PE Investing in Upper Mid-Market Sub Saharan African Companies

Aubrey Sibanyoni:
Thanks for having me, Elana.

EMS:
Absolutely. So to kick off the conversation, tell us a little about your firm and how you got to where you are today.

AS:
So Elana, Herakles Investment Partners was founded two years ago, but it's actually an offspring of company called Sakhiwe Capital, founded in 2015. This was a US-based advisory firm, specifically looking at African investment opportunities.

EMS:
Great, Aubrey. So given your focus on PE investing in upper mid-market sub-Saharan African companies, I would love to hear your outlook for the space.

AS:
Elana, we think that in this space we have a great opportunity to partner with some of the African countries, investing in the upper level companies and bringing those companies to the US to help us grow.

EMS:
Great. And more specifically, where do you see some of the greatest opportunities and why?

Aubrey Sibanyoni:
So the idea that we need to take America back into the industrialization, we think that's important. A lot of the products, we do not manufacture them in the US as we did in the past. And so we look at Herakles Investment Partners as a great partner bringing in some of the big industrialized companies from South Africa. We have partners in aluminum, in iron ore. Those big companies that we can help bring to the US and show them what the market looks like in the US, we think that would be one of the opportunities where we'd like to look at.

EMS:
That's very interesting, Aubrey. And on the other hand, love to hear some of the greatest challenges you're up against and how you're conquering them with your strategy.

AS:
That's a very important question. We have real challenges, partly is that we see some dollars going into the continent of Africa but not enough. And that is an issue because some of our competitors, Europe, Asia, they're coming to Africa in a big way. And what that means is from a competitive perspective, we are falling behind. And so if we as Americans can look at the continent of Africa more on the friendlier side and on the partnership side, I think we can get a lot farther than where we are currently.

EMS:
Absolutely, Aubrey. So I wanted to shift gears a bit. Obviously ESG, DEI are top of mind for the PE alternative investment industry. So I'd love to hear your thoughts on how your firm is addressing these timely topics.

AS:
So we are a very small private equity fund. So far we've raised $15 million. Some of the compliance issues like ESG could very well be burdensome to us. And so we try to be very cognizant of that. As a Black owned private equity fund in terms of DEI, that to us is very important. Currently, we are looking at a CFO. If I might add into this podcast that in our search we are looking for, of course a woman because we want to have that proper diversity. If we can have that going, we feel that we can be a lot stronger because we'll get a much more different perspectives that can help the firm grow.

EMS:
Absolutely, Aubrey. So we've covered a lot of great ground today and wanted to see if you have any final thoughts or takeaways you'd like to share with us.

AS:
The takeaways are, I think that we need to go out and compete. We no longer can afford to actually sit back as Americans and let the market come to us. We have to go out there and compete. And part of that is look at emerging spaces like Africa as an example, because now we have gotten other countries deeply and heavily involved. And I believe that if we do that we will see a lot more opportunities.

In 2022 in September, we were invited to witness the signing of a memorandum between New York Stock Exchange and Johannesburg Stock Exchange. So what that meant was that the two countries, South Africa and United States would get a chance to now have a dual listing on some of the companies. So from private equity perspective, we think we want to do the same thing, open the bridge, open the two countries, and fellowship and coinvest with each other and help each other's market grow.

EMS:
Aubrey, I wanted to thank you so much for sharing your perspective with our listeners. And thank you for listening to the EisnerAmper podcast series. Visit eisneramper.com for more information on this and a host of other topics. And join us for our next EisnerAmper podcast when we get down to business.

^{Transcribed by Rev.com}