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Cold Solutions announces Sh7.5bn investment in Kenya

NAIROBI, Kenya, Jul 13 – Cold Solutions Kenya Limited, a leading temperature-controlled warehouse and logistics service provider, has announced that it will invest Sh7.5 billion (USD 70 million) in constructing state-of-the-art, temperature-controlled cold storage warehouses in the country.

The cold storage facilities will be located in Nairobi and Mombasa. The firm will construct Cold Solution’s flagship facility in Tatu City Special Economic Zone in Nairobi.  

The 15,000 sqm grade ‘A’ cold storage complex on six acres at Tatu City will be the country’s largest, most advanced and efficient in the region. A typical grade ‘A’ facility is defined as that with high specifications in terms of quality, size (much bigger in scale than typical warehouses), hook height and dock levellers, large lay-down area around the warehouses and specialist facilities such as cold storage.

Utilising a combination of local and international specialists, Cold Solutions Kenya’s facility at Tatu City is expected to be operational in 12 to 18 months. It has been flexibly designed to cater for numerous temperature ranges from +26 to -40 C and multiple product ranges, from fresh fruit and vegetables, to pharmaceuticals and vaccines, meats and poultry and frozen foods. 

Cold Solutions Kenya Limited is a portfolio company of ARCH Cold Chain Solutions East Africa Fund, a private equity fund advised by ARCH Emerging Markets Partners Limited (ARCH).

ARCH is a specialist emerging markets investment advisor with deep experience of emerging markets, private equity, asset management and legal and governance matters over many decades. ARCH focuses on delivering added value to investments, based on a risk-adjusted approach.  ARCH has an existing and planned network of operational offices in emerging markets, giving it an extensive global reach. ARCH’s decision-makers are on the ground when it counts, and this helps to ensure investment and execution recommendations and decisions are made using robust, timely and relevant information.  ARCH has successfully launched and is advising two emerging markets focused themes (Renewable Energy and Cold Chain Solutions platforms).

By establishing the Cold Chain Solutions East Africa Fund, ARCH Emerging Markets Partners Limited intends to spearhead the development  and operation of  large scale energy efficient cold chain solutions facilities and end to end logistics throughout five countries in East Africa covering Ethiopia, Kenya, Rwanda, Tanzania, and Uganda.

The fund plans to build up to 10 state-of-the-art temperature-controlled cold storage warehouses in the region. The warehouses will be built to international standards to enable food and product safety. The investment in East Africa will be at least Sh 21.4 billion (US$200m).

Reacting to the investment announcement in KenyaJared Irving, Managing Director, ARCH Emerging Markets Partners Limitedsays, “We are proud to announce the inaugural Cold Solutions facility in Kenya, the first of a network of industrial scale, cold chain solutions throughout East Africa. Cold Solutions’ one-stop-shops are designed to allow businesses to keep track of products in real-time and facilitate transportation across East Africa through temperature-controlled trucks, either within inner city or to long-haul destinations. Our storage facilities, together with our transportation and management services, will mean dependability and reliability.”

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Chris Barron, Kenya Country Head for Rendeavour, Tatu City’s owner and developer, adds, “We are delighted to welcome Cold Solutions’ transformational cold storage complex to Tatu Industrial Park, which is home to more than 50 Kenyan, East African and multi-national businesses building best-in-class facilities in Kenya’s first operational Special Economic Zone. By providing power, water, waste management, roads and ICT, Tatu City has created an ideal operating environment for businesses entering or expanding in East Africa.”

The need for cold chain solutions in Sub-Saharan Africa

The United Nations’ Food and Agriculture Organization estimates that over 40 percent of food in Sub-Saharan Africa perishes before it reaches a consumer (this is often referred to as food loss). This can be as high as 60 percent for fresh produce in Sub-Saharan Africa.

Even though fruit and vegetable production is a fast-growing sector in Kenya, and it bears considerable local and international market potential, the post-harvest losses of horticulture crops are far higher than those of cereal crops. It is estimated that 40 percent to 60 percent of fruits and vegetables produced for consumption are lost along the supply chain.

Due to a lack of cold chain solutions in Kenya, most crops are only seasonally available with price variations between peak harvest and low season reaching up to 500 percent under normal conditions.

The creation of extensive and reliable cold chain solutions could greatly impact, in a positive way, food security and economic development. Cold chain solutions can play a major role in minimizing food loss as well as improving food hygiene and public health. It could also be enablers for Kenya to take part in international trade as both consumers and producers.

The creation of extensive and reliable cold chain solutions is essential to ensure food security and economic development. Cold chain solutions can play a major role in minimizing food loss as well as improving food hygiene and public health. These businesses are also enablers for developing countries to take part in international trade as both consumers and producers.

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