Bulls n Bears Entrepreneurship Zone :: Due Diligence: Spotting opportunity in Africa’s frontier economies

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Investisseurs & Partenaires (I&P) is an impact investment group dedicated
to African SMEs, with a strong focus on hard-to-reach and fragile countries.
Through several investment vehicles, I&P invests between €50,000 to €3
million as a minority shareholder. Since 2002, the firm has backed around
100 companies in 16 sub-Saharan African countries.

In an interview with How we made it in Africa, Sebastien Boye, I&P’s chief
investment officer, discussed the investment opportunities in frontier
economies and revealed the one deal he wishes he invested in. Below are
slightly edited excerpts.


What is the greatest investment lesson you’ve learnt?


If I had to pick one, I would say the quality of management. It is not the
most original answer but by far the most important factor for success (or
failure). This is even truer for the young and high-growth companies in
which I&P invests. Being a successful entrepreneur in a difficult
environment, such as the countries where we operate, requires extraordinary
talent, resilience and commitment.


Identify an untapped opportunity for private equity investors in Africa.


In most of the countries in which we operate, we are the only investor
targeting small caps. If you are targeting an investment ticket size of more
than $5 to $10 million, it is very difficult to invest in countries like
Mali, Burkina Faso, Cameroon or Madagascar, for instance, simply because
there are very few local companies that are mature enough to attract such
investments. And yet there are great entrepreneurs and great opportunities
(and low competition). But you have to be ready to invest smaller amounts,
and this will eventually hurt your net IRR. At I&P we believe, however, that
we can offer our investors extra value through the impact we create … by
fostering entrepreneurship in these difficult countries.


What is the biggest misconception about your job?


Being an impact investor does not mean that you are going to compromise on
value creation. Our choice to focus on small deals means that we have to be
very good at delivering very strong gross IRRs to be able to serve decent
net IRRs to our investors. It means that we only invest in companies that
can create significant value by their growth potential and the strategic
position they build in these underserved countries.


Name the one deal you wish you invested in.


Azalaï Hotels is a fantastic entrepreneurial story, started by Mossadeck
Bally, a great Malian entrepreneur. [Ed note: Mossadeck Bally is one of the
entrepreneurs featured in How we made it in Africa: The book.
<https://book.howwemadeitinafrica.com/> Get your copy here.] He understood
very early that the lack of hotels targeting African businesspeople in West
Africa was a great opportunity. He started by buying a state-owned hotel in
Bamako in the late 90s and built a West African leader managing 10 hotels
and competing with international groups who are increasingly targeting the
continent. This is a great example of the kind of opportunities that can
exist in the Sahel, which is not a region which is seen as attractive.

What are the skills needed to succeed in Africa’s private equity industry?

Resilience, humility and the ability to keep it cool. Most of the companies
in which you will invest will face a crisis at some point, especially if
they are fast-growing and still small. Crisis management is a key element
you have to be ready to cope with, and obviously as an active investor
supporting management, your support is key during these difficult times.—
Howwemadeitinafrica 



Sebastien Boye

 

 

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