Private-equity firm seeks out opportunities in Africa

19th October 2018 By: Natasha Odendaal - Creamer Media Senior Deputy Editor

Fully black-owned private-equity company Agile Capital is actively seeking to invest millions of rands into diverse sectors and companies with a solid presence across Africa.

The pan-African group, formed in 2016 following the management buy-out of Zico Capital, has available capital of about R750-million of a R1-billion fund available for investment into new opportunities.

“We draw on capital largely from First Rand Group. They committed to our initial fund, which we raised in 2009, of R500-million. The second fund we raised in 2014 was R500-million. And now our latest fund of R1-billion, which we are in the process of deploying,” says Agile CEO Tshego Sefolo.

There are many opportunities across Africa, it is just a function of finding the right investment with a compelling growth story to add to a strong existing portfolio of companies driving the African agenda more aggressively, he tells Engineering News.

Agile Capital currently has a portfolio of 15 companies across various sectors, largely domiciled in South Africa with a strong presence in Africa.

He cites an investment in South Africa-based Provantage Media Group, which is based in South Africa but has a presence in several African countries, including Tanzania, Nigeria, Ghana and the Democratic Republic of the Congo.

Despite economic, political, regulatory and corruption challenges, there remains many opportunities for investment and growth across Africa, with scope across sectors such as retail, property and mining services, besides others.

However, the investment approach is a cautious one, with a strategy of teaming up with local partners and with a “game plan” similar to that deployed locally.

“It has historically been difficult for companies to parachute themselves into the rest of Africa and to make a successful fit to the country being entered,” he says, noting that often there is mismatch between the strategy and the host country’s environment.

Africa as a whole is often painted with the same brush, however, each country on the continent is drastically different, he elaborates, highlighting differing regulations and legislation, operating environment, currency and repatriation difficulties and political and economical risks.

“When we invest, we do it through our partners. It all comes down to the partners you invest with.”

Agile Capital director Londeka Shezi adds that, increasingly, Africans are doing business with Africans and investments are being pooled into in diversified packages to maximise returns as the African agenda becomes more topical.

Further, beyond the returns, she says that this presents an opportunity to get ahead of the curve and become a launch pad for mutual knowledge and skills-sharing between the different countries on the continent.

Each country has knowledge South Africa can learn from, while the nation has skills it can transfer.

“Business in Africa can be different. We can be on the forefront of helping Africa achieve its business aspirations,” she says, noting the need to structure the business relationships in such a manner that it results in proper skills transfer and evolves from the China story, from which lessons can be learnt.

China – and other economic powerhouses – has significantly invested in Africa, however, in many cases, the skills transfer and benefits for Africa have not been fully exploited.

“We have the right concepts and we want to learn from each other, however, when it comes to execution, it looks like a failure. “We need to learn from the lessons and develop the right people with the right skills,” she tells Engineering News.

With the US increasing its protectionist approach and tariffs against China, the continent is likely to see increasing influence and involvement from the Asian country.

“China is open for business, and many African countries are willing to entertain that partnership,” Sefolo explains.

The key will be in the structure and models of the relationships to the benefit of all partners, particularly in deep skills transfer.

Through the equity fund, the group is able to invest in growth and acquisition capital, traditional buy-outs and buy-ins, buy and build platforms and black economic-empowerment solutions.