Establishing the African investment model

ATR: Who and what is ECP?

Doddy: Emerging Capital Partners (ECP) is a pan-African private equity firm that has raised more than US$2 billion for investment across the African continent, including the Francophone regions.

We have put our investors' capital to work in more than 40 countries through seven private equity funds, directly supporting more than 50,000 jobs.

We have made more than 50 investments – with more than 20 exits completed – and a strong portfolio of remaining transactions.

ATR: How long have you operated within the African markets?

Doddy: ECP has been investing across Africa for more than twelve years.

ATR: What was the motivation to move into Africa?

Doddy: As an early advocate of growth capital investment into the continent, we were attracted to Africa's huge growth potential. Africa's GDP growth has exceeded the world average for 11 consecutive years.

In comparison to other emerging economies, Africa is still a largely underserved market of nearly one billion people, and it is hugely diverse. It is easily forgotten that the continent spans 20 per cent of the world's land mass, and is larger than Europe, India, the US and China combined. But the opportunity is so much more than just a straight growth discussion.

Africa is the beneficiary of booming demand for natural resources, fuelling routes to exit for PE investments, such as the recent acquisition of ECP portfolio company Anvil Mining by Hong Kong-based MMG Malachite Ltd.

Africa's growing middle-class story is also remarkable, while 43 per cent Nigeria's population is under the age of 14. We expect to see a huge rise in consumer sector investment, such as our recent stake in the casual dining chain Nairobi Java House, based on that demographic.

Finally, Africa has a perceived risk that is higher than its actual risk, resulting in comparatively limited competition and attractive valuations for investors.

ATR: In how many countries do you currently operate and what is your staff complement?

Doddy: Seventy per cent of our employees live and work in seven countries throughout Africa.

We have offices in Abidjan, Casablanca, Douala, Johannesburg, Lagos, Nairobi and Tunis, as well as Paris and Washington DC, which gives our investment team a deep reach into African markets.

This enables us to gain insight into the region's local economies and ultimately select companies that will deliver returns to investors.

Our portfolio of companies, many of which are regional in focus, currently operate in more than 40 countries across the continent.

ATR: Within which industry sectors are you involved?

Doddy: We have completed deals across a wide variety of sectors including telecoms, consumer businesses, financial services, natural resources, agriculture and utilities.

We invest in companies that operate in business environments characterised by limited competition or in sectors where Africa has either a comparative advantage or an unmet need.

This strategy maintains diversification within ECP's investment portfolio and provides our investors with greater, risk-adjusted returns that are generally uncorrelated to the US and other global markets.

ATR: Who or what are your biggest success stories?

Doddy: We were early investors in the telecoms business and have been fortunate to have had a number of successful investments in that sector, with companies such as Celtel, MTN, Starcomms and Orascom all firms that we helped to grow rapidly into market leaders.

When we started investing, cell-phone penetration in Africa was two per cent and the consumer market was much smaller.

At the time, industry analysts predicted that cell phone penetration might grow to four to five per cent over the following decade. The fact it has grown to more than 60 per cent today clearly demonstrates consumer power in Africa.

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