AMA: Private Equity Analyst at African Impact Investor

WSO - I would like to share my knowledge on banking/PE/markets in Africa for those in the market and those willing to be party to the African growth story. Could also help for your PE interviews!

Bio:

    Analyst (3rd year) at MM private equity firm focussed on impact investment in Africa. Target school (in South Africa), undergrad exposure to Math and Finance, prior experience in investment banking at Africa's largest bank. I got into banking via on-campus recruiting and a bit of luck. Made the jump to PE after completing a master's degree in Economics

I am able to answer questions about the African perspectives recruitment, banker/PE lifestyles, pay and, of course, African markets.

Comments (102)

Jan 14, 2014

What is the recruiting like for Americans at your firm and the banks you have previously worked at?

Jan 14, 2014

jakeBBAF

My firm values candidates that are to African markets and candidates with African networks .
It is imperative to understand African markets and people.

My previous employers had Americans at junior levels with limited African experience but a passion for Africa, illustrated through research or prior life experiences on the continent. At more senior levels, there were some Americans that were seasoned deal makers on the continent.

Jan 14, 2014

Would you recommend spending a few years in traditional PE before joining an impact investment fund or going directly into impact investing from investment banking? Thanks.

Jan 14, 2014

Thanks a lot, PanAfricanBanker.

1) Africa where? I imagine Joburg, but let's get that straight.
2) How much of your firm's PE business is ex-ZA?
3) How much of your former bank's IB business is ex-ZA?
4) What's better for a pampered European kid, Cape Town or Joburg or any other city?
5) More general question: how do you guys deal with cross-border transactions with states where the law (especially property law) is scarcely, or weirdly, enforced? It could be a stupid question based on wrong premises, but consider that, as said, I'm European, and we still (wrongly, I think) see Africa as Far West + Kalashnikovs.
6) Do you guys rely only on locals? I've had many interactions with one of the main telcos of ZA, and everybody was South African.
7) What happened to Pistorius?

    • 1
Jan 14, 2014

nda

1) Indeed, I am based in Johannesburg, but I spend 3/4 of my time travelling.
2) 100% of our deals are outside South Africa.
3) c. 30% (However, I have only worked on deals in Africa, outside South Africa).
4) Cape Town is a great city for pampered kids from all over the world; however, Johannesburg has several investment banks from all over the world and every other type of company from all over the world. It is much easier to be hired in banking in Johannesburg, provided you can make the cut. In addition, Johannesburg is the productivity hub of South Africa; more work is done here at a much greater pace than work is done in Cape Town. That said, Cape Town is the home of several asset managers, venture capitalists, private equity firms and insurance companies.
5) Agreed that perception may outweigh facts on the ground. Most countries have better legal systems than may be perceive but for the particularly risk averse one may have contracts drafted in the law of a country with a legal system you trust. Usually, South African or English law works. However, security is always governed in local law, so either one can procure PRI/CRI, ensure that you are dealing with influential local partners or find strong local counsel.
6) Please clarify your question.
7) I'm not qualified to answer this question; perhaps you should refer to the Mail & Guardian (mg.co.za) or News24 (news24.com).

    • 3
Jan 14, 2014

6) In easier terms, how many foreigners (both from other African countries and from Europe/US) do you have working in IB/PE there?

Thanks again for the other answers.

Jan 14, 2014

A man walks up to you in the street, hands you 1MM cash and simply requests you place it in Africa. What do you do?

Offshore liffe

    • 1
Jan 14, 2014

big1

I would ask for more money and more specific mandate.
Africa is a very big continent with various opportunities, and complex national,regional and continental dynamics.

Jan 14, 2014

Are you currently based in South Africa? Being such a large and diverse continent, does your firm focus on certain geographic regions (Sub-Saharan vs North Africa) or sectors(energy vs telecomm)?

Jan 14, 2014

Anihilist

Yes, I am in Johannesburg.

The funds at my firm focus on specific industries. We endeavour to cover the whole continent (or at least each region) for diversification.

    • 1
Jan 14, 2014

What countries in Africa are the most politically stable and most friendly to FDI?

Jan 14, 2014

That's a tough one, I would say those are two separate questions.

In my opinion, countries with political stability are countries where one can reliably predict the next party to rule and where one can expect peaceful transitions of power. These countries include (in no order of preference) Rwanda, Nigeria, Ghana, South Africa, Kenya, Uganda, South Africa, Ethiopia, Angola Mozambique and Zambia; to mention a few.

As for FDI friendly, that is harder to answer. Please clarify your question.

Jan 14, 2014

South Africa is the best place, by a long shot, that I have ever visted. I've been to over 25 countries and it was amazing. In Cape Town, the wealth divide is incredible and terrible. I've never seen so many good looking, rich people in one place.

Joburg, definitely a bustling business city. I've never seen so many signs for 'Ernst and Young' in my life.

1. How did you end up living there in the first place?

2. Do you envision leaving the region?

3. What's the compensation like? If you don't want to name specific numbers, could you provide a percentage based off what you know for roles in the US?

4. Do you go out at night and party it up? I got mugged on Long Street in Cape Town ^_^

Jan 14, 2014

yeahright

1. I am an African (by birth, descent and naturalisation).
2. I plan to stay here, there is significant opportunity here for skilled professionals especially in the financial sector.
3. Your purchasing power here (in South Africa) is much higher than major U.S. cities for accommodation (100 sqm flat for less than USD 700 per month), food (meals at high end restaurants is models and bottles, etc. Some things are more expensive such as clothing, gadgets, cars, etc. But overall your money goes further here, especially if you are paid in USD, EUR or GBP. Wages are generally lower but your lifestyle is much cheaper and there is great weather here (no snow storms).
4. I party a fair bit, never been mugged but crime happens much like most countries.

P.S. I am surprised by the Ernst & Young signage they only advertise near their offices.

    • 1
Jan 15, 2014
yeahright:

South Africa is the best place, by a long shot, that I have ever visted. I've been to over 25 countries and it was amazing. In Cape Town, the wealth divide is incredible and terrible. I've never seen so many good looking, rich people in one place.

Joburg, definitely a bustling business city. I've never seen so many signs for 'Ernst and Young' in my life.

1. How did you end up living there in the first place?

2. Do you envision leaving the region?

3. What's the compensation like? If you don't want to name specific numbers, could you provide a percentage based off what you know for roles in the US?

4. Do you go out at night and party it up? I got mugged on Long Street in Cape Town ^_^

Haha, I live and work in Cape Town. I got mugged next to Eastern Food Bazaar by 6 township guys that emptied my pockets like a pack of hyenas, pick pocketed on Long Street and my car got broken into near Sea Point. :(

But that's fair enough, since I'm a pampered European. Haven't been mugged for 5 months now, baller.

Jan 15, 2014

Orkid

You have had more experiences with crime than I have had in the last twenty years in Africa.
This is a great case study for general insurance.

I am glad you are balling now.

Jan 14, 2014

Hello,

Thanks so much for this.

My questions (and obvisouly let me know if you don't feel comfortable answering any)
1) How would you recommend trying to break in if I am coming from Canada? How is the HR, headhunter scene in Johannesburg? Should I try the online application/Linkedin reach out route or should I contact local HR to break into high finance in SA?
2) What is the pay like, and what is your standard of living. (Although you probably make less, you probably live more lavishly?)
3) You mentioned a strong interest in SA....any blogs,forums,news websites you like to look at?

Thanks again!

Jan 14, 2014

twinwings

1) Recruiters are open to foreign nationals as are most international companies operating in South Africa.
However, It is fairly challenging if you are not available for interviews, you will have to plan around that.
There are several reputable head hunters here so you will not have a problem finding one.

Contact the recruiters directly either via uploading your CV online with an aggregator such as careerjunction or by applying for specific jobs. Linkedin always helps because you will be checked out and recruiters want to see a shiny detailed profile, that is well written.

2) Your purchasing power here (in South Africa) is much higher than major U.S. cities for accommodation (100 sqm flat for less than USD 700 per month), food (meals at high end restaurants is models and bottles, etc. Some things are more expensive such as clothing, gadgets, cars, etc. But overall your money goes further here, especially if you are paid in USD, EUR or GBP. Wages are generally lower but your lifestyle is much cheaper and there is great weather here (no snow storms). WSO has some data on local firms but generally entry level banking at top firms BB plus local is comparable on PPP terms. However, if you have significant foreign currency liabilities, you can always ask the firm to pay you in USD.

3) If you want to learn about the local market moneyweb.co.za, cnbcafrica.com, bdlive.co.za, financialmail.co.za and fin24.com are good news sources. As for recruitment there are several top recruiters such as paton personnel, pinpoint partners, peoplesource, michaelpage, robertwalters, DAV and Intrepid to name a few. As for banking lifestyle in South Africa, it is the same as everywhere else (with cheaper bottles and rent).

    • 4
Jan 15, 2014
PanAfricanBanker:

twinwings

1) Recruiters are open to foreign nationals as are most international companies operating in South Africa.

However, It is fairly challenging if you are not available for interviews, you will have to plan around that.

There are several reputable head hunters here so you will not have a problem finding one.

Contact the recruiters directly either via uploading your CV online with an aggregator such as careerjunction or by applying for specific jobs. Linkedin always helps because you will be checked out and recruiters want to see a shiny detailed profile, that is well written.

Thanks for a great thread, PAB. I'm fairly new to the African PE scene but have found your answers very informative. I have a few questions - would love to hear your thoughts:

1) You mentioned that there are several reputable head hunters - do you mind if I ask which firms are the biggest players?
2) How do you think African-based PE firms compare vs. UK-based, African-focused PE firms? Is the model, size, or way of doing business different?
3) Who are your biggest competitors? After Blackstone, Carlyle, and ECP, I'm not sure who I'd list as the biggest players in Africa.
4) I've heard that PE shops in Africa focus a higher proportion of their time on sourcing deals vs. due diligence, structuring, etc. Do senior folks expect junior folks to have sourcing experience?

Thanks again!

Jan 14, 2014

What Universities did you attend?

Jan 14, 2014

Bob-Zimmerman

I attended two of these target schools:
- University of Cape Town
- University of the Witwatersrand
- University of Pretoria
- University of Johannesburg
- University of Kwa-Zulu Natal
- Rhodes University
- Stellenbosch University

Jan 14, 2014

Thank you very much for this post PanAfricanBanker.

Question : For a current MBA student in the US with no prior banking experience but with plans to move to PE in Africa. What career path would you recommend?

It is what it is!

Jan 15, 2014

QueSeraSera

It is fairly challenging to break into PE without prior banking experience.
My only colleagues without prior banking experience are seasoned former industry executives or management consultants involved portfolio management. But those positions are scarce in funds in the deal making phase.

I would recommend joining an investment bank in South Africa/Nigeria/UK with pan-African exposure. They would be open to MBA students from top schools. All the BBs have office in South Africa/UK, it shouldn't be too hard coming from one of these BBs. It would also help a great deal to come from a top African bank like Standard (Stanbic) Bank, Rand Merchant Bank, Barclays, Investec, etc.

    • 1
Jan 16, 2014

Thank you very much for your response PanAfricanBanker.

As a follow-up to your response , what do you think of PE Consulting - with the likes of McKinsey or Bain (in Africa) -as a path to PE in Africa ? Compared to the banking path you mentioned, which one do you think will provide a better platform?

It is what it is!

Jan 15, 2014

What is the base pay for PE in SA? In US Dollars. Also do you have colleagues that worked in BB investment banks in the U.S?

Jan 15, 2014

JustRunning

The pay grades are not standardised here, please check the WSO database.
Pay here is generally lower than the U.S. in nominal terms but in PPP terms it is quite competitive (provided you don't have U.S. liabilities).
Cost of living is great here compared to major U.S. cities.

I have no colleagues that worked at BBs in the U.S., African experience is what is valued here.
Although, at my former employer, in banking, I had several colleagues with the U.S. experience at BBs.

Jan 15, 2014

Hi PanAfricanBanker

Really appreciate your op here.

Is there an age ceiling for entering PE firms generally. I didn't start my journey early.

I know there's lot of work/ adventure out there and I'm very much interested. The market above the radar is rather small and predictable.

You talk about SA. How willingly and to what extent will an SA PE firm headhunt foreigners based outside SA but willing to relocate?

Jan 15, 2014

MayorofLagos

I suppose it is good to join early, most of our VP level guys are 30-32.

My firm hires many foreigners, we have people from all the continents. Most recruiters would read your application and ask you to come for an interview with the recruiter.

Being a foreigner does not work significantly to your disadvantage for international firms; however, not being available for interview does hurt your chances. The easy way out is to recruit of a top business school in the EMEA region like LBS, INSEAD, IMD, IE, IESE, HEC, UCT, GIBS etc.

Also having a good story helps, (world travel, martial arts champion, published poet etc.)

    • 2
Jan 15, 2014

Just wanted to say GREAT THREAD!!! I'm absorbing all this and hope to make transition sometime soon...

Jan 15, 2014

femzilla

Please elaborate on your transition, perhaps I can advise.

While you are appreciating the thread, please indicate with silver bananas which comments are helpful to you.

Jan 15, 2014

Thanks for the effort to answer the questions here PanAfricanBanker. I also have some of my own:

background: Interested in doing my exchange at University of Cape Town or Stellenbosch University and afterwards I am considering working in South Africa in banking/consulting/corporate strategy.
1) Which university would you recommend me to chose?
2) How would you recommend me to try and break in?
3) Is it hard to get a Visa for work? Will this be a deterrent in employability as a foreigner?
4) What is the minimum level of experience required for PE in South Africa?
5) Is Eastern Europe experience valued? Quite similar development of economies from the 90s...

Thanks in advance.

Jan 15, 2014

EE_cons

1) I would recommend the University of Cape Town, it has a good placement record in the fields you have listed.
2) The usual, be exceptional, do extracurriculars, get good grades, do internships and network. WSO FAQs can help you all of this.
3) It is not a problem if you apply to international companies. Local companies with limited foreign staff may be harder to crack. It seems none of your target companies would have a problem with foreign staff. It is also a problem if you are not here to be interviewed.
4) As usual with PE, you need some banking experience to be on the deal making side or consulting/industry experience to be on the portfolio management side. I don't know if there is a minimum or maximum number of years.
5) I wouldn't say it is valuable for African markets.

    • 1
Jan 15, 2014

1)what are the go to sectors in africa when it comes to investing and you believe is going to do really well?
2) Funny question, but what proxy discount rates you use in your financial models..does it go something above 15% for some countries and is there any marked difference between the extreme cases
3) I have heard alot about good african companies and business models doing exceedingly well and generating orgasm spilling returns? you came across one...Im talking like 3x revenue jump in a year or so..
4) Do girls in SAF fall for "im an investment banker" line?

"A man travels the world over in search of what he needs and returns home to find it." ~George Moore

Jan 15, 2014

neil joseph

1) It is important to note that with more context (country, asset class, strategy, etc.), I can recommend sectors more meaningfully.
However, at a high level I can state the following:

In my opinion, having lent money and all over the continent, growth alongside reasonable governance is expected from (in no particular order):
* Ghana (FMCG, oil & gas, media, financial services, real estate, agriculture)
* Rwanda (financial services, FMCG, agriculture)
* Mozambique (oil and gas, mining (coal), financial services, real estate)
* Zambia (mining, financial services, real estate, agriculture)
* Nigeria (FMCG, oil & gas, media, financial services, real estate, agriculture)

If you have more aggressive growth targets (and are less risk averse) try (in no particular order):
* Angola (FMCG, oil & gas,real estate)
* Ethiopia (FMCG, energy)
* Tanzania (FMCG)
* DRC (FMCG, mining, oil & gas, financial services, agriculture, energy)
* Zimbabwe (FMCG, mining, financial services, real estate, agriculture)

2) I avoid DCFs, I prefer or IRRs and times money multiples. If I have to I use DCFs, I use 20%. Lending rates in some major African countries are over 20% in which case it may be prudent to increase your discount rate.
3) There are several that meet a 2x jump but you would have to ask someone in equity research for companies with such significant escalations in profits. The South African and Kenyan stock markets have a lot of publicly available information.
4) You may have to provide proof. Generally, it helps to be a banker, when hipsters are not hating.

    • 1
Jan 15, 2014

20%+ discount rates!! man...thats big....I ws talking to a guy who was looking into mozambique and he told me he used a rate of 10% but it was a intl project in USD so that must be it...n im surprised with you guys not using DCF..! thats a new info for me....

and which is the most risky projects you have personally been involved in? and do you also take expropriation insurance n stuff?

"A man travels the world over in search of what he needs and returns home to find it." ~George Moore

Jan 15, 2014

And yes, do you get laid when you travel? and any funny anecdote or story ( with regards to unique mgmt style in Africa, cultural differneces in office culture compared to SAF etc )to share from your 3/4th of your office time going in travels across the continent

"A man travels the world over in search of what he needs and returns home to find it." ~George Moore

Jan 15, 2014

PanAfricanBanker, thanks for doing this AMA - great timing. I intern at my college's investment office. Staff was given a mandate the to review frontier market investment managers. I am focusing on African PE. Could you point me to any good research?

You can't kill the guys you trade with

Jan 15, 2014

This is outstanding stuff. Much appreciated brotha!

You can't kill the guys you trade with

Jan 15, 2014

Thanks for the post, how many CA's do you have in your team? Have you heard of many people that have been able to transition from big 4 (with financial services focus) to PE/IB?

Jan 16, 2014

We have one or two CAs. They are in the minority at my firm and most PE firms.

It does happen, investment banking experience is the most helpful prior experience.

I recommend breaking into banking or trying your luck at PE (maybe you will make the cut).

Feb 12, 2014

I have a question regarding the Modeling tests for African P/E. I have an interview coming up. Anything i need to know?

Thanks,
Anogie

Jan 15, 2014

Right on time Bruh! +1

Jan 15, 2014

Hi:

How could one send out his CV to the different funds? Is the preferred portal through a head hunter?

Thank you;
JustRunning

Jan 16, 2014

JustRunning

The best place to upload your CV is a central portal like career junction, there you can indicate what type of work you are looking for.

In addition, make submissions to the recruiters that I mentioned earlier.

Jan 16, 2014

Thanks PanAfricanBanker.

On the age thing I am actually in my late thirties, but with what I've seen in PE/ VC in Africa I feel there's a lot of oportunities in the sector.

Nevertheless I would appreciate your frank reality to my optimism...

Jan 16, 2014

MayorofLagos

You may have missed the boat for all non-partner positions.
If you can raise a fund, perhaps you can be a partner.

Indeed, there is much opportunity in PE/VC.

    • 1
Jan 16, 2014

I should add that I have a 12-year experience in audit, 6 of which is in IB...

Jan 16, 2014

MayorofLagos

Do you mean to say you have spent 6 years auditing investment banks?

    • 1
Jan 16, 2014

Yes...

Jan 16, 2014

MayorofLagos

I think you may have to raise a fund, that's the only way to guarantee a spot in a PE/VC firm.
Or perhaps you could look for work on the portfolio management side of a PE outfit.

    • 1
Jan 16, 2014

Thanks for the great comments so far.
I have just finished my Honours at a target here in South Africa. Been great to hear some info so far about the South African/African market compared to the normal US/Europe/Asia info on WSO.

1. I have spoken to a few professionals in the finacial services sector here in SA and most are Chartered accountants who have then done a MBA/CFA or work experience over in London then transitioned over to finance from accounts. Would you say this is the normal case for South Africans working in the investec/coronation type of companies?
2. Would you say its better to train in the banks(TOPP) instead of the big 4 for articles if you plan on going down the CA route and then transitioning over to something like equity research.

Jan 16, 2014

MattZA

I am pleased to push the narrative toward the African experience.

1) I can't speak to the intake at Investec or Coronation in particular. However, I can say that there are a fair bit more CAs in IB in South Africa than most countries. In the U.S. for example qualifying as a CPA is not a traditional path to IB.
There are many ways to crack IB, the easiest at analyst level is to apply for an internship and thereafter a FT position. To get internships and FT offers you need to be an exceptional student at University, with extensive extracurriculars, top grades, charm and ambition.

That is faster, cheaper and less taxing that doing accounting, financial management, tax and auditing for at least seven years.

An MBA (from outside Africa) will help a fair deal at associate level. CFA may also help at associate level but I think an MBA is the easiest way to break in as an associate.

2) The CA route is one channel but there are easier ways into banking.
That said if you are up for the CA story, then the TOPP programs (at banks and extractive industry player) are better than TIPP programs, in my biased ex-banker opinion, because you see the sectors you are going to work in more clearly and you can network better than auditors. TOPP at banks is the easiest way, if not you can do TOPP at extractive industry players and move into their corporate finance teams.
I can say that doing the TIPP route can help you break into consulting if you are generally exceptional.

I can't speak to ER, I am not qualified to comment.

    • 3
Jan 16, 2014

Thanks PanAfricanBanker...

Jan 16, 2014

Thanks, I appreciate the info. I had not though of going through the mining companies as a way in. Saying that i heard the SAB guys get free beer every now and then :)

Jan 16, 2014

Matt_ZA

You also consider Sasol they also have a great TOPP program.

Jan 16, 2014

If there are any monkeys who have experience with African PE firms/banks, feel free to ask some questions or recall your experiences.

Jan 16, 2014

Is the domain of the French language a must?

Jan 16, 2014

Speaking French helps a great deal.

However, there are many people that get away with only English.

Jan 16, 2014

Thank you PanAfricanBanker.

Do you see many CA's transitioning into PE in Africa?

To be more specific, would you consider a professional with a CA and a CFA, and two years experience in insolvency & restructuring a good candidate for PE?

Jan 16, 2014

ssmaclac

There are a few but they are in a minority among African PE people.

You would have your CV looked at and you may even get an interview; however, if you were competing with a banker that is a CFA charterholder that is not a CA, that banker would be selected.

Jan 16, 2014

What about in comparison to the standard banker without a CFA, as I would assume this to be the majority.

Jan 16, 2014

Do you see much of the UK firm Actis, they have about $5bn AUM? Or indeed, any UK firms at all?

Jan 17, 2014

Actis is extensively invested in Africa. I don't think they invest in the UK at all.

Most major African PE shops have either European personnel or European LPs.

Jan 16, 2014

"In Africa, most "traditional" PE firms have an impact investment/developmental finance slant to their mandate because of the pool of LPs that invests in most African PE funds."

You said this in an earlier response, and I was hoping you could expand on the specifics of impact investment/developmental finance as it pertains to your fund specifically (and others that invest in a similar way). What types of investments are you looking at (or could you provide some examples/more color)?

Great thread- really appreciate you doing this.

Jan 17, 2014

Black Jack

Developmental/impact investments involve investing in profitable companies that will yield profits and positive (direct and indirect) socio-economic impacts.

For a generic development impact example, an investment in a clothing company and building a new factory may be developmental.

This investment will allow for the creation of jobs, introduction of potentially better production capabilities, more payments to local suppliers and it will improve the supply of locally produced goods. There are a myriad of metric to measure development impact.

In addition, when these companies are invested in, management and development consultants are hired to find ways to improve efficiency in a socially responsible way. In addition, there will be social and environmental conditions to the investment that will reduce negative impacts on the society and the environment (compliance with the IFC performance standards). Furthermore, governance standards will be benchmarked against global best practices, skills transfer and training programs can be implemented.

It is beneficial to invest industries that are intrinsically developmental whilst providing access to goods and services that improve the lives of employees, suppliers, customers, communities and other stakeholders. These industries could include telecoms, infrastructure, healthcare, education, FMCGs, financial services, agriculture, real estate etc.

There are many other ways to have a positive impact on society and your investors' bank balances simultaneously.

Jan 17, 2014

As someone who works in PE in Africa, do you see any exit opportunities to London or the rest of Europe for people like you and me?

Jan 17, 2014

It happens, perhaps not now given the bleak job market in Europe.

Things that could work to one's benefit when considering this exit include
- The prevalence of emerging market focussed firms in Europe
- an MBA from a good business school
- Some networks in Europe

It will be some time until Europe has a strong job market for EU and non-EU citizens.

Best Response
Jan 17, 2014

Great to hear from a fellow monkey in a different part of the continent. I am in PE as well (in Nigeria). I started off in Big4 NY - Audit and then due diligence. Thereafter, came to Nigeria to work in an Ibank and I am now in PE. I will be applying for an mba later this year and will probably come back to continue in PE.

I can speak more on Nigeria but Panafricanbanker is pretty much spot on in his posts. However, like he has said, and so many others say, African PE is not a one size fits all model.

In terms of backgrounds - a good number of PE analysts/associates/VPs in South Africa and Kenya have CAs and schooled locally. Part of this is because the education system in South Africa is solid so a lot of top students stay in the country for University. In Nigeria, the vast majority of PE folks have IB experience from Western countries and schooled mostly in the US or the UK. I would say a good 60% of associates/Snr associates/VPs are Nigerian, 20% another African country, 10% non African. However, PE funds are becoming more open to non African associates.

In terms of pay - associates should expect between $40,000 and $100,000 (post tax) and in most cases - housing, car, and a driver. Bonuses are pretty much anywhere between 0% to 50% of base pay. No carry should be expected pre mba. Senior associates should expect anywhere between $80,000 and $120,000 base (post tax) and same benefits and bonus % expectations as associates.

In terms of the work & Industries - Oil and gas, financial services, consumer goods and now infrastructure, are the active areas within PE in Nigeria. You can expect to close between 1 and 2 deals a year. We are seeing a situation where too much money is chasing too few deals for the larger funds. Middle market PE is the sweet spot in terms of activity. Hours are pretty light (even at large funds) - anywhere between 50 and 60 hours per week except when closing a deal. Sourcing deals here can be frustrating. Most businesses (even large ones) are still run by founders and in some cases, rather see it fail, than have someone else take control of it. As such, debt is preferred to equity in terms of company preference for investment product.

In terms of specific funds - the top PE funds in Nigeria are (in no particular order): Carlyle (DC HQ), Actis (London HQ), ACA (Nigerian Based), ECP (DC HQ), Abraaj (Middle Eastern) Helios (Based in London).Standard Chartered PE, Africinvest (Tunisian HQ) IFC too is very active here. Every month, there is some PE fund that starts operations in Nigeria, most recently, there has been leapfrog, one thousand and one voices (us based), Bob Diamond is starting a financial services focused African PE fund, and a bunch of others. KKR recently started an Africa practice but based out of London. In the next 5 or so years, other major US PE funds should be active in Africa.

In terms of living in Nigeria - You will most likely be based in Lagos and on the Island (Where most businesses and wealthy folks live). There is a huge and growing foreign population in Lagos from pretty much everywhere in the world. You will most likely be given housing, a car, driver etc and security so you would be safe. Lagos is an interesting city because FDI is pouring in like its going out of fashion, so infrastructure is getting better. Dont get me wrong, it is no J'burg but the city is getting better by the day. There are also a growing number of good restaurants, clubs, beaches etc if thats your thing.

Advice to anyone trying to break in - First things first, Be humble!!! Do not feel because its Africa and you are a foreigner, you would/should be treated like a king. PE is PE and Africa or US, it is still competitive to break in and Foreigners are becoming a dime a dozen in the financial services space. As in the US, the easiest route of getting in as an associate, is applying through a headhunter and coming from an IB background. Post mba, a few PE funds recruit at top schools (Mostly HBS, Wharton, Booth, Columbia, INSEAD, LBS). I would argue that after HBS, your best odds are going to LBS/INSEAD, then Wharton. Its a crapshoot from other schools but a top 10 is a must. Pre or post mba, you need to make sure you have some sort of "Africa connection". i.e prior work experience in region where you want to work, project relating to an African country, significant other from country of your choice etc.

Good luck all, let me know if you have questions and thanks for doing this PanAfricanBanker.

    • 4
Jan 17, 2014

alreadyrich

Thank you for sharing your experiences!

You have added some meaningful elements to the discussion.

Lagos is one of my favourite cities in the world.
It is good to read about Lagos Island moving onwards and upwards.

We seem to have a similar challenge in Kenya as in anglophone West Africa where there is more capital chasing investments than there are investment opportunities.

I also concur with the point on humility, especially in Nigeria, Ghana, Kenya and South Africa where there are many globally competitive skilled people in the financial services sector.

Jan 17, 2014

Thanks for your comment. I'm from Africa currently working in big 4 audit in NY. I have a few questions,
1) Was it difficult for you to move to DD?
2)Do you think you would have been able to make the move to PE without the DD stint, assuming you had taught yourself modelling and other technical skills?

Jan 17, 2014

First off, I just wanted to say thank you to PAB and alreadyrich for your contributions. Its just amazing knowledge thats being dropped here.
My q's:
1. As an African in the middle east region currently working in transaction banking (think trade finance, cash/liquidity mgt., supply finance), is an MBA the best option to breaking in? (Target schools in the region; LBS/INSEAD)
2. Is the age bracket in Africa similar to that in the US/Europe/Asia? Like if you got it in you, you break in during your early 20's.
3. Are there any experiences in E.Africa that you might care to share (business/personal)? I would also love to hear your input about Ethiopia. Can we possibly call it the next big thing? If yes, what sectors do you think are ripe for investment, given the risk appetite?

Again, thanks PAB and alreadyrich for sharing your thoughts and experiences.

Death is certain; Life aint.

Jan 18, 2014

Alsushy

1. The easiest way is actually with networking. If you have a moderate network then an MBA from an M7 school or LBS/INSEAD is the way to go.
2. Youth is works in your favour especially at analyst level; at Associate level 25-29 is a fair age.
3. East Africa is where I do a fair amount of business but I am yet to venture into Ethiopia. Kenya is a great place to do business their tech sector is blowing up as is their real estate sector. With the devolution of power to counties, you can expect major infrastructure and education investments. There are many other priority sectors that the government is promoting.
Rwanda is also a great destination the Rwandan Development Board is promoting investment very effectively; Check out their website.
Tanzania has been the focus area of many European DFIs, so check out the likes of the AFD, EIB, CDC, IFC, FMO, etc. These entities are targeting certain industries in Tanzania.
Some of my colleagues are investing in Ethiopia their energy, FMCG, infrastructure and real estate sectors are booming.

@alreadyrich what are your views?

Jan 18, 2014

Just wanted to stop by and award you a silver banana PanAfricanBanker, incredibly informative topic. Thanks for doing this.

Here's a quick one: You previously stated that most PE guys in Africa were analysts at banks in Africa or London, but have you encountered bankers from Frankfurt or Paris? Is it feasible to break in from one of the two major European regional offices or is experience in London a dealbreaker?

Jan 18, 2014

above_and_beyond

Thank you for the silver banana, keep them coming. Please provide them to comments that add to your knowledge base.

African experience is essential, if you are in London covering Africa then you are good.
It does not matter where you are based provided you spend time in Africa doing deals.

People with zero Africa experience are rarely hired in African PE, maybe in banking you have a shot.

Ask your management to place you on African deals.

Jan 18, 2014

Any advice on breaking into Africa PE from investment banking in the US (specifically NY). Saw your post above on the topic, but are there any specific HHs that deal primarily with placing analysts in Africa/would you suggest reaching out directly to firms that you are interested in joining? Any suggestions greatly appreciated.

Also, any way to get around the "people with 0 Africa experience are hired to Africa?" Is it enough to be working at a top US bank/group with a genuine interest in Africa and a relevant industry? Can PM you if that is easier (as this might get more into my personal situation/background).

Jan 20, 2014

I'm back!

Black Jack

I would say that you lose little by cold-emailing but it may be easier to go via a recruiter because:
a) there is a shortage of PE positions
b) of the high-level of network based recruitment that happens in PE
c) recruiters can tell you when to apply and what they want from potential applicants

I am unaware of US head hunters that are proficient in African PE placements.
However, in a previous post I indicated that one should contact the recruiters directly either via uploading your CV online with an aggregator such as careerjunction or by applying for specific jobs on the recruiters website. Linkedin always helps because you will be checked out and recruiters want to see a shiny detailed profile, that is well written. There are several top recruiters such as Paton personnel, pinpoint partners, peoplesource, michaelpage, robertwalters, DAV and Intrepid to name a few. These firms specialise in South African placements aside from pinpoint partners that do a fair deal of pan African placements in IB/PE jobs.

It is good to research firms before approaching head hunters and then you can recommend a list of say 5-10 firms for the recruiter to look out for. Also you may also be able to read profiles of their personnel.

Honestly, it is very hard to break into African PE which is very network driven without an African network or African experience. That said, it is much easier to break into an a top bank with African IB operations without Africa experience, if you only have US BB IB experience, than breaking into PE in Africa. African life experiences also help.

Feel free to PM

Jan 19, 2014

What exit scenarios do you guys assume when considering investments? Listing? Sale to another sponsor? Sale to strategic? I get the impression exiting investments can be pretty tricky over there.

Jan 20, 2014

The usual PE exit strategies are applied.

- Private placements
- Listing
- Sales to strategic investors (e.g. groups looking for a pan African footprint, groups with supply chain synergies, etc.)

Investors in infrastructure, FMCG, telecoms, resources and real estate have particularly abundant exit opportunities.
The South African, English, Canadian and Kenyan capital markets are flush with people looking for African equity exposure.

Exiting is not tricky.
Entering is tricky, not exiting.

Jan 20, 2014

Good people

How to break into African PE without African experience is a popular question on this thread.
I have often indicated that prior African experience is major advantage.

To those working in PE/IB in the US, have you seen many Africans from IB backgrounds in Africa break into PE without any prior experience in the US?

Jan 20, 2014

Thank you for a very detailed insight into Africa's financial industry.

I was just wondering how the competition was for securing a job within finance -- any job at all, not just PE or IB. Would you have any insight here?

I have no experience with Africa, though I'm fairly interested in the continent. As such, I wouldn't mind taking something lower on the rungs to learn the ropes, so to speak. Any good advice?

Thanks!

Jan 21, 2014

The competition is quite intense in markets like Lagos and Nairobi. Johannesburg is also competitive but there is a bigger services industry to absorb candidates. That said, you need to know exactly what you want in order to find a viable entry strategy.

Jan 21, 2014

Great topic.

Question, you reiterated that previous IB experience is important for jumping to PE. What about S&T? And would it be looked more favourable upon coming from a local IB like RMB/Neddies or one more international?

Thanks

Jan 22, 2014

I think an S&T CV would be looked at but not preferred over a CV with IB or consulting experience.

S&T people tend to fit better in the HF environment.

It depends on the PE fund, pan African funds tend to have a preference for candidates with international experience on the continent. Local funds with no pan African ambition could not be bothered.

    • 1
Feb 6, 2014

Thank you to PanAfricanBanker and Alreadyrich for sharing the invaluable information. It's good to get the perspective of people actually working on the continent. Can any of you elaborate on what is the recruiting process like in your respective cities? Is it more geared towards technicals or fit?

The dragon dozes off in the spirit which is its dwelling.

Feb 7, 2014

guymanuzo

My interview was more about technical issues because the partners knew a fair bit about my personality and experience before the interview. Fit was not really discussed.

They asked me about the industry, modelling, relationships with bankers, key PE metrics and earnings expectations (bonus vs carry).

Feb 13, 2014

What other technical questions could they pose? recently i spoke to a recruiter and he asked about foreign exchange risks for a foreign investor in relations to his african investments. How does one address these?

Feb 18, 2014

Pan African banker, I am a Ghanaian student who is now a MasterCard foundation scholar at Mcgill University. as a MasterCard scholar, i am supposed to return to Africa to give back. Is Mcgill respected in south Africa? Is weight put on how elite one's university is as done in Europe and America? how do i break in? My grades are good but do I stand a chance?

Feb 24, 2014
Comment
Feb 18, 2014
Feb 21, 2014
Nov 23, 2015

Pages