No. 182: 3 Thoughts: Shellye Archambeau | Africa’s 2018 VC Activity | Pollution Inequities

Take Bigger Risks: Shellye Archambeau, Former CEO, MetricStream

I’ve seen Shellye Archambeau’s name around and have been intrigued to learn more about her story. Her appearance on Masters of Scale gives a great peak into how she’s navigated her way through Silicon Valley.

What stood out in particular was her telling about a Bible her family has passed down that contains her family tree for ten generations. She credits that Bible along with her family’s culture has given her a sense of her ancestors and where she comes from that. That shaped how she developed her vision.

I’m so big on the importance of knowing where we come from being a mental block for black folks in the Diaspora, but haven’t given a lot of thought to how to make sure those coming after me know where they come from. I will give that some thought.

2018 was a Monumental Year for African Tech Start-ups with US$1.163B raised in equity!

It’s pretty amazing to see the traction startups are getting, but there’s a long ways to go. Just yesterday, $1.93b in deals were announced globally.

This brings to mind this great conversation between Ian Bremmer and Keyu Jin. China and African countries are not apples-to-apples by any means. There have to be lessons in the China story, though, that can guide countries to chart their own path deliberate, yet accelerated growth. I think making big investments in developing R&D ecosystems in each country’s strong industries is the way forward.

GenNx360 Capital Partners acquires majority stake in Miller Environmental Group

This deal stood out initially because GenNx360 is founded and run by black folks. Then, this morning I thought about this study showing the racial-ethnic disparities in who causes and consumes pollution. The study essentially showed that minorities cause less pollution but consume more of it. The GenNx360 deal feels somewhat symbolic of an effort to take the reins of addressing that.

No. 140: Three AM Reads: Egypt Reaps from Devaluation | Private Equity Gets it Done in Uganda | Africans in the MLB

No Pain. No Gain: Egypt Edition

Yesterday, I bristled at the scenario of a group of hedge fund managers pushing for the devaluation of the Naira. A country going through a devaluation situation experiences lots of pain, but good can come from it. Egypt seems to be seeing early fruit from the devaluation it initiated last year, making it a more attractive investment destination for foreign investment dollars. We’ll see. It’ll probably take a bit more time to determine how attractive Egypt has really made itself to foreign investors.

Actis Shows Private Equity Can Still Get it Done in Africa

I was looking around this article for the “Sponsored Content” tag, because it read a bit too much like an ad. Regardless, this is a solid story of what private equity can accomplish across African markets. Actis took a struggling business in Umeme – the largest private energy provider in Uganda – and made some real changes in its business. Actis seems to be pretty happy with the returns it realized once it completed its exit from the company in December of last year. Here’s to more PE shops realizing positive returns from their investments on the continent.

South African in the Major Leagues

I would write about President Buhari trying to raise nearly $7B for infrastructure investments, but I saw this piece on the first African-born major league baseball player getting his first hit! Pretty cool!

No. 132: Bill Janeway Knows a Lot about Technology and Economics

Barry Ritholtz did a fascinating interview with Bill Janeway, Managing Director at Warburb Pincus, a private equity shop whose name you may have seen when Timothy Geithner joined as President a few years ago.

Side note: Warburg Pincus is the largest shareholder in Kosmos Energy, the exploration company that was part of the discovery of the Jubilee oil field in Ghana nearly a decade ago. Wow. Time flies. Check out Big Men if you’re looking for a movie to watch this weekend. 

Janeway draws on economic theory and the history of the US technology sector over the course of the interview. This is one of those interviews I will listen to a couple more times to be sure I caught all the events, people, and companies I should look up, such as Ferdinand Eberstadt. Check out the interview below.

No. 61: Bridging “Trade not Aid” 

I gave a presentation earlier this week on how investment was key to moving the needle on transforming economic engagement with African countries from development aid to infrastructure. Here is my brainstorm in preparation for that talk, with some edits.

During the IMF Spring Meetings a couple weeks ago, I heard a theme of working with the private sector to foster investment on the continent. For the past several years, the conversation around Africa’s economic engagement with the rest of the world has often circled around the phrase, “trade not aid.” President Obama’s Doing Business in Africa Advisory Council held its first meeting last month and discussed setting an ambitious goal for doubling US trade market share across Africa – 7 percent to 14 percent. The U.S. has watched China overtake market share the past several years, going from 3 percent to over 14 percent. 

The reality is that for effective trade to happen, you’ve got to have the infrastructure, systems, markets, etc for it to make sense. I worked on a project several years ago where a client wanted to import peanuts from Ghana during a drought Georgia was going through. Making that happen would have been difficult because of how long it would have taken the nuts to get from Upper East and Upper West Ghana to port in Tema. While Ghana has invested in road infrastructure, connecting northern Ghana with the rest of the country, there is still a lot of work to do. 

This is where private investment on the continent comes in, filling the gap between the “trade not aid” tag line. The developments here are exciting, especially for investments led by African investors. For example, pension funds on the continent seem to be gaining comfort in being limited partners in alternative investments likes private equity. Hopefully, the African Development Bank is close to launching the Africa50 fund it announced a couple years ago. Alike Dangote and the Blackstone Group are partnering in developing power projects. The list goes on. 

While these are exciting developments, I’m wrapping my head around the reality that bridging the gap between aid and trade is not a something that will happen quickly. This could very well be something my daughter works on (hopefully). So much of the continent’s development is interconnected when thinking about port access, broadband penetration, and transportation. It’s hard to compare to China’s rapid development or that of South Korea and Singapore. I’m excited about the continent shaking loose and carving out its own path. 

No. 59: President Obama’s Business in Africa Advisory Council Held First Meeting This Week

Last year, Commerce Secretary Penny Pritzker stood up the President’s Doing Business in Africa Advisory Council, a group of small, medium and large US businesses currently engaged in business on the continent and tasked with helping shape U.S. policy for business engagement with the continent. 

The makeup of the council is very interesting. You’ve got people ranging from Dominic Barton, head of McKinsey, to Kevon Makell, head of a renewable energy consultancy based in Charlotte, to Karen Daniel, CFO at Black and Veatch. 

If you’re as slow as I am at washing dishes, that two hours will give you enough time to watch this two-part recording of the advisory council’s first meeting on April 8. 

Part 1

Part 2 

Three things caught my attention during the meeting:

  1. Mr. Barton challenged the Council to think big, specifically in positioning the US to double its share global trade with the continent in five years. In 2013, our share was down to 7 percent from 13 percent in 2001. Compare that with China which has gone from 3 percent to 14 percent in the same window. 
  2. Wal-Mart was very clear in communicating that African countries not meeting its logistical needs amongst others should not expect partnerships equal to what countries that did meet their needs would experience. 
  3. The various US agencies that have significant engagement on the continent don’t really know what tools they have respectively for engagement on the continent. This includes OPIC, USAID, the State Department, and the U.S. Ex-Im Bank. Their representatives seemed to agree on the need for better coordination. 

One of the recommendations that stood out was a US-Africa Infrastructure Center which would equip US infrastructure developers to more effectively compete for deals on the continent. This struck me as a platform that could be helpful in tracking progress in closing the gap on the World Bank’s projection of $93B per year for 10 years investment in infrastructure across the continent

Further, the platform could serve as a helpful marketing tool in showing the effectiveness of US infrastructure developers in terms of time to completion, total project cost, lifespan of finished projects before maintenance, among other metrics.  Then again, it may be a better move to invest in the work already done by the African Development Bank, World Bank, and other stakeholders in setting up a platform focused on infrastructure development. 

The council meets next in September or October. I look forward to tracking their progress. Hopefully, I would have figured out how to be helpful to their work in some way by then. 

No. 51: Private Equity in Africa Made One Big Little Step

I may have done a fist pump when I saw that Helios Investment Partners raised $1.1 billion for its latest Africa-focused fund – a new record besting the $908 million the firm raised about three years ago. The notion of investing on the African continent is not such a novelty any longer. Sixty percent of the investors in Helios’ last fund participated in this round. Institutional investors showed up to participate in this round. So what, you ask?

There is much work to be done on the continent, and Africa-focused funds like Helios are securing the capital to ensure that work is done – that’s the hope at least. For example, one of Helios’ portfolio companies Helios Towers raised $630 million in its push for taking Africa’s cell tower infrastructure to the next level. Last year’s Ebola outbreak exposed the need for public health infrastructure in the affected countries. Africa’s agricultural potential remains largely untapped. Transportation is still very expensive within and among African countries. Millions of people are still trying to be productive with no power for light at night. The more capital that private equity firms like Helios, AFIG, ECP, and Kuramo have to deploy, I believe they will play their part in taking out larger chunks of these problems.

So we think the industry will take off in Africa, and we now think that probably the growth rate in private equity in Africa will probably be greater than it will be in any other part of the world. [But] it will take time.

David Rubenstein said this about the private equity industry in Africa during last year’s US-Africa Leaders Summit. It will be interesting to watch this prediction over the coming years. Rubenstein says we should give it 10 years. I wonder if we will see different models flourish on the continent in that time. Bob Diamond and Ashish Thakkar’s Atlas Mara made waves last year with its rapid acquisition of a few banks across Sub-Saharan Africa after raising around $725 million. During his keynote at last year’s Harvard Business School Africa Business Conference, Bob Diamond stated that he saw Atlas Mara serving as a catalyzer of copycats. We will have to see about that. Still others point to the holding company model as working better for the African context due to their not being subject to the 10 year limited partnerships of private equity firms.

Whatever model runs the day ten years from now, I am excited about Africa-focused funds securing the capital to do big things on the continent. I hope Helios’ raise opens the door for other funds to raise funds at the $1 billion plus level.

No. 40: Three Things in African Markets You Need to Know This Week – October 14

Oil Discovered Off Senegal’s Coast – link

The wave of West African countries discovering oil continues with Cairn Energy, a Scottish Oil Company, striking oil about 100km off the coast of Senegal. The company is not yet sure about the size of the discovery – a first for Senegal. When Ghana discovered oil in 2010, many looked to the country to debunk the resource curse theory. While Ghana has avoided the security issues parts of Nigeria have dealt with for the past 50 years, it has faced serious fiscal challenges since the oil discovery. Perhaps Senegal will be the leading country to show that African countries can manage their resources effectively. I’ll be watching how Senegal markets its oil in the coming years, in the wake of Nigeria not exporting oil to the U.S. for the month of July – the first time that has happened since rcords were kept in 1973.

Abraaj Takes Majority Stake in Libstar – link

The Abraaj Group, one of the more prominent private equity firms focused on developing markets, announced a majority stake it took in Liberty Star Consumer Holdings (Libstar), a company previously owned by Métier, another private equity firm. The company is a leader in the private-label and own-branded fast moving consumer goods spaces supplying customers like KFC, Pick n Pay, and Tiger Brands. The company’s latest annual revenue as reported on Metier’s website was about $405M.

Equatorial Guinea’s Second Vice President Agrees to Relinquish $30M in Assets – link

The United States Governent and Equatorial Guinea’s Second Vice President Teodoro Nguema Obiang Mangue reached an agreement for Second Vice President Mangue to relinquish $30M in assets in wake of charges that he used his influence to embezzle funds from the Equatoguinean people. As part of the agreement, $20M will go to a charitable organization in the benefit of the Equatoguinean people, and another $10M will go to the U.S. Government, which will also use the money for the benefit of the country’s people. This agreement came in the lead up to Equatorial Guinea’s Independence Day, which was this past Sunday. The U.S. Government originally sought $70M from Second Vice President Nguema.