The journey so far: Carolyn Campbell, partner, Emerging Capital Partners
Carolyn Campbell is a founding partner of Emerging Capital Partners (ECP), a pan-African private equity fund which has raised more than US$3bn in growth capital through funds and co-investments. Campbell serves on the firm’s executive committee and investment committees.
Since founding ECP 18 years ago, we raised more than US$3bn for investment, invested in more than 60 African companies and fully exited from 43 of them. As you can imagine, we have faced no lack of challenges during those years. We have weathered the Jasmin Revolutions in North Africa, the global financial crisis and several commodities downturns, which have an outsize effect on several African economies.
The way ECP was designed from the start helped us overcome these challenges. Rather than time the market, we spread our investments over several years which allows us to be patient and exit at the right time. We also have a wide geographic scope and we invest in multiple currency zones.
Our ability to work in both Francophone and Anglophone Africa also helped us to achieve balanced diversification. We are one of the few funds to have such a penetration in both zones, and we have made some of our best deals in Francophone Africa.
I am proud of the lasting and important companies we have built. When I land in a key African airport, I am pleased to see a café or bank that we grew from often a smaller concept into a national brand. I am also proud to have built a diverse team of investment professionals hailing from 15 countries with different languages and cultures. And we have managed to develop genuine camaraderie that shows in our investment approach. We have invested in more than 40 countries and pioneered in key markets such as Kenya and Côte d’Ivoire.
Today, ECP’s two large offices in Nairobi and Abidjan allow us to cover much of the continent and our organisation around these two poles. This is key to understanding our success. This footprint has enabled our companies to take advantage of Africa’s integration and generate economies of scale by building platforms. We built regional platform companies in many sectors including banking, cellular towers, insurance and energy. ECP portfolio company Orabank, for instance, is present in 12 West-African countries, and Eranove, one of Africa’s leading electricity and water utilities, has built a significant presence in three key countries while developing fast in many more.
I would not dare speak for myself. But there is a fundamental weakness in our business that emanates from investors’ perception of Africa.
When we started fundraising in 2000, we met large international investors whom we knew from our previous careers as emerging-markets investment specialists. The amounts we were looking for were completely unheard of for African markets. Many had never seen anything positive going on in Africa. Some investments had been undertaken here and there but never before on such a scale. I can tell you people were sceptical.
Emerging markets at the time meant mainly China, or India, in the best of cases. The work required to convince new capital to invest in our space has been difficult, and I would like to say that this has changed today, but I wish I had more success at injecting my enthusiasm into investors in New York and London.
The notion of “just do it” in our space. The private equity investing space is very regulated, time-consuming and expensive. Only a few institutional investors will be willing to invest – and following the advice to “just go for it” will not succeed. You had better be prepared for intense scrutiny, which will come, and you only get one shot at it because investors have long memories.
Another convention we often hear at investor conferences on Africa is that you have to have “boots on the ground”. This is certainly true and this explains why we have several offices throughout Africa. But the truth is you need a balance between your local presence and your institutional framework from a centralised headquarters.
Everyone in our founding team had worked at global firms in emerging markets before and we brought with us a wealth of experience from our relationships with the international financial community. As a private equity investor in Africa, you need to have institutional experience, best practices and a regulatory framework that inspires confidence.
A few thoughts here: how difficult it is to fundraise – keeping your focus on your investment strategy while being attuned to what investors want. But you have to keep fundraising continually, and you have to be successful in the face of market cycles. Whatever you anticipate about fundraising, it will take twice as long and cost twice as much and you don’t have the luxury of timing the market.
You also need to get the concept and the people right, and once those are in place the journey becomes sustaining and self-reinforcing. One sure thing about entrepreneurship is that you keep learning all the time. There is not a day when I say to myself, this was just another day at the office. Life as an entrepreneur in the African space is full of “if only I had known this!”.
But then you learn and, as long as you learn, you are better prepared for the next exciting challenge.
We are actively looking at a few overlooked targets and sectors. One is tech-enabled logistics. I am not talking about shared rides in urban centres, but integrated logistics, for instance, in the transport, consumer supply and natural resources industries.
Tech allows for radically better customer relationship management, constant monitoring and cashless transactions. This is a revolution that happened in Asia – and I am sure it will spread across Africa in no time. The opportunity to deploy tech in Africa is now, as we know from having invested in cellphones and cellphone companies for the past 15 years.
Tech is already fundamentally changing education and this is having huge consequences for businesses and governments alike. We are following these developments closely as we think we can play a more important role in accelerating the spread of technology in Africa.
This has already been the case in the past looking at game-changing deals such as the one we made in IHS, the biggest towerco on the continent. It helped the whole sector to mature. IHS had about 800 towers at the time we invested and now has more than 23,000 and is in the top 11 in the world.
‘The journey so far’ series is edited by Wilhelmina Maboja, with copy editing by Xolisa Phillip, and content production by Justin Probyn and Nelly Murungi.