*Article Courtesy of DealMakers Magazine 2017
Agile Capital recognises and supports BEE as an imperative, bringing together diverse skills to add value – thereby ensuring the holistic growth and invigoration of its targeted investment vehicles, whilst increasing returns.
Agile Capital holds a broad portfolio spanning multiple industries, focussing on businesses offering both solid operational track records and tangible potential for growth. “Beyond our current holdings, we continue to pursue investments across diverse sectors in the South African market as a key local PE player,” notes Tshego Sefolo, CEO: Agile Capital. “We are particularly interested in challenging misperceptions of BEE as a passive collection of dividends – we like to think we merely happen to ‘black’ as we certainly bring more than a box-ticking scorecard to our transactions.”
Identifying the right partner
The right BEE partner consequently provides more than credentials within a given transaction, instead offering precisely the list of essentials business requires of a PE partner: effectively as a coincidentally ‘black’ PE partner. “Within the ambit of PE we do of course have to make returns and will not be satisfied with a lazy balance sheet,” says Ms Londeka Shezi, Director: Agile Capital. “And whilst we bring the considerable benefit of BEE credentials to our ventures, our primary focus is growth and assisting the strategic direction of those businesses in which we invest.” Shezi adds that, ability to add value is a key consideration which forms part of their investment evaluation matrix.
Correspondingly, the value added by the ideal PE partner is that ingredient which ensures the target business realises the growth trajectory forecast upon investment. “From our perspective, this translates into hands-on practical assistance – including business development and leveraging the networks we offer within our extensive portfolio to effect synergies across markets, through to assisting executive management as and when required,” says Shezi.
Mutual value in partnership: recognising embedded value in management
The ability to discern when to assist a partnered business is additionally vital. Appreciating the industry-specific knowledge embedded in existing executive management cannot be underestimated in a PE partnership. “We recognise the importance of executive management having as free a hand as possible in our investments,” notes Sefolo. “We approach assistance from a non-executive perspective whilst being ready to roll up our sleeves and contribute in diverse ways – as sounding boards for new ideas, providing legal verification, sharing our experience and expertise in labour relations, or assisting in further expansion through acquisitions and additional liquidity.”
However, each investment is unique and a blanket approach cannot be applied. The degree of participation in investment vehicles may differ depending on the sophistication and size of any given business. Greater interest equates not only to greater risk, but also the potential of higher return, correspondingly inviting increased levels of participation.
Further underpinning this level of PE investment is the fundamental praxis that any venture essentially functions as an ongoing relationship between the parties as opposed to a passive transaction – with a mutual sense of exchange realising an operational synergy in consequence. “Crucially, we understand our investment as a full partnership, which is the ethos behind our targeting businesses with dependable management teams that we can then propel to achieve the desired growth ambitions,” notes Sefolo.
Shifting misperceptions of time
It follows that this practice invites greater adaptability and resilience into such transactions: notably with regard to timeframes. “We want our partners to grow – and we enter our partnerships knowing that this could initially mean lower dividends over a preliminary period,” explains Shezi.
Meaningful returns may require a slow and steady approach, combining calculated risk and tenacity. “We view ourselves as strategic investors open to long term partnerships, particularly appreciating the challenges of the local economy,” notes Shezi. “As such our focus is on timing – and not on time itself.”
In this regard, an additional misperception may perhaps lurk in the market: that PE is somehow exclusively focussed on the short term and bound to a limited period in which to realise an investment. Shezi explains, “Whilst the very nature of PE requires investments to be made with an exit in mind, Agile offers more flexibility as regards the open ended tenor of our investments in that we will continue to partner and develop a business until the time is right to sell.”
Meaningful value: BEE applied as PE
Ultimately, and considering the very real social pressures in the country at present, superior returns can only be generated through a disciplined approach to investing that builds sustainable businesses and embraces transformation and the empowerment of others.
“Agile actively looks to enter into long-term relationships, drawing on our extraordinary talent pool of human capital to bring value to our investments,” says Shezi. “And it is precisely because of this exceptional skills base we offer in addition to much-needed liquidity – looking well beyond fulfilling a mere scorecard – that we are happy to form a consortium to ensure the best BEE deal for any partnership.”