deal to acquire 100% of leading temperature-controlled warehousing, distribution, and supply chain solutions provider Sequence Logistics. The acquisition will be funded by increased equity commitments to CCH by the AIIM-managed funds: AIIF4 and IDEAS Managed Fund.   

“The deal will allow CCH to deliver on its mandate by securing attractive long-term partnerships with market-leading retailers, wholesalers and food producers,” said AIIM investment director Damilola Agbaje

This is CCH’s second acquisition in this sector. In 2022 CCH announced a milestone deal that would see it acquire CCS Logistics from Oceana Group. That deal has now been successfully closed.  

To bolster CCH’s foray into the temperature-controlled logistics industry, the business has appointed Paul Gibbons as CEO. Gibbons has over 20 years’ experience in cold chain distribution and supply chain management, making him a "recognised industry leader" in this field.

He has designed and implemented cold storage supply chains for over 30 fast-moving consumer goods food producers and three major retailers, as well as led customer engagement for a major third-party logistics business. He serves as the Global Cold Chain Alliance’s South Africa advisory council chairperson.

“With both Sequence and CCS, we want to be the partner of choice in South Africa for both storage and load consolidation solutions. We will have a technology-led approach as part of the blueprint for the Group to achieve this,” said Gibbons, adding that the acquisitions will see CCH operate storage across nine facilities with about 146 000 pallets in Johannesburg, Cape Town and Walvis Bay in Namibia.  

He elaborated that the CCH’s interest in Sequence was driven by the company’s proven ability to deliver a high-quality service at attractive prices. “At the core of Sequence’s offering is the emphasis it places on technology as an enabler of its business.”

Sequence Logistics owns 46 000 pallets of temperature-controlled storage capacity across three facilities in Durban, Cape Town, and Johannesburg. The company also manages a fleet of trucks operating scheduled store deliveries for retail partners and food suppliers.  

“Load consolidation allows retail, wholesale, and foodservice partners to focus on service levels; maximising store space and optimising inventory levels, while ensuring on-time delivery of products as they are demanded by stores. For CCH, securing these strategic partnerships ensures greater predictability of cashflows and increased spend per customer,” Gibbons added.  

AIIM believes temperature-controlled logistics infrastructure is critical for both improving sub-Saharan Africa’s food security, allowing domestic producers to meet the standards required to participate in global trade; and creating higher value jobs through more formal food retail and wholesale models. Yet, infrastructure in this sector is underdeveloped and, in some places, non-existent. The CCH investment therefore provides an avenue into a high growth and high impact sector. 

Agbaje noted CCH’s market activity shows its commitment to becoming a fast-growing platform with an expansive outlook.  

As part of its energy efficiency strategy and carbon reduction strategies, AIIM will leverage its “extensive track record in energy investments across the continent” to drive efficiency and improve the CCH generation mix. To this effect, the investment will demonstrate a 20% improvement in energy efficiency across the CCH platform. To offset the risk of the current energy challenges and drive growth in South Africa, CCH will deploy renewable-energy generation and battery storage with AIIM partner companies.  

“We will also be creating additional jobs to ensure adherence to global standards in terms of environmental, social and governance standards. Our targets for ESG are to have 30% females employed by 2025, 30% females in management by 2025 and 30% females on the board by 2025. In addition, there will be 78 jobs created for new hires by 2025,” said Agbaje. 

Edited by Creamer Media Reporter

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