Bulls n Bears Entrepreneurship Zone :: Due Diligence: Alta Semper identifies untapped formal retail potential in Nigeria and Ethiopia

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Alta Semper is a dedicated frontier-markets private equity firm investing
in consumer and healthcare opportunities across African growth markets.
Michael Avery sat down with the managing partner and CEO, Afsane Jetha, to
learn more about the firm’s investment strategy.


What is it you look for in an investment?


We invest in market-leading companies in the healthcare and consumer
sectors across twelve diversified African countries. Our investment
philosophy is to create and preserve value by implementing material
operational improvements across our portfolio companies. We invest in number
one or two market share consumer and healthcare assets which aspire to
expand geographically into neighbouring regions. We like to invest in
buy-and-build platforms and have a strength in helping local families
institutionalise their businesses.


What is the greatest investment lesson you’ve learnt?


The greatest lesson we have learnt is that governance can break or make an
investment. Thus, we only invest majority stakes, which allow us strong
governance rights, significant influence over governance structures and the
ability to bring in new management when necessary. As most of our deal flow
is proprietary and relationship-based, we spend a significant amount of time
assessing management and creating a governance structure.


Identify an untapped opportunity for private equity investors in Africa.


Nigeria and Ethiopia are Africa’s most populous nations and have two of the
lowest penetrations of formal retail in Africa. Formal retail only comprises
5-7% of the GDP in Nigeria, while Ethiopia has the least penetrated retail
sector in Africa, presenting a massive retail potential.


What is the biggest misconception about your job?


The idea that there is no capital in Africa is a big misconception.
Instead, the biggest challenge that companies face in Africa are the limited
resources in terms of human capital and the dearth of experienced management
teams.


Name the one deal you wish you invested in.


We once had the opportunity to make a small growth capital investment in an
East African clinics and diagnostics business that had an exceptional
management team. But we didn’t because we felt it was too early stage. In
hindsight, the business has grown three times over the last two years, and
has reinforced our views that backing strong and dedicated management teams
is a winning strategy, and that in future we would take a risk on earlier
stage growth equity if we found the right promoter and team.


What are the skills you need to succeed as a private equity investor in
Africa?


General partners (GPs) must focus on creating the right management teams as
well as the right strategic and operating partners. Moreover, there are
different market opportunities in different countries; GPs must identify
untapped sectors in high-growth countries. The right sector focus is also
important; we focus on sectors that are correlated to the growing consumer
class, which also have low levels of government intervention and that have
relatively high barriers to entry.—Howwemadeitinafrica 



Afsane Jetha

 

 

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