Women-Led Private Equity Investing

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

JB:
Sure. I come from a poor and marginalized community in Johannesburg, and fortunately overcame to qualify as a CEA. I gained corporate finance experience, and then private equity experience, at one of the local leading private equity firms. I later gained international experience. I completed a masters in public administration at Harvard in the US. And then I worked for the World Economic Forum in Switzerland as their head business engagement for Africa. While not directly related to private equity, this international experience broadened my networks and can be leveraged for the portfolio companies in our fund.

We set up AIH Capital as a mid-market private equity fund two years ago to ensure the active participation of women in the economy, and financial inclusion. Our purpose is to uplift and impact women through our investment choices. We've raised $21 million to date of committed capital and we're still fundraising. We successfully did our first deal in Future Growth, one of the leading South African asset managers.

Our private equity fund is unique in that our parent company, AIH, is a broad-based company with over 53 black women shareholders. So this ensures a wider impact to our women shareholder base. Also, a portion of the returns accrue to AWCA, the African Woman Chartered Accountants Association. And the AWCA's work has contributed to the increase of black woman chartered accountants in South Africa from 400 to 8,000 over 20 years.

EMS:
Jesmane, love your journey, very inspirational. So to shift gears a little bit, love to hear more about your focus on PE investing and your outlook for it.

JB:
In this current high interest rate environment capital will become more scarce, and allocators more selective, so funds need to up their game. Having said this, EI is becoming more important and allocators will look at a carve out of their pool of funds for investment in emerging fund managers, including woman-run funds like ourselves. Impact investing will merge with traditional investing such that a standard vanilla fund that offers commercial returns will also need to demonstrate ESG impact.

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

JB:
In South Africa there are serious challenges with energy security. Corporates are reallocating the CapEx budgets to clean energy solutions that allow them to become wholly or mainly energy independent from the state-owned electricity provider Eskom. While we don't back startups or greenfield projects, we are assessing established companies in the energy supply chain. And there's one such company we're currently evaluating. Globally climate initiatives are important for our planet and future generations, and this is where capital is being allocated and where opportunities lay. Also, there is opportunity in logistics and distribution as supply chains are rule configured for more local availability following Covid supply chain challenges. And then, technology is becoming more integral as a defensive and growth strategy for businesses. This ranges from more intelligent use of data, to how we engage customers, and run operations more efficiently. Across the industries, we look at the investment in technology by a business in a way that gives it more longevity and a competitive advantage.

EMS:
And Jesmane, on the other hand, what are some of the greatest challenges you face and what are your steps to overcome them?

JB:
With the current high interest rates, leverage management buy-outs, any transaction that is over geared will be challenging as capital is becoming more expensive and more scarce. Also, corporates are faced with added liquidity challenges as their clients are trying to defer pendant and clients delay spend, and this adversely impacts on revenue and cash flows of product and service providers.

EMS:
Jesmane, to shift gears a little bit, wanted to touch on ESG, which is top of mind for the industry. Love to hear how you're integrating it both at the firm-wide level and investment level.

JB:
At the outset of our fund, the IFC helped capacity builders with our ESG management information system, and this covers ESG across our investment process. From the initial deal screening, to the due diligence, to legals and to post investment quarterly ESG reports that our portfolio companies need to complete. Our ESG management information system also demonstrates to allocators that we have the proper ESG framework and processes in place. We've actually published our ESG policy on our website, and we do want to live out these principles. We are also strong on the governance aspect of ESG, and have gained experience putting in place governance processes for boards. For example, I have chaired the risk and governance committee of a large listed technology company in South Africa.

EMS:
Jesmane, being a woman money manager, you're such an inspiration. Love to hear your background, and what you're doing to inspire future generations to follow in your footsteps.

JB:
Elana, when I started out in private equity over 20 years ago, I was the only woman on the deal team for the funds I was involved in. I clearly remember that I didn't get invited to the poker nights or cricket games. This may seem trivial, but this was informal places where deals was discussed and work assigned. In sum, I didn't feel fully a part of the team. I initially tried to embrace the male attributes like wearing black and pin stripes suits. As you can see, I've changed my colors. Over time I came to a place of being more comfortable as a woman in the workplace, and embracing myself fully. And moving forward, 20 years on, there are a lot more women in the industry and we are starting to see women run funds like ourselves. Having said this, we still have a way to go for gender inclusion.

We are also unique as a fully black woman-owned and managed private equity fund. Last year I visited allocators in New York and they were so impressed with our unique profile. They said it's something they don't see at all. We're also broad-based with over 53 women shareholders in our parent company, and we hope that this model can serve as a reference for gender inclusion.

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

JB:
As a new fund, we are focused on building our business. And as we invest in portfolio companies, many in industries that are male-dominated, we want to shape these portfolio companies to be more gender inclusive in various ways. Ranging from the staff profile to customer solutions. We also want to encourage our portfolio companies over time to reduce their carbon footprint. And to have a handle on data that shows which activities are generating the most emissions, so that that can be tracked.

EMS:
Jesmane, I want to thank you so much for sharing your perspective with our listeners. And also I wanted to thank you additionally for sharing the complimentary link to your online DER course for the Workplace, which EisnerAmper will publish on our website right under this podcast.

JB:
Thank you for having me, Elana.

EMS:
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, where we get down to business.

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