Major South African food producer went from making millions to business rescue in a decade

Daybreak Foods has gone from being one of the largest chicken producers in South Africa, employing over 3,400 people, to business rescue in just ten years. 

This collapse has significantly impacted the Government Employees Pension Fund (GEPF), which has fully impaired the R176 million it provided to Daybreak Foods to fund its business rescue. 

This indicates that the fund, the largest of its kind in Africa, is not confident in the chances of the major food producer making a turnaround. It also spells trouble for the other R485 million the GEPF invested in Daybreak. 

The GEPF revealed this in its annual report for the 2024/25 financial year, which was tabled to Parliament on 18 November. 

It detailed a strong performance from the fund, with its assets under management rising to R2.69 trillion on the back of contributions of R96 billion from members and a stellar year for the JSE. 

The GEPF manages the pension savings of 1.26 million South African government employees, with around 560,000 pensioners benefitting from its payouts. 

However, some of its assets, which are predominantly managed by the Public Investment Corporation (PIC), have been poorly invested in recent years. 

In the current financial year alone, the GEPF wrote off R3.6 billion worth of investments in various unlisted companies.

One of the largest drains on the fund has been the investment it made in Daybreak Foods through the PIC in 2015. 

The GEPF detailed the history of this investment in its annual report, with Daybreak going from being one of the largest poultry producers in South Africa to business rescue in a decade. 

In 2015, the PIC provided funding of R1.1 billion to assist the AFPO Consortium to purchase Daybreak, with R485 million coming from the GEPF. 

At this point in time, Daybreak was firing on all cylinders, with the company employing over 3,400 South Africans and producing nine million birds per cycle of 34 days. This made it one of the largest poultry producers in the country. 

Daybreak is unique in that it operates around a fully-integrated value chain, with its operations encompassing breeding, hatcheries, broiler farming, feed milling, and the processing and packaging of fresh and frozen chicken products. 

In 2017, the PIC snapped up the entire company following various breaches of the original investment agreement. This resulted in the GEPF owning 33.3% of Daybreak alongside the Unemployment Insurance Fund and the Compensation Fund. 

Business rescue

Daybreak’s operational performance steadily declined over the next ten years, with the company coming under severe financial pressure earlier this year. 

In January 2025, Daybreak secured a loan facility from the PIC of R250 million, of which R176 million was disbursed by March 2025. 

These funds were allocated towards working capital and expenditure requirements to support Daybreak’s turnaround plan and address its liquidity issues. 

This marked the beginning of Daybreak’s slide into business rescue, with the CEO resigning in March 2025 after a period of significant organisational changes at the company.

The GEPF said these changes and the CEO’s resignation impacted the stability of Daybreak, pushing it to enter business rescue in June 2025. 

In April, the National Council of the Society for the Prevention of Cruelty to Animals (NSPCA) had to cull over 350,000 chickens from various farms operated by Daybreak after they were left without feed for days, resulting in cannibalism. 

The NCSPCA said staff at several sites had not been paid, and thousands of dead chickens were left in the growing sheds.

The PIC gave Daybreak the remaining R74 million of its loan agreement to ensure it could pay staff and restore improved living conditions for its chickens. 

On 26 September, Daybreak’s creditors approved a business rescue plan to save the company in partnership with the PIC. 

Daybreak’s business rescue practitioner, Tebogo Maoto, has briefly explained this turnaround plan and how it relies on the PIC for funding. 

South Africa’s largest asset manager has already pumped over R200 million into Daybreak in 2025 to try to stave off a potential liquidation and fund its business rescue process. 

The PIC initially bought Daybreak for R1.19 billion in 2015, but it has now allocated over R2 billion in capital to the state-owned company to keep it afloat.

“Let me be honest with you, in order for us to accelerate the recovery, there has to be a capital investment to assist with the reactivation plan,” Maoto said. 

Maoto declined to specify how much money would be needed, but clarified that it would not come solely from the PIC.

“The consideration is to restart operations at one of the abattoirs and to also restart operations at one of the feed mills through an operating partner,” he said. 

“We are creating a runway to kickstart the company’s lean operations and generate cash as early as possible, as well as to rebuild operational rhythm over time.”

The focus on select operations will likely come with labour rationalisation as only two of Daybreak’s five divisions are currently operational. 

“At the beginning of business rescue proceedings, we were able to successfully stabilise the breeding and hatchery farms, which incorporate around 500 jobs,” Maoto said. 

“These operations are starting to wash their face and are producing chicks to be used in the rest of the business. We have generated around R20 million in cash from this process so far.”

Maoto said the reopening of the abattoir typically requires around 1,000 employees, but Daybreak cannot afford to hire as many labourers, so it is likely to be fewer. 

“There will definitely be a retrenchment plan that will be put in place to lay off employees. As we ramp up operations, employees will be called back to employment,” he said.