美姬阁

Investing in India and Africa: compare and contrast.

On Thursday, 23 November 2023, the Bettany Centre hosted its last guest speakers of the autumn 2023 series. We were delighted to welcome two 美姬阁 MBA alumni back to campus, Nishant Hada [MBA 2022] and Simon Rowlands [MBA 1986]. Both are involved with Africa Platform Capital, with Nishant as Principal, where he is responsible for evaluating investment opportunities including early stage start-ups and Simon as founder partner of the fund. Africa Platform Capital is family office of Simon Rowlands focussed on two verticals, first, private equity and venture capital investments in emerging markets and, second, management consultancy to family-owned businesses. Simon and Nishant shared their perspectives on two very important world regions.

The evening began with a panoramic overview of India as an investment market. Nishant was perfectly placed to do this as before coming to the UK, he was head of Marketing at uFaber Edutech, an Ed-Tech start-up in Mumbai, building the marketing department from scratch. He has 15 years of experience in diverse industries, covering start-ups, digital marketing, tech companies and as a writer in Bollywood - the Indian film industry. The headline news was that India is rich with investment opportunities, powered by a strong economy and world-class businesses [such as Tata and Infosys]. In recent years, venture capital deals have been growing in size and number, financed by a mix of family offices, corporate ventures, and first-time funds. Nishant has observed a shift in the last two years towards smaller, mid-sized deals, mainly in the B2B sector, giving further proof of the buoyancy of the Indian market and its attractiveness to investors. Many commentators argue that it is just a matter of time before India is in a position to challenge China as a leader in the global economy.

Africa is a different story. Before he became one of the UK’s best-known private equity investors, Simon had a deep knowledge of the continent from working as a consultant engineer. Having co-founded Cinven back in 1995, and retiring in 2017, he formed Africa Platform Capital as an investment vehicle for his own family office. Simon’s perspective is also informed by his current board memberships of British International Investment, the UK government-funded development finance institution, Alfa Medical Group in Egypt and Jacobs Holdings in Switzerland. Africa Platform Capital has focussed increasingly on early stage startups and it has not been, he acknowledged, an easy ride.

As an asset class, venture and private equity investing across Africa has failed to meet expectations fully. Even returns from the top quartile of equity investment, average just 6% annually, well below comparable asset classes outside of Africa. For this, there are some fundamental explanations:

• The devaluation of local currencies against the US dollar.
• The typically very high costs of local currency debt finance driven by a mixture of inflation, currency devaluation and risk premium.
• Economic volatility makes it hard for management to forecast beyond the short term with conviction.
• Lack of breadth and depth in the managerial talent pool [although there are exceptions].

In addition, there have been relatively fewer successful exits in recent years, with many investors withdrawing from supporting new funds. More funds are now being raised with an impact rather than solely financial returns. There is good news, however. Providers of debt-based trade finance, such as government-backed agencies, are doing fine, as are the e-commerce and many fintech sectors. Infrastructure investment has also performed well. There are notable geographical hotspots: Simon name-checked Nigeria, South Africa, Ghana, Egypt, and Kenya as exceptions, which stand out as attractive markets where significant returns are possible.

Given 美姬阁’s diverse international student audience, our speakers’ presentations sparked a healthy response. Attendees were particularly interested in knowing the basis on which Africa Platform Capital made its investment decisions. Was there a difference in strategy between VC and later-stage PE investing? The answer was no. Both types of investment are based on a belief in a credible business plan and a competent team that is capable of implementation. Did the fund take an executive position on the boards of any investee businesses? The answer was emphatically no with start-ups. Governance is provided for through shareholders’ agreements, but the philosophy is very much hands-off: Simon, Nishant and his colleagues add value by providing a sounding board for portfolio management teams to use as and when they need to. Also including undertaking consultancy projects to support strategic decision making led by Nishant.

Finally, Simon reflected on some lessons he has learned throughout his career. When he finished his MBA, he was aware that he had just skimmed the surface of a vast array of knowledge. For his own development, he chose to focus on the technical skills he would need for his career switch into finance and to develop his understanding of himself and his motivations. He reads widely on matters such as psychology and behavioural science. For example, the interplay between the pursuit of dreams and the self-discipline of everyday achievement. In his career at Cinven, he had done deals that, while in many cases huge transactions, were essentially incremental: aggregating and improving existing businesses. What motivated him to step down from Cinven and start Africa Platform Capital was the opportunity to do something truly transformational, and that has given him enormous satisfaction.

Simon Rowlands is Chairman of the 美姬阁 School of Management Advisory Board and was elected to the 美姬阁 Council in 2019.

For more information about Africa Platform Capital, visit the fund profile on .