British International Investment

ADP III Holding 5 L.P.

North AfricaConsumer - other services

ADP III Holdings 5 LP is the special purpose vehicle for BII’s investment into Kazyon Limited, an Egyptian discount supermarket chain.

Our investment

Description of the investment.

A co-investment, alongside ADP III, into Kazyon.

Founded in 2014, Kazyon is committed to providing access to affordable products to the underserved market in Egypt and the surrounding region. Today, Kazyon is the largest discount supermarket chain with over 600 stores in 18 governorates in Egypt, offering the lowest price possible for household essentials, dry goods, and fresh produce for customers and supporting over 5,000 jobs.

BII's investment will help to fund Kazyon's expansion into Morocco, and will target mostly low-income job creation and low-income customers. It is part of the USD 165 million equity consortium of institutional investors led by Development Partners International (DPI). This funding projects to create over 11,000 new jobs serving 1.5m customers a day in Egypt and over 5,000 jobs over the next seven years and reach over 370,000 customers per day in a new expansion market.

Kazyon will leverage BII and DPI’s expertise in ESG and impact, implementing new ESG action plans.

Impact information

Applies to investments made from 2019 onwards. The tabs in this section define what we expect to achieve through the investment, assessing the potential impact of the investment against six dimensions of impact. You can find more details on our methodology of assessing impact here.

What?

Impact

Enhancing economic opportunities through increased employment and decent work for women and men, which can lead to an improvement in livelihoods, and support low-income populations by providing access to food and other basic goods at the most affordable price points, thus improving the resilience of vulnerable households

How?

How?

Create quality, low- and semi-skill jobs through Kazyon’s first international expansion into Morocco and support the continued growth of jobs in Egypt through the opening of more stores. Increase accessibility of a wide range of affordable foods and basic goods to low-income consumers.

Who?

Stakeholder Geography Characteristics
Employees

In Egypt, only 22% are in Cairo, and stores are typically located on ‘secondary streets’, which speaks to a key component of the business model of reaching outlying, underserved areas/consumers. A similar strategy will be pursued in Morocco.

Based on Egypt profile, >70% of employees estimated to be characterised as low-income; <10% of Kazyon’s employees are female, although DPI (our co-investment partner) is implementing a gender plan to address this.

Customers

In Egypt, only 22% are in Cairo, and stores are typically located on ‘secondary streets’, which speaks to a key component of the business model of reaching outlying, underserved areas/consumers. A similar strategy will be pursued in Morocco.

Given Kazyon's target market, we are confident that the bulk of customers will be considered low-income.

How much?

Scale Depth/Duration

In Morocco, Kazyon projects creating >4,800 in-store jobs by December 2028 (in 875 stores). In Egypt, there are currently >5,000 employees, and Kazyon projects this number to increase to >19,800 in-store employees by end 2028. In Morocco, Kazyon projects its stores will reach ~320k customers per day by December 2028. In Egypt, customers per day are projected to increase from >200k today to >1.8m within this timeframe.

Kazyon’s minimum gross wage for employees is EGP 4,000/month, as compared to a government stipulated minimum wage of 3,000/month in Egypt, and we would expect a similar approach to quality pay in Morocco. DPI is also working wth Kazyon on a detailed job quality action plan. Given the ambitious expansion plans in both countries, we would expect relatively immediate and growing impact over the next five years through long-term employment.

Contribution/additionality

Contribution/additionality

Financial: BII's capital will help DPI to make the investement, having hit its country exposure limit for Egypt.
Value: Limited opportunity for value-add due to passive co-investment, but Kazyon may be a candidate for a Resource Efficiency loan, but this would only be explored post-investment.

Environmental and social information

  • Environmental and social summary

    A high-level description of the environmental and social aspects of the investment. This may include a summary of key environmental and social risks identified during environmental and social due diligence (ESDD); key elements of an environmental and social action plan (ESAP); or ways in which we plan to support the investee improve environmental and social standards, such as through their environmental and social management system (ESMS); as well as any other priority areas agreed with the investee.

  • Environmental and social risk

    A risk category rating, which indicates the level of environmental and social risk associated with an investment. For an explanation of the categorisations used, see here. We consistently provide an environmental and social risk category for all investments screened from 2023 onwards.

Environmental and social summary

We partnered with our fund manager to co-invest in this company, including by relying on our fund manager's ESAP. The ESAP included items related to environmental and social resourcing, occupational health and safety, human resources management and community safety.

Environmental and social risk

Medium-High

Reporting and Complaints Mechanism

The Reporting and Complaints Mechanism allows anyone outside BII to report alleged breaches of the business integrity or environmental and social provisions of BII’s Policy on Responsible Investing. This includes breaches made by BII, a BII investee, or a portfolio company of a fund in which BII has invested. The Reporting and Complaints Mechanism Rules are available here. Reports and complaints can be submitted by email to [email protected] or by mail. See more details on our Reporting and Complaints Mechanism here.

For any other general enquiries contact us at [email protected]

  • Key facts

    First published

    When the investment was first published on the website database.

    :
    July 2023
    Last updated

    When the last quarterly update of the website database occurred.

    :
    January 2024
    Project number

    An identifier number shared by investments in the same project.

    :
    D6119
    Status

    The current status of the investment (green flag for active and red flag for exited).

    :
    Active
    Region

    The geographical region where the country is located. We currently invest in Africa, South Asia, South East Asia and the Caribbean. In 2023, BII’s investment mandate was extended allowing it to invest in regional funds linked to Ukraine, with the majority of activity expected to begin post-war. Investments outside these regions were made prior to 2012 under previous investment mandates.

    :
    North Africa
    Country

    The countries from which we derive the value of our investment. Where value is derived from multiple countries, this is indicated.

    :
    Egypt, Morocco
    Sector

    We prioritise those sectors that facilitate development and need our capital the most. Our priority sectors contribute towards many of the Sustainable Development Goals. They range from investing in the power infrastructure that will provide people with better access to electricity, to investing in financial institutions that direct capital to the individuals and businesses that need it the most.

    :
    Consumer - other services

    We provide capital in the following ways: directly – through direct equity, direct debt, guarantees and other non-intermediated financial instruments; and indirectly – principally through investment funds.

    For direct investments and fund investments, this is the date BII committed capital to the investments. This is typically the date on which legal agreements are signed by all parties.

    For the portfolio companies of our fund investments, this is the date (either the month or the quarter) on which the fund committed capital to the portfolio company.

    For direct equity investments, this is the date at which British International Investment exited the investment.

    For debt investments, this is the date at which the final debt repayment was made.

    For funds, this is the date at which the fund was terminated.

    For underlying fund investments, this is the date at which the fund manager exited the investment.

    The total amount committed, per financial instrument, per investment, on the date BII becomes subject to a binding legal obligation to provide funding or assume a contingent liability. This information is provided in US dollars.

    For direct investments, this is the amount that BII has committed to the business or project. For fund investments, this is the amount BII has committed to the fund.

    The currency in which the investment was made.

    Investment type :
    Equity
    Start date :
    April 2023
    Amount :
    $10m
    Currency of investment :
    USD
    Domicile

    The company or investment fund’s place of incorporation.

    :
    United Kingdom

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