Bulls n Bears Entrepreneurship Zone :: Agile Capital CEO sees opportunity in infrastructure and agri-processing

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South African-based private equity firm, Agile Capital, was launched in
2015 as a result of a management buy-out. The name means ‘to build’ in
Tswana and in English defines agility and speed.

How we made it in Africa sat down with CEO Tshego Sefolo, to find out how
he approaches his investments.


Can you single out one of your greatest challenges in establishing Agile?


The biggest challenge is [getting] the right people. The saying goes that
people are your greatest assets, and I always say that in any organisation
or business, good and competent people are your greatest assets, not just
any person. And that’s been the greatest challenge.

More importantly, that you’ve got ethical people, who, when confronted with
very tough options, choose to do the right thing because very often when
pressure is mounting there is a temptation to sometimes push the envelope a
bit and you need people who are going to say “wait”, and draw the line.


If you were to look at investment lessons, one of your most important that
you’ve learned in your career, what would that be?


That you need a combination of good people and a good business. It doesn’t
help having a good business being led by bad people and the converse is
true. As part of your investment thesis and programme you must identify very
early on which of those two variables is missing because when you get the
combination wrong, that’s when you lose money.

Where we’ve done well is where we’ve backed very solid management teams in
companies that have had very good businesses. In terms of market position,
they’ve got the right products, they’ve been developed over time, there’s
tangible track record and there’s a very compelling value proposition. And
if you get that right, that’s when we’ve done very well.


Identify an untapped opportunity for private equity investors in Africa.


If I look at South Africa and the rest of Africa, there are two particular
investment themes that we’re seeing. Infrastructure is one of the them, and
when I talk about infrastructure it means [not only] roads and dams and
other facilities, but also investments aligned to that, such as the funding
of the infrastructure. If you can find some clever funding models to be able
to facilitate [infrastructure] you can generate a good return.

You go to places like Tanzania and Nigeria and you look at the amount of
air traffic that is currently being experienced – any kind of funding
solution, and product, that is aimed at the aviation space, would be quite
useful in a market like that. There are pockets of value that one can
identify.

In South Africa specifically we’re seeing agro-processing and food
production becoming quite topical. If you pick the right investments here
you can generate superior returns.


What are the skills required to succeed in Africa?


The South African market and private equity industry is quite mature and
its well understood. When you go further north there is an education process
that goes with what you’re offering. The idea of having an equity partner
who is not active in the business, for a founder and entrepreneur, is quite
unique.

I find that some of the businesses that you look at in our space, they are
family businesses that have gone through generations and now they’re
bringing in a professional investor; that marriage really needs to be
handled very carefully because they’re not used to that. Even if you reduce
it into an agreement you cannot just leave it there. You need to make sure
you are integral to the business and spend time developing the relationship
and therefore your interpersonal skills are under the spotlight.


What sort of work goes into fostering those relationships?


If I look at where we’ve managed to have those fruitful relationships and
partnerships, they’ve come through other relationships that we’ve had in
some of those markets. You go into Tanzania, for example, and – getting into
the retail space – what we have found is to the extent that we already have
an existing relationship with a particular party, it becomes easier to
leverage off that when building the network. For you to parachute yourself
into the DRC and think you’re going to do deals, you’re going to find it
very challenging.--Howwemadeitinafrica


<https://www.howwemadeitinafrica.com/due-diligence-agile-capital-ceo-sees-op
portunity-in-infrastructure-and-agri-processing/61251/tshego-sefolo-agile/> 

Tshego Sefolo

 

 

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Bulls n Bears 

 

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