CVC agrees to sell troubled African tea plantation business

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CVC has agreed to sell the troubled Kenyan tea estates it bought from Unilever less than three years ago to Browns Group, making the Sri Lankan conglomerate the world’s largest tea exporter.

The private equity group’s tea business, Lipton Teas and Infusions, announced on Wednesday that it would divest from its plantations in East Africa, including the controversial Kericho plantation in Kenya, which has a history of violence and sexual abuse.

The company did not disclose the size of the transaction, but said the proceeds would be reinvested in a program to transform the tea industry. As part of the deal, Browns agreed that the 87 million kilograms of tea it sells annually will be grown to Lipton’s environmental, social and governance standards.

Browns is owned by Sri Lankan holding company LOLC Holdings, whose portfolio spans automobiles, pharmaceuticals, mining, agriculture and financial services. The group owns tea, pepper and rubber plantations in Sri Lanka, and last year bought its first tea plantation business in Kenya from Scottish group Finlays.

CVC acquired the three plantations in Kenya, Rwanda and Tanzania in 2021 as part of its €4.5 billion purchase of Unilever’s tea business. Lipton, whose brands include PG Tips, Lipton and Pukka, is the world’s largest tea company.

Lipton CEO Nathalie Roos has set out to improve tea quality to improve wages and working conditions. “Our ambition is to roll out our standards across the industry,” she told the Financial Times following the announcement.

The sale to Browns frees CVC from a number of problems associated with ownership of the plantation.

Last month, the Financial Times reported that a consortium of cooperatives in Kenya claimed to have been ignored after expressing interest in purchasing the properties, arguing that a sale to the local community would return the land to descendants of clans who had been evicted in the early 20th century.

Lipton said on Wednesday it would offer shares totaling 15 percent of the Kenyan operating company to local communities, “to create accessible community equity and mutually aligned economic participation.” The company also said it would invest 1 billion Kenya shillings (€7 million) in a new community welfare trust.

Last year, Browns offered a similar structure when it bought Finlays’ real estate business in Kenya. The two parties agreed to offer 15 percent of the shares for public sale of the company through a local cooperative.

Historical violence and human rights issues in the region have loomed large over the region’s plantations. TO BBC Overview A documentary filmed in the final months of Unilever ownership revealed that sexual abuse was widespread on the plantation.

The local community has also protested against the mechanization of tea plantations by burning picking machines, arguing that they have deprived workers of their livelihoods.

Private equity groups Advent International and Carlyle ended up withdrawing their bids for the business when it was first put up for sale, in part because they were unwilling to take responsibility for the workers who depended entirely on the plantations for their livelihood, or because to take risks. Bad headlines in case something goes wrong.