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Private Equity De-Mystified! - Career (2) - Nairaland

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How These Leading Nigerian Startups Raised Millions Of Dollars In Equity / How To Get Into Private Equity In Nigeria / Private Equity In Nigeria (2) (3) (4)

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Re: Private Equity De-Mystified! by oneblacboi: 12:45pm On Aug 13, 2012
Nice educative post on PE. As a fresh grad looking to launch a career in PE, where would you advise i start?
Re: Private Equity De-Mystified! by nitrogen(m): 3:03pm On Aug 13, 2012
Have missed this thread.
Re: Private Equity De-Mystified! by globechamp: 5:18pm On Aug 13, 2012
What a great thread here.
Ever since my interaction with a PE firm few years ago, I immediately ditched the fact that there is poverty in Africa. Mehn, these PE guys are making a KILLING. I know what I am talking about. Check out the major PEs in Nigeria and you will discover that there funds under management has grown in leaps in less than a decade? Why? I will speak from my experience working in an environment with one of the biggest PEs in Nigeria at the moment. Pardon me if I dont mention names.
1. They have excellent structures in place. All their processes are very thorough. They can research about a firm/investment to the last drop of their blood before they then pass the research results and recommendations to the management team who have have decades of experience running PEs in USA, Africa etc. They even fly in experts from the world to come and access what they are doing and advise what they need to do differently in order to look more attractive, despite the crazy image Nigeria has the world over.
2. They are extremely committed to VALUES. Because they have consistently delivered outstanding results more guys are willing to give them more dollars to manage. And seriously, they are getting the dollars.
3. They hire the best people, I mean the creme la creme. Most of their guys are from Wharton, Stanford, Harvard etc

Lastly
4. They dont even have a single signboard and just ONE office, yet they manage investments all over the world. You cant even find them in the news.

Seriously, PEs are making it seriously in Nigeria.

By the ways, I now currently work for a project company funded by one of the PE funds, working hard to get back into the mainstream of PE.

Denee? Nice thread




deenee: @ moremi,I still repeat without trying to sound like a "broken record", that the PE terrain is not as bad as you connote. I also think that the comparison you are drawing with the "West" is flawed. PE is still very new in Nigeria whilst in the "West" PE transactions have been in existence for close to a century hence the "level playing ground" that would make your analogy credible is missing.

Additionally, there have been attempts to structure PE transactions in the past some of which didn't end well. ("Linkserve" deal comes to mind). However, a handful of firms are involved in some ground breaking transactions and have put in place some form of structure around their funds. For example, ARM Capital partners has the Infrastructure fund out of which they have drawn funds to invest in Lekki Concession Coy responsible for managing about 50 klm of road along the Lekki/Ajah axis for LASG. There is also the retail and hospitality fund out of which they have pooled resources for the construction of Four Points Sheraton, V.I and a host of other hospitality outlets under construction. There is the real estate fund managed by ARM properties and a TMT fund with investments in a handful of outdoor advertising firms. ACA also has something similar to this. I am not trying to hold sway for PE firms in Nigeria, because there is still plenty room for improvement, but I think that they deserve some commendation especially when we consider the larger marco- economic environment and policy inconsistency in Nigeria- a condition that is not prevalent in the "West". In terms of transaction value, I am not aware of any coy (except the Dangote group and a major telco) that has done any deal in excess of $1 billion. A lot of these deals are done in tranches hence you can have a PE firm investing first and foremost in a pioneer transaction and later increasing their holdings by way of more investments(e.g construction of malls, REITS etc) .

You speak of 30+ returns being a herculean task. Actis and ECP made 3 times ROI when they divested from Starcomms. Another PE firm wholly owned by a Nigerian made 4 times ROI when they divested from a major telco via a private placement. Same also from ABC transport. There are also some PIPE(private investment in a public entity) transactions that also yielded superlative returns especially during the IPO craze of 2006-2008. I can go on and on if not for "confidentiality" reasons.

Besides, I work with a bulge bracket PE firm here in the USA with HO in the Cayman islands and with SIGNIFICANT investments in tech start ups around Silicon valley. We have structured some deals in real estate, healthcare, entertainment esp. box office movies etc I can tell you that apart from healthcare,entertainment (which has a shorter gestation period by the way) and tech start ups, no other PE investment will guarantee you a 30+ ROI. Is it real estate where house prices keep falling everyday, or infrastructure that is supported via govt. concessions and tarrifs. Tech start ups will also have a hard time now especially with the recent bungling of the highly anticipated facebook IPO.
On a personal note, success has a relative definition. For some, it simply means having a regular 9-5 job that will offer them the comfort of a home, car, funds to send their kids to college, a modest retirement savings account (RSA) whilst they live their life "one step at a time". For others, success is defined in "Quantum Leap" terms where life is lived on the edge. I think, that I know what my definition of success is and I am certain that it is not based on another person's yardstick. BEST OF LUCK to you however you wish to define your "SUCCESS"

P.S The thread is not about PE investments in West vs. PE in Nigeria. It is just to educate and create awareness. Please let's take note of this.

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