ECP draws on over 15 years of private equity investing experience in Africa and has completed over 60 transactions and nearly 40 full exits. Key elements of the ECP investment approach, which aims to deliver attractive risk-managed returns to investors, include the following:
- An On-the-Ground Team
- Identifying Investment Themes
- Top–Down Research and Target Identification
- Differentiated Access
- Strategic Value Creation
An On-the-Ground Team
Central to ECP’s approach is our extensive Africa-based team whose experience and contacts provide us the market insights and relationships critical to our ability to identify and execute investments and to add value to portfolio companies. Africa is a huge and diverse continent, and covering it effectively requires a significant human resource investment. Over 15 years, ECP has developed the largest on-the-ground private equity investment team in Africa with six offices and diverse staff in hub economies throughout the continent covering the following regions:
- North Africa (Tunis, Tunisia)
- Francophone West Africa (Abidjan, Côte d’Ivoire)
- Anglophone West Africa (Lagos, Nigeria)
- Central Africa (Douala, Cameroon)
- East Africa (Nairobi, Kenya)
- Southern Africa (Johannesburg, South Africa)
Identifying Investment Themes
ECP seeks to identify opportunities that will benefit from the fundamental, long-term structural demographic and economic shifts driving Africa’s growth. This could entail the replication of an investment in a new geography, such as our series of Mobile Network Operator (MNO) investments, or could originate from insights gleaned from our many portfolio companies. For example, following ECP’s series of MNO investments and our participation on the boards of several African MNOs, ECP identified when the roll-out of data networks would drive demand for outsourced telecommunications infrastructure, leading to our investment in a prominent mobile communications infrastructure company. The ECP team’s local presence also enables us to identify new growth trends early, such as the growth in quick service and casual dining restaurants, and to position ECP to invest in the emerging market leaders.
Top–Down Research and Target Identification
Once we have identified a potential investment theme, the ECP team conducts thorough research to understand key growth drivers and factors in more detail, learn lessons from other markets, and assess ECP’s capacity to add value to the target companies. ECP also maps the market to identify and evaluate the suitability of possible target companies for an ECP investment.
Our on-the-ground team enables us to build the relationships, trust, and mutual understanding required to execute our proactive thesis-driven investment strategy. Once we have identified the companies with which we want to work, we use our network and reputation to secure positive introductions to the shareholders and management of the target companies in order to discuss the ways in which an investment from ECP could enhance the target company’s growth prospects and create value for all parties.
Strategic Value Creation
There are two levels to ECP’s approach to value creation. The first level seeks to increase value and exit preparedness by implementing good governance processes, enforcing Environmental, Social, and Governance (ESG) standards, ensuring timely performance reporting, and introducing management incentive plans. These initiatives improve financial and operational control of the business, enhance sustainability, and ensure alignment of interests with management to drive value creation.
At a more fundamental level, ECP seeks to identify, in due diligence and afterwards, the actions required to enable the target company to deliver transformative growth and create outperformance. From our experience, companies are often prevented from realizing their full potential by their inability to upgrade management, raise funding, and execute key strategic acquisitions. Over its 15 years of investment experience, ECP has developed significant expertise in all three areas: identifying and attracting top-caliber management to strengthen key operational functions and facilitate company expansion; driving both debt and equity fundraising for portfolio companies; and, where relevant, supporting portfolio companies in the execution of transformative acquisitions to consolidate market position and achieve economies of scale.