Philippine-focused hard discount grocery chain DALI has secured $8.4 million (about P493 million) investment commitment from DEG, the investment arm of German state-owned development bank KfW.
DEG, which announced the investment commitment on its website, said the investment will support the company’s expansion of stores and warehouses across the Philippines.
The German investor’s commitment comes three months after DALI secured $25 million from Venturi Partners, a Singapore-based growth firm, which invested through its $180-million maiden fund.
DALI, which launched operations in February 2020, operates more than 600 stores across the Philippines. Its store network is currently served by five distribution centers, with more under construction.
The company offers a range of 400 consumer goods encompassing both food and non-food. Its stores are based on a German supermarket model where operations are stripped to their bare necessity without fancy interiors or towering advertising costs.
On its website, DALI said emerging markets like the Philippines and other Southeast Asian countries with high population growth, sensitivity to food inflation, and a high proportion of food spending relative to income offer much potential for implementing hard discount retail.
Hard discount retail is an established format in places such as Poland, Turkey, and Colombia, it added.
DEG said its investment will be used to accelerate the roll-out of new stores and distribution centers, as well as to drive the launch of new private-label brands.
“DEG’s investment will have a significant developmental impact by facilitating access to food and other consumer products at affordable prices for customers predominantly based in Tier 2 and Tier 3 cities on the Island of Luzon and across the Philippines,” the investor said in a disclosure.
DEG added that the investment aligns with its strategy of supporting SMEs in developing countries, promoting the development of local upstream supply chain producers, and providing access to affordable, high-quality food and other consumer products for a broad population.
DEG’s other investments in the Philippines include $8.26 million in Osmanthus II Cayman Investment, which holds a 15% stake in BDO Network Bank; $10 million in MAA General Assurance Philippines Incorporated; and $19.4 million in Communication and Renewable Energy Infrastructure (CREI) Phils.