Friday, October 30, 2020

ECP private equity firm investing in Africa

ECP Investments in Africa

Emerging Capital Partners (ECP) is a private equity firm that has invested in Africa for the past two decades. Private equity firms usually source funds from wealthy individuals and institutions seeking investment opportunities. After meeting its financial target, the private equity firm then closes the fund to new investors. 

As an emerging economy, Africa is ripe with investment opportunities. Unfortunately, due to the absence of data and information on how to invest in some African countries, it is a challenge for individuals to forge investment on their own without the help of a private equity firm.

Additionally, it is easier, faster and less risky to pull resources from multiple sources. 
So far, ECP has made over 60 investments. Since investments carried out by private equity firms have a time limit, usually not over a decade, ECP has had more than 50 exits after the successful completion of projects, which brought in over $3.2billion in growth capital. 

How ECP Works to Improve Performance, Profitability and Successful Exit

For private equity firms, success is paramount if they are to continue getting the support of investors for future projects. Investors entrust them with their money with the hope that they will get great returns. So, this is a priority for ECP. Given its years of success, investors remain confident in the investment choices that ECP makes when looking at Africa’s opportunities.

Collaborates with a team in Africa to help identify investment opportunities

ECP understands the risks it takes with the funds it receives from investors. This is why it works closely with teams in various African countries to ensure the projects they undertake are legitimate, profitable and have a viable exit strategy. Africa has 54 countries, and getting information about the opportunities in this vast continent requires heavy human resource investment. 

Over the years, ECP has put together experts in Tunisia, Abidjan, Nairobi and South Africa. These teams work on ECP’s portfolios in Northern Africa, West Africa, East Africa, and Southern Africa, respectively. ECP’s success is highly attributed to its extensive investment in teams to carry out market analysis on the ground and unique opportunities that are likely to lead to be highly profitable to investors. 

Systematic investment themes

ECP appreciates the danger of haphazard investments and is especially cautious because of the vast investment opportunities in Africa. Some ventures carry a greater risk and may not be beneficial to the local communities. This is why ECP doesn’t just seek investment opportunities that will result in great returns, but it selects projects that are also likely to have long-term benefits that will spur growth. 

Sometimes, one investment opportunity gives rise to another, so there is a mutual benefit for the investors and communities in Africa. For example, ECP invested in Mobile Network Operator (MNO) services in various countries. However, before exiting this project, ECP realized the demand for data would soon put pressure on mobile communications infrastructure. So, ECP expanded its portfolio by investing in a company to provide telecommunications infrastructure.
 
ECP has also looked for investment opportunities in the service industry to spur Africa’s economic outlook by luring travelers, both for leisure and business, with fine dining restaurants. Rather than invest in every opportunity that comes its way, ECP opts to pick the most sustainable theme that will also be profitable and easy to exit within a stipulated period. 

Intense research of target industry

ECP has maintained its reputation as a private equity firm primarily because it carries out top-down research for every investment opportunity. Some of the key aspects the company looks at include key growth drivers, lessons learn for similar markets in other African countries, how ECP can add value to target companies, and the suitability of the said companies to ECP’s portfolio. 

Transparent relationship with host companies

ECP appreciates that the companies it obtains are critical for a successful, profitable, and mutually beneficial venture. Once ECP discovers the companies to work with, adequate research is carried out to ensure they are reputable and that all the shareholders agree to ECP’s plans and growth aspects of the investment.  

Value creation

Most companies in Africa fail to grow and bring about transformative change due to poor management, failure to execute strategic acquisitions and capital constraints. ECP brings all these to the table when discussing possible short-term mergers to improve performance, expertise, and growth.

ECP looks to enforce Environmental, Social, and Governance standards, issuance of timely performance reports, and introduce incentive plans to encourage output performance. When done correctly, the host company will realize sustainable goals, have greater financial and operational control of the business, and the local communities will also benefit from increased job creation, and betters managed corporate social responsibilities.

Sound investment sustainability policies

ECP always endeavors to ensure the companies retain a solid foundation eve after its exit. This is why its stainability policies include robust job creation opportunities, managerial and technical skill development, and infrastructural development, such as increased telecommunications connectivity and easy access to clean water and electricity.  

ECP also protects the companies they work with by complying with all state laws and best corporate governance practices. The management and employees of the companies are also expected to exercise high integrity. Acts of corruption are frowned upon, and this has helped ECP to maintain high standards in all its portfolio companies. To ensure compliance, ECP has an ethics hotline that staff members can use to report non-compliance. 

Ongoing Investment projects in Africa

Although ECP has had at least 50 exits, it still has several projects it is actively pursuing. They include;

Atlas Bottling Corporation (ABC)

This is a company based in Algeria. It was founded in 1995 and is a leading bottler of carbonated soft drinks. Some global brands with agreements with this company include Pepsi Cola, 7Up, Mirinda, and Pepsi Max.

Orabank Mauritania

ECP acquired this bank in 2008 and has since been providing conventional and Islamic banking products to Mauritanians.

IHS

This company has been in operation since 2001 and has since become a leading provider of telecommunications infrastructure in Africa. It has investments in Cameroon, Cote d-Ivoire, Rwanda, Nigeria, and Zambia. It has about 23,000 towers and works with leading telecom operators such as MTN, Etisalat and Airtel. ECP acquired this company in 2016.
Wananchi

Wananchi is a Swahili word that means citizens. This telecommunications company is based in East Africa and provides high-speed internet and pay television services. It provides services under the brand name ZUKU (retail) and Simbanet (corporate). The Zuku Channel supports local content and airs it across Africa.

Maarifa Edu Holdings Limited

This Pan-African investment company focuses on acquiring and developing institutions providing tertiary education. Cavendish University Uganda and Cavendish University Zambia are the major institutions that have benefited from an improved academic quality, IT systems, and increased access to education under Maarifa.
Mukuru

This is the largest money remittance company operating in Southern Africa. It was founded in 2004 and has grown with 90 remittance corridors, which facilitate easy movement of money to cover daily living expenses. Reliable and safe money transfer channels have increased its client base to over five million users.

ECP Awards for Successful Investments in Africa

2019 Pan-African Fund Manager of the Year Award
2019 Women Impact Award – Founding Partner and COO, Carolyn Campbell
2015, 2017 and 2019 Best Regional Bank of West Africa Award – ECP Portfolio Company, Orabank
2018 Exit Award by the East Africa Private Equity and Venture Capital Association (EAVCA) – Java House Investment
2018 Water Utility Company of the Year – Senegalaise des Eaux (SDE) – ECP Portfolio Company
2017 Private Equity Investor Award for gains in its portfolio companies Eranove and Oragroup, which won Best Energy Project 2017 and Best Bank in Africa 2017 awards, respectively.

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