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Abraaj Group divests Koba International stake to Capital Group Private Markets

Published 14 September 2016

The Abraaj Group has sold its investment in Koba International Group to Capital Group Private Markets for an undisclosed amount.

Abraaj made the exit through its ALAF I Fund. Koba is the fifth exit from the Fund, which invested predominantly in Mexico, Colombia and Peru.

Capital Group Private Markets made its investment through CIPEF VI, a $3bn fund focused on building a diversified global emerging markets private equity portfolio.

Koba operates the highly successful chain of D1 supermarkets in Colombia and it is the leading hard discount retailer in the country, providing high quality basic staples at the lowest prices.

The hard-discount model has been well-received in Colombia, where consumers are increasingly opting for proximity over full-service supermarkets.

Colombia’s high urbanization rate, equivalent to 75% of the total population, together with heavy traffic and insufficient transportation infrastructure, drives consumer preferences towards smaller grocery stores closer to their homes.

Given its strong growth, D1 is at an important inflection point and is well-positioned for significant gains in market share in the Colombian retail sector over the coming years.

D1 stores offer around 500 different high-quality products (“SKU”). Koba locates these stores in densely populated areas predominantly in middle income neighborhoods across several cities in Colombia.

The low prices are achieved through its high buying power per SKU, its own distribution network, low operating costs and by applying simple management principles at the stores and across all functions.

Abraaj invested in Koba in 2010 when the latter had just started operations with approximately 20 stores. During its tenure as a shareholder in Koba, Abraaj introduced significant corporate governance and organizational enhancements, bringing in other institutional investors to help fund the accelerated growth of Koba.

Today, Koba has almost 500 stores, over 5,000 employees and serves close to 10 million customers per month. Six years on from Abraaj’s investment, Koba is one of the most dynamic players in the Colombian retail space.

The Abraaj Group in Colombia managing director Daniel Wasserman, commenting on the exit, said: “It has been a privilege partnering with Koba. Helping Koba grow over the last six years and seeing it become what it is today has been incredibly rewarding.

“Our exit supports the Abraaj investment thesis of combining our financial and operating experience across growth markets with well managed companies who are positioned for success.

“Koba’s accomplishments have been exceptional and we wish our former partners, management, and Capital Group Private Markets every success for the future.”

Commenting on the investment, Capital Group Private managing partner Mark Martin Diaz Plata said: “Koba and D1 are very well positioned to build on their existing success. There is a tremendous opportunity for D1 to continue to expand across Colombia, given its strong local brand, impressive track-record on execution, and customer recognition.

“We are glad to have the opportunity to work with Koba as it enters this important next stage of growth.”

Source: Company Press Release