Africa PE
I am currently a 2nd year Analyst at bulge bracket IB. I could have the option to work for a Mega PE fund in Sub Saharan Africa (find out in about 2 weeks). I am hoping folks can help answer the questions below:-
- What compensation should I expect as an Associate in Africa? Will it be on par with compensation is North America for Associates?
- What exit opportunities will I have after 2-3 year in Africa? Will US PE shops still consider me or discard me as an "Africa expert" (assume I do not want to go to B school)
- In general, do folks think this is a good idea?
Any and all comments / help will be much appreciated!
I know close to nothing about Africa PE. However, if you change your mind about not attending B-School, that would make for a killer application piece and would distinguish you from the crowd considerably. Might want to reconsider...
I'm assuming this is for SA, it is very violent, same goes for Nigeria, although as long as your in Lagos, Boko Haram is a lot less of an issue and I'd take it over SA. If it's somewhere nice, Kenya take it.
By SA I mean South Africa, not summer analyst/associate.
Agree with futurectdoc - I will only take it if its SA or lagos, in my opinion they are the only ones with enough capital and deal flow, but then again you said its a mega fund.
Compensation wise - It will be on par with the US in PPP terms but not the same in amount, remember it is a lot cheaper over there and you might seriously want to reconsider B'school
Wouldn't something like an African PE experience make you stand out in terms of b school apps?
Africa is a relatively underrated natural resources region. A lot of Chinese firms are trying to beat the competition out to grab the resources there. It could be a valuable gig, but of course use some common sense. Don't go if it's in the middle of some war-zone region. If it's South Africa you could gain a lot of experience and have some fun at the same time. But even if it's a very well-known PE fund, why would you want go to Nigeria, for example?
I'd take it if it's a decent location.
I would be careful about this - although it seems like a very interesting opp (Carlyle I'd guess) - if your goals are to do North America PE, then your experience will be a hard sell (for lateral / developed market opps). The experience you get is just a lot different, and PE roles in the US / developed market tend to have a very narrow focus on candidates (read: previous experience) they'd like to see.
BSchool should be a much easier sell, and this should position you well for that top schools.
I just stumbled on this. I know a kid who used to be at Lazard NY, did a PE gig in Lagos for like 2 years, he's at Wharton now doing his MBA, go figure. Most PE firms have offices in SA due to stability, but most of their work is done in Nigeria. Carlyle, Helios Partners (Some Nigerian ex TPG guys Backed by Soros), and First Bank Nigeria's PE fund are the top ones in Nigeria at the moment
Presumably this is for Lagos if it's SSA for a mega fund? South Africa really is a market on its own and deals/capital markets are far more developed than in the rest of SSA. If the goal is just to do a two year stint and head off to do an MBA, I'm sure there is little downside - otherwise I would carefully consider how committed you are to this region/sector and how it fits in your long-term goals. One thing to consider is that a good amount of SSA investment is run out of London (e.g. Helios mentioned above) if you are looking for long-term plans beyond your stint on the ground - but far less so out of the US.
As for comp, I would expect/demand a strong all-in package preferably in excess of what you'd get in the US given the high expatriate cost of living (don't underestimate this) in Nigeria.
Related question, does anybody know anyone who has worked/interned at OPIC (Overseas Private Investment Corp.).? I am currently a junior in undergrad looking for an internship that will help me break in to emerging markets IB/PE at some point. Would something at OPIC help me any more than a standard BB/Elite Boutique SA program?
Less help because "emerging markets IB/PE" (this is pretty broad...) will look for technical skills which will be much harder to obtain at OPIC than in a banking environment. If you want to show dedication to EM, do it either directly through interning/starting at relevant banks/funds or show initiative in those regions in addition to your regular banking experience.
Very helpful answer, thank you. I had suspected the technical training at OPIC would likely not measure up to that at other banks, and was going to try to get in touch with a former OPIC intern -- but you sound like you know for sure that this is the case. Do you have any suggestions as to which banks/funds (with opportunities for rising seniors/recent grads) are most active/successful in emerging markets? Or as to how one might best show the kind of initiative you mentioned?
PE in Africa (Originally Posted: 03/09/2013)
I am personally a strong believer in African growth over the next several decades. I'm not arguing it is the next, slam-dunk, Asia-esque explosion, but growth potential in certain areas is still huge. If you want a more in depth explanation of this please refer to the 14-page special in last week's Economist (Emerging Africa).
My question is, do any of you know of any PE firms that focus (or even dabble) in sub-saharan Africa?
Banking in London would be a good start. Helios and such would recruit from there and there is a likelihood you can actually work on Africa deals depending on the group/industry. Look into London offices of Standard Bank, Renaissance Capital as well in addition to your usual suspects. It would help a lot if you are African as a lot of PE funds are desperately seeking "local" talent.
EMPEA is a great database to start with.
TLG Capital, located in London. http://www.tlgcapital.com/
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Actis and Carlyle. I'm also a strong believer in the African growth. But "several decades" is just too long as investment horizon?
Abraaj bought out Aureos so have a presence there now also. There are some South African based PE firms such as Ethos and then some small locally based firms in other Sub-Saharan countries.
The earth's population is set to grow from 7 to 10 billion by the end of the century. The population of Africa is expected to increase from 1 billion to 3 billion over that time period. So 2/3rds of the world's population growth this century will be African. At some point (maybe 100+ years away), African GDP is likely to be larger than that of Europe and the Americas combined. Whether now is a good time to invest is another question of course!
The western world would probably have to stop paying Africa 2 cents on the dollar (thats being generous) for resources they then sell into and out of their own markets for 3 dollars on the dollar in order for that GDP trend to be realized.
Politics aside, if you're interested in African PE and think its the new frontier to get rich in... I personally feel taking a bet on African PE is very risky but so was joining Carlyle group in 1992. It can pay off huge.
This is my opinion but I'd probably steer clear of the western PE firms like TPG Growth and Carlyle. Reason being... these regions have deals in the tens of millions or maybe if its a monster then 100-200 million. While it may be interesting for Carlyle to plant their flag in Africa so they can tell LPs that they are investing on every continent except Antarctica and so they can add an extra inch to their dick vs the KKRs of the world, the Africa investment opportunity isn't really sizable enough to get Rubi very excited. AT BEST maybe it'll contribute 2% income to the broader firm.
Maybe you think PE is über sophisticated, but it's still subject to the same economic principles as the rest of the world. Scale is the name of the game. And doing 100 $10 million investments requires much more overhead than 5 $200 million investments. And lets face it (a) there aren't enough opportunities in Africa for that kind of dry powder, (b) it's waaaay too risky to cut that size of an equity check in that region and (c) the way these guys look at smaller deals is this: if I can put $20m to work for a guaranteed 3x MOIC, it's not worth my time because I'm only earning carry on 40mn in gains. If I can put $20m to work for a guaranteed 1.5x MOIC but a reasonable expectation of hitting a 5-10x MOIC (which given the scale and riskiness of the region, isn't completely absurd)... then I'm making carry off a net gain of $180m... so $6m to Carlyle vs $32m.
Getting back to the point... I'd steer clear of the big name western guys and focus more on the ones for whom it would be or is a meaningful addition/part of their business. Someone mentioned one of the middle eastern ones which is one of the largest and most successful in the Middle East and Africa. I'd maybe also look at some of the middle eastern SWFs. They invest in high growth in their region but if they want to diversify with the same type of growth/risk/return upside profile, they need to turn to Africa AND that part of the world is an open oyster to well connected SWFs... so would definitely be well situated.
Lastly, this risk/return profile isn't exclusive to the PE funds. I would expect some type of above-market upside incentivization included in my comp package if I were working in the region... especially considering how eager these guys are to get Western-trained monkeys out there.
Western-trained monkeys are important but purely Western doesn't cut it anymore. You really need local talent with Western training -- local operational expertise is very difficult to find whereas Western monkeys are a dime a dozen. Helios is an African focused PE fund based out of London and is well-regarded.
CS's CFIG (PE arm, since sold to Grosvenor Capital) raised $100M last year from the African Development Bank for their Agvance Africa fund (http://tinyurl.com/l73vw7j). Its focused on agricultural growth via microfinancing.
There are also Helios Capital in London, Emerging Capital Partners in DC.
TLG and Abraaj should be the only ones that really have a focus on the region. Only one's I know about though.
PE in Africa - How to break in? (Originally Posted: 08/09/2013)
I was wondering if any monkeys out there are involved in any PE investments or any M&A deals with exposure in sub-saharan Africa?
I am very interested in gaining exposure in this geography and I'm curious how someone can break in from a North American background.
While there is clearly not a lot of developed business, I feel there is a large opportunity for growth capital to have a major impact both regarding financial returns and also with social impact (eg triple bottom line). If you feel the same way I would love to hear your thoughts on different countries in the region - and even better how you would suggest breaking into this area.
A couple points
+A lot of the guys in those funds seem to have at least some operational experience in Africa before they joined up.
+Corruption is known to be a big issue in Africa. So even if you have rock solid ideas, convincing LPs that you aren't going to be breaking any anti-bribery laws/the country you are invested in isn't going to implode will be a bit tricky.
+Also, these guys seem to focus on the "safer" African countries that haven't seen much armed or political conflict. e.g. Ghana etc.
+Doesn't the IFC invest in frontier countries? I know they are based out of DC..so maybe that is a route you can go.
I don't work in PE, but these are just some general things I noticed.
Your best bet would be Nigeria or South Africa. However, there are both pros and cons: 1. South Africa Normally, South African PE guys very often have a local CA background. However, there are a lot of foreigners as well. These are usually US MBAs or INSEAD guys. They usually have investment banking/mezzanine/leverage buyout experience. However, they are usually at bottom of the totem pole, still getting up, while the top guys are often local guys (to get the deals).
My experience is that it's very tough to break in until you are lucky because of the BEE requirement in South Africa. If they want to hire foreigners, there are plenty of US ex-investment bankers who want to come to try it out. Also, the PE circle is not big in South Africa (the biggest player in Africa) - there are actually only really a few players and people circulate to some extent.
The top guys either have banking/consulting experience or direct operating experience in running some of the companies.
My suggestion is to do investment banking/leverage finance in the States and at the same time, try to get it in. The other option is to become an experience hire at the senior level.
The deals as mentioned in the post above are not easy to get in Africa, it requires extensive travel and local experience (not easy at all)
Nigeria is booming so you might have luck here - Join the likes of MBB and you can relatively easily lateral into a PE job. But then, PE in Nigeria is another kettle of fish (only for the brave). And I am not sure about the level of rigor of your deal experience that you will be getting.
Overall I suggest looking at the South Africa PE/VC association (SAVCA) and look at each firm to see what you are interested in and go from there.
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