Afinitas� pan African venture takes shape
Brian Benza | Friday November 10, 2017 15:36
BusinessWeek: Two years after listing, how has the company grown?
Tumelo: You will remember when we listed in 2015, we didn’t have any investments under the company. Soon after listing on the BSE, we bought a 50% stake in Africa Events Limited (AEL), a firm that is involved in organising the Africa Financial Services Investment Conference (AFSIC), held in London every year. We have now added two more companies to Afinitas, which is Ethiopia Investments Limited (EIL) as well as Adventis Limited - an Africa focussed asset management company.
BusinessWeek: Unlike most startups that tend to focus on the local market, you seem to have a different strategy?
Tumelo: Yes, we are looking at exploring opportunities all over Africa. When you are at the constraint that Botswana is a relatively small economy on one hand and you have the Africa Rising buzz on the other, it only makes sense for one to look at the whole continent as a single market.
BusinessWeek: There are usually a lot of hurdles associated with investing in Africa, issues such as political uncertainty, lack of infrastructure and skills. How do you intend to overcome these?
Tumelo: I believe it’s all about doing your research and due diligence before committing resources. Opportunities are always there. For example, we have chosen Ethiopia as one of the first countries for us to invest in where we have committed $2.5 million and our first subsidiary, Eqos Limited, which is a business process outsourcing company in Addis Ababa. The Ethiopia market has been closed for sometime, but is beginning to open up.
It is the second most populous economy in Africa, with about 60% of the population under 35 years of age. The government there has invested a lot in educating its people, so you just don’t have a large population as your market, but you also have a burgeoning middle class.
BusinessWeek: What business model are you looking at in these investments?
Tumelo: At the moment, we are looking at providing seed capital and taking up equity in these companies. We are not looking at debt financing. Our preferred approach prepared is that we take up an equity stake and then we bring in a management team that runs the project.
BusinessWeek: What else are you working on in Ethiopia or other markets on the continent?
Tumelo: We have other investments in the pipeline in Ethiopia as we look to drawdown on the funds that are already committed for that market.
Through AEL, we have set out to conduct investor road shows in 12 African countries where we try to promote and facilitate investments in those economies. In the road shows, we bring in international investors that are interested in a particular country and introduce them to opportunities in that market.
To date, we have covered; Zambia, Botswana, Namibia, Rwanda, Tanzania and Ethiopia. We will be doing the other six countries between now and the end of the first quarter of 2018. Apart from our annual London investment conference, and the road shows, we also have capacity to run conferences on behalf of our people under AEL.
BusinessWeek: Afinitas’ third subsidiary, Adventis, what line of business does it do?
Tumelo: Adventis is a Jersey-incorporated asset management business. The company is setting up Africa focussed funds. There is one fund that was quite advanced on and we should be in a position to reveal the details of that project to the market very soon.
BusinessWeek: How is the shareholding structure with the three subsidiaries?
Tumelo: Afinitas has a 50% stake. The company also holds a 66% in Adventis and the Ethiopian subsidiary is 100% owned by Afinitas.