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Musa Group AVCA Interview with Will Jimerson and Richard Akwei

 

Musa Group Musa Capital

Q: William, what was your background prior to co-founding Musa Group, and what prompted you to start a business in South Africa at such a pivotal time in the country’s history?

A: I co-founded Musa Capital with my partners, Antoine Johnson, and Meredith Marshall in 1995. Whilst completing my undergraduate degree in engineering at Massachusetts Institute of Technology, I interned at Microsoft, NYNEX Corporation, and Digital. I also worked on Wall Street prior to launching Musa Capital. My partners and I felt deeply that we could make a positive contribution to Africa which was at an extraordinary time in its development.Musa Group

Q: Richard, please tell us a bit about your professional background.

A: I started my career with J.P. Morgan, spending 16 years in investment banking positions in Latin America and Africa. I transitioned to principal investing in 2004 when I joined The Rohatyn Group, an emerging market fund manager based in New York. I have known the founders since 1995 and joined the Group in 2012 shortly after moving to South Africa.

Q: Tell us about the evolution of Musa Group. What makes you different from your peers? Do you consider yourself an impact investor?

A: Musa Capital started with Fund I which had US$30mn and was focused on financial services and telecommunications investments across Sub-Saharan Africa. As the fundraising market was difficult following the exit of Fund I, we decided to make direct investments with the carried interest and also developed a broader advisory platform.We launched Fund II in 2008 with US$80mn and continued making investments leveraging the consumer theme. Moreover, we realised that these types of companies required a more direct investment model to sustain their rapid growth. In 2015, a large African institutional shareholder acquired a 30% stake in the newly constituted Musa Group, with Musa Capital holding 70%. Musa Group now consists of a fund management group, operating companies in the food, housing and retail financial services sectors, and an investment banking group. Our structure has evolved to enable us meet our core objective of “doing well and doing good” in Africa, while being cognisant of the investment opportunities that are present, the needs of the underlying businesses and the broader fundraising market. Management believes that the firm is well-positioned to take advantage of Africa’s attractive investment themes regardless of the structure of the opportunity.

Musa Group

Q: Musa is currently raising capital to invest in Botswana, Namibia and Tanzania. Why develop a country strategy now?

A: We decided to focus on these countries because they have similar development challenges to South Africa, so we felt we could successfully apply the expertise we had gained from investing in South Africa. Furthermore, it was important to focus on countries where pension fund managers had shown commitment to investing in PE, and these three countries fit that criteria. Each country fund will target mid-cap businesses, with typical investment sizes of between US$3mn and US$8mn (in local currency). A co-investment facility, domiciled in Mauritius, will provide global investors with exposure to each of the country funds.

Q: Given your experience investing in the mid-market in Sub-Saharan Africa, what are your key value creation levers? What is your philosophy when it comes to social impact?

A: Many mid-sized businesses cannot afford a well-trained risk manager or finance director. However, they still need strategic direction, not just in the board room, but also in the c-suite. Sometimes, you just have to “roll up your sleeves” and meet the CEO every other day, on issues such as the product range, cost efficiencies and containment, or leakages. The challenge is to instil a good governance model without stifling entrepreneurial spirit. Our ethos is to “do good and do well” which means feeding, housing and educating people, and giving them access to decent healthcare and financial services. In 2010, through Fund II, we invested in Matlapeng Housing, which builds and manages good-quality rental stock for low to middle income housing in South Africa. If the needs of people are met, we will always do well financially.

Q: Has Africa’s recent economic slowdown meant for a more challenging environment?

A: Our presence in South Africa for over 21 years has given us insight into a number of cycles within the market and we have always found success. With depressed asset prices, investors are able to deploy capital at more attractive prices. With depressed asset prices, investors are able to deploy capital at more attractive levels. We actively seek out opportunities within the education, food, healthcare and residential real estate sectors, where there is a clear need due to a lack of high-quality supply.

Q: Given your longevity in the African PE industry, what developments have you witnessed over the years and what are your expectations for the future?

A: The African PE market has significantly evolved from the early 90s. The industry was originally dominated by New York or London-based fund managers, which over time established regional offices. Those players still exist and have become household names like Actis, Emerging Capital Partners and Helios; however, they have been joined by a growing number of indigenous African fund managers. Similarly, while the initial commitments were largely DFI-based, the investor pool has widened to include commercial investors such as fund of funds, global and regional pension funds, family offices and global impact investors. Like most nascent markets, first-mover advantage is rewarded, and much of the value creation in those initial transactions came from finding and building “hidden gems.” In the current market, improving operational performance and governance are as, or more important, as finding “hidden gems.” We believe that the current trends will continue, and that African pension funds will play a significantly more visible role in the future.

Q: Taking the long-term view, is this a good time to invest in Africa?

A: There has never been a better time in the past 21 years. This is partly because African pension funds are now more enthusiastic about investing locally. The only problem posed, is that there is a lack of product for them to invest in. Now it is up to us and other investment managers to prove that their enthusiasm is well-placed.

Read PDF version here http://www.avca-africa.org/media/1514/avca-member-interview-musa-group_final.pdf

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“Private Equity Will Flourish Where Strategic Investors Won’t Go”

William Jimerson, “private equity will flourish where strategic investors won’t go”.

William Jimerson at SuperReturn Africa 2015, at the Mövenpick Ambassador in Accra.

Musa Group Corporate Essentials Feature

Watch Musa Group CEO, Will Jimerson talk  entrepreneurship‬, ‪the importance of impacting lives‬ when doing business, and success‬, all fundamental focus areas for the Musa Group.
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Why Millennials Should Look Into Entrepreneurship

Entrepreneurship - The road less travelled

Entrepreneurship – The road less travelled

As is reflected in South Africa’s alarming level of youth unemployment, one of the biggest challenges facing Millennials is finding a job. With the need to create more new employers and more opportunities for others, should Millennials be following the path to entrepreneurship?

ACCORDING to the 2014 GLOBAL ENTREPRENEURSHIP MONITOR (GEM) SOUTH AFRICA REPORT, 7.0% of the adult population in South Africa is engaged in entrepreneurship, while 2.7% already own or manage an established business. It also reveals that for every 10 adult males engaged in entrepreneurship there are eight females.
From this report we also learn that the typical South African entrepreneur is male, between the ages of 25 and 44, lives in an urban area, is involved in the retail and wholesale sector, and has a secondary or tertiary level of education.

Based on the report’s findings, it is safe to say that South Africa needs more male and female Millennials (born between the early 1980s and early 2000s) to consider starting businesses. The reason for this is that the biggest challenge this group faces is finding jobs and/or opportunities, hence the alarming level of youth unemployment.

Education plays a significant role in starting a new business and Millennials, unlike generations before, have more access to education. Moreover, Millennials are tech savvy and possess IT skills that are a must have for any business start-up. Currently, 28% of South Africans start businesses because they do not have another option for work – they are known as ‘necessity entrepreneurs’.

In this day and age, we need to create more new employers that will create more job opportunities for others. The challenge begins after graduation when the majority of graduates opt to seek employment instead of starting a business. Some graduates even settle for career paths different from their field of academic study, while others eventually give up and end up sitting at home. Our society is in dire need of ‘opportunity entrepreneurs’ who can identify an opportunity to start a growing business that, in return, will create employment for others.

The majority of Millennials are risk takers and dream chasers, willing to make mistakes and learn from them. A generation that has been constantly overcoming obstacles and has gained tremendous amounts of bravery, boldness and confidence growing up. This generation is distinctive and open minded. Millennials believe in lifelong self-development and growth. A wealth of information is available at the Entrepreneurs Growth Centre (0861 SMEFIN) for this purpose.

Millennials are also entering into what THE FUTURE OF ENTREPRENEURSHIP: MILLENNIALS AND BOOMERS CHART THE COURSE FOR 2020 REPORT refers to as the traditional ‘peak age’ bracket – around 40 – for entrepreneurship.

Millennials are resilient, assertive go-getters and fall into the 35.5% of adults in South Africa who identify good opportunities to start businesses. This compared to 25.4% of adults who are prevented from starting businesses because of fear of failure.

A prosperous future for Millennials in entrepreneurship begins with establishing a locally desirable idea, ensuring it is clear and simple for people to understand, it is relevant and provides a needed service or product, and that they identify mentorship from knowledgeable and supportive people. It is of utmost importance to maintain focus on acquiring and maintaining customers by fulfilling on a promise to provide a quality product at a value proposition. Following this mantra will allow the entrepreneur to do good for the community in which they operate while doing well (making financial, social and emotional profit) for themselves.

http://www.sabusinessintegrator.co.za/viewonline/196/company-news/why-millennials-should-look-into-entrepreneurship

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Musa Group Launched as Founding Firm, Musa Capital, Celebrates 20 Years of Growth

Musa Group Announcement

Boutique advisory and private equity firm adds shareholders and operational entities to increase its capacity to make a social impact

Musa Group Launched

Musa Group Launched

After 20 years of successful financial advisory and private equity activity in Africa, creating both wealth and value for communities at the base of the pyramid through impact investment, boutique firm Musa Capital has added capacity by institutionalising itself through the acquisition of commercial and industrial operations and taking on new shareholders.

The resultant Musa Group is now a diversified trading and operating company with products and services in areas key to the transformation of South Africa and the rest of sub-Saharan Africa: Housing, manufacturing, retail finance, fast moving consumer goods (FMCG), and agriculture. The Group retains its original private equity and financial advisory divisions.
Its operating divisions are former investee companies of the Musa Kubu Fund in which Musa Capital directors played pivotal roles at board level in structuring the companies for growth by delivering essential products and services to grass roots communities.

“Our close association with these companies gives us confidence in their ability to deliver further value to us as the Musa Group and to society as a whole,” says Musa Group CEO, Will Jimerson, one of the founders and directors of Musa Capital. “We bought them out of the Fund because of their close fit with our future strategy.”
Management has a stake in the new Musa Group and other shareholders include BEE groupings and large investment institutions.

“Our Group mission is to develop Africa through inspired leadership – by growing businesses that provide relevant products and services made in Africa, for Africans, by Africans,” Jimerson says. “We have, therefore, involved ourselves with shareholders who have the same mission and will support our actualisation of it.

Musa’s track record In the past 20 years includes investments in Ecobank, UBA in Nigeria, and Sonatel in Senegal, all in the mid and late 1990s. One of the Group’s operating companies has a track record of feeding over 1.2 million school children a day throughout South Africa. Another division has been responsible for building over 3 000 middle income housing units for mining industry employees in the Northern Cape.

“In the past two decades we’ve proved just how much can be achieved with high levels of innovation and comparatively few resources,” Jimerson says. “Having additional skills on board now, via our operating divisions, enables us to scale significantly the transformational effect of our entrepreneurialism. In addition, with the institutional backing of our shareholders along with the company’s larger organisational footprint, we’ve broadened our access to project capital. “All of which positions us to improve the quality of life for at least 5 million Africans within the next five years.”

The Musa Group is made up of four divisions. The FinServe Group provides, among other retail financial services, insurance and pension-backed housing loans.
The Skyward Group, which is the country’s only manufacturer of uPVC windows and doors, provides low cost housing as well as the finance for people to rent to buy the houses it builds.
The AFH Group, which owns a number of Spar retail outlets in KwaZulu-Natal, has established an integrated value chain that incorporates products from small scale farmers in the delivery of fresh produce to Spar outlets around the country.
Musa Capital will carry forward the company’s original and rapidly expanding advisory and private equity business.

Lumkile Mondi, former chief economist of the Industrial Development Corporation (IDC), is non-executive chairman of the Musa Group.

Musa Capital Sponsored Bakubung Student Excels At M.I.T

sibongile-magagula-at-m-i-t

Musa-Capital-sponsored-Sibongile-Magagula-

South Africa’s export-driven economy is highly dependent on good road and air transportation, so the country’s government recently sent 30 fast-rising transport managers, mostly in their 30s and 40s, to MIT for a specially developed five-day professional education programme. What was also special about these managers was that most of them had grown up in disadvantaged communities with limited educational, social, and employment opportunities under the apartheid era. They brought with them a passion for learning and an infectious collegial spirit, and they became an inspiration for their MIT Professional Education faculty, making the summer week in Cambridge a transformative experience for all involved.Professor Joel Schindall, director of the MIT Engineering Leadership Program, and Blade Kotelly, lecturer in the same program, taught several sessions on design thinking and innovation.

“This group, more than any I’ve worked with, was so open, so excited,” said Kotelly. “They had such a strong desire to learn, and to modify the way their organizations operate, and they were very quick to realize that you can innovate on any level, even the smallest thing, and make a difference.”After a day of classroom work on design principles, Kotelly gave the students MBTA subway passes, and sent them on an evening photo scavenger hunt. “I asked them to find examples of good and bad design — door handles, turnstiles, street signs,” he says. “They took photos and shared them via Twitter; the next morning we went through and talked about what made them good or bad in various contexts.”

“That exercise gave our students the opportunity to immediately engage with the excellent transportation system in Cambridge in absolute safety and security,” notes Hazel Bagley, strategic business development manager at the Regenesys Business School in Johannesburg, which oversees the educational program on behalf of South Africa’s Transport Education and Training Authority. “That alone led to new insights; consciously scanning your surroundings gives a completely fresh perspective.”Student Sibongili Magagula, a senior logistics controller, commented on how Boston and Cambridge have put “so much effort into encouraging walking and cycling, and catering to old and disabled people. Adapting some of these features will help solve some of the challenges we face in South Africa.”Classmate Virginiah Hlungwani, who works as an operations and technical assistant, said the program experience “has added a value in my life, it expanded my knowledge and taught me to handle challenges in any environment. After the course I felt in my spirit that I have gained self-confidence.”

Professor Schindall, commenting on his experience, said, “From the moment I walked into the classroom and met the students, the program was inspiring. The students were engaged, active, participative, thoughtful, and wonderfully supportive of each other. If I had to pick a single word, I would say they were a delight to work with.”The program’s content, which also included operations management, was developed over an eight-month period by Tish Miller, MIT Professional Education’s director of academic programs, in consultation with Bagley. Together they ensured that the material would have immediate and lasting value for the students, who were selected on criteria including managerial experience (3-5 years), employment in operations or supply chain management, and identification as strong candidates for senior management roles in the near future.“I’ve worked on many programs at MIT over the years,” says Miller. “What made this collaboration stand out was the level of gratitude both the participants and the faculty had for each other. Both groups shared how much they were learning from each other and appreciated working together. It made for a very fulfilling experience for all.”The program, MIT Professional Education’s first with South Africa, came about as a result of the unit’s strategic objective of creating greater engagement with professionals from the world’s major emerging economies. Executive director Bhaskar Pant, who was himself born in one of South Africa’s neighboring countries, Zambia, noted, “There is hunger in rapidly developing economies for the kind of expertise MIT can provide, and it is so satisfying when you witness such joyful participation and adoption of learning as we saw in this program. We look forward to organizing more such mission-centric endeavors in the future.”

Schindall praised the program’s mission of developing the skills of workers from disadvantaged communities who have demonstrated initiative, leadership skills, and potential in the workforce. “I think it’s well-conceived and hope it will be enormously successful,” he says. While no firm plans are in place yet, Regenesys and MIT Professional Education are in discussions about additional offerings down the road.Whitehead Institute Professor Hazel Sive, founding director of the MIT–South Africa program and herself a South African, gave a brief talk at a program reception, and noted how the interaction there exemplified the two-way value of working with practitioners from around the globe. “Making connections between MIT and South African colleagues through this type of exchange is clearly to our mutual benefit,” she said.

A post-program note to Pant, Bagley, and Regenesys director William Vivian offered a summary of the student perspective. “We learned about mind and hand but equally we were encouraged to be ourselves and we were heard,” they wrote. “We were heard when we asked questions, we were heard when we sang and danced. Not once did we experience anything but unconditional acceptance of who we truly are, and that is MIT’s trump card. When you are accepted in this way you … open your mind to accepting ideas and ways of doing things that you might never have thought of before.”

Picture:Sibongile Magagula at Massachusetts Institute of Technology (M.I.T)

Musa Capital Welcomes Learners From Mothotlung High School For “Take A Girl Child To Work Day”

Musa Capital is proud to participate in the annual national “Take A Girl Child To Work Day” campaign, first initiated by Cell C in 2003

In accordance with the Millennium Development Goals, the campaign aims to reduce the gender inequality gap that currently persists in the country. It creates a platform for the nation to dialogue about the needs of young girls in our society, and take a collective step in exposing girl learners to the various career opportunities and mentors available to them in the public and private sectors.

On May 29th, 2014 Musa Capital invited 10 learners from Mothotlung High School to participate in this campaign. Mothotlung High School is a public school that educates 1,200 students in a township near Brits. The school provides students with a free education and meals, as 70% of represented parents are unemployed. To the 10 learners who joined Musa Capital for the day, poverty and unemployment is a reality that few in their community seem to escape.

As a means to inspire the learners, Musa Capital took them through an integrated program that focused on Social investments, Proactivity and Career Planning. During a discussion with Musa Capital’s Executive Director, Richard Akwei, and Vice President, Rebone Mabusela, learners were exposed to Musa Capital’s investment strategy, learning about the various ways that private equity firms can provide both financial and technical assistance to businesses in Telecommunications, Financial Services, Mining and Mining Services, Retail and Consumer Goods, Construction, Agribusiness and Renewable Energy across sub-Saharan Africa.

The learners further engaged in a discussion about the various issues that face their community and the roles that they can play today in order to create sustainable social change. In an icebreaker activity intended to encourage the girl learners to articulate their dreams, Nthabiseng (a grade 12 learner), shared that she dreamt of “becoming a teacher, and helping orphaned children”. Following a game and discussion session on proactivity, career planning and collaboration hosted by Claudia Masemola, an intern at Musa Capital, Nthabiseng further indicated that she was inspired to start tutoring orphaned children in her community. She also planned to engage with her teachers to learn more about career opportunities. Her comment not only inspired her fellow classmates to think more deeply about their career plans, it also demonstrated the impact that mentorship can have on young girls in communities.

Having transferred our values of Excellence, Innovation and Social responsibility; Musa Capital encourages our girls to remain inspired and “Be the change they wish to see in the world”. (Ghandi)

Bakubung Factions Bury Their Seven-Year Hatchet

Breakthrough bodes well for government intervention in Rustenburg platinum belt

ONLY the champagne was missing when the Bakubung royal family, the directors of the tribe’s commercial entities and financial adviser Musa Capital publicly signed a deal to bury the hatchet in the long-standing row over Bakubung shares in junior platinum miner, Wesizwe.

The differences between two Bakubung leadership factions go back to 2007, when it emerged that a substantial portion of the community’s stake in JSE-listed Wesizwe, which is building a platinum mine on Bakubung land, had been put into a complex web of companies by Musa Capital.

It had been used as collateral to raise funding from the Industrial Development Corporation (IDC) and Deutsche Bank for other ventures.

The attempts to make peace went at a slow pace at first, but North West standing committee on public accounts chairman Hlomani Chauke pressed the parties to look beyond their differences.

But last week, piles of documents, empty water jugs and spent cooldrink cans strewn across the boardroom table at the auditor-general’s premises in Pretoria, attested to the success of the latest effort.

The marathon open stakeholder meeting lasted close to eight hours.

The breakthrough is significant beyond local and regional affairs. It is a rare success for government-led intervention in the troubled Rustenburg platinum belt, where communities believe they are not benefiting from the mining activities carried out on their land.

“This is a proud example of government doing its job and helping to repair the fissures in a community that I know will be one to stand for success,” said Musa Capital founder William Jimerson.

Bakubung acting queen Margaret Monnakgotla said the seven-year battle was ended because of the Bakubung’s willingness to stand together. They are an impoverished 30,000-strong community at Ledig near Sun City. The agreement would soon be announced at a community meeting.

The royal family had raised concern about the “disappearance” of their 33% stake in Wesizwe, which is expected to start production by 2018. The shares were sold in 2007 for more than R700m, amid fears they were getting diluted because the tribe did not have funds to buy more shares as Wesizwe continued to raise capital.

The transaction involved deals with the Deutsche Bank and the IDC — which still holds a close to R100m balance until disputes over financial and governance affairs are settled.

According to records, most of the money was invested in nine portfolio companies in the retail, finance and construction sector, through the Musa Kubu Fund, a partnership between the tribe’s investment arm, Bakubung Development Corporation (BCDC) and Musa Capital.

Under the new deal, the Bakubung royal family and the directors of two commercial entities linked to the community, the BCDC and Bakubung Economic Development Unit (Bedu), a developmental arm, undertake to “reconcile their differences”.

They also recognise the royal family and acting queen’s authority and role in the governance structures of the community.

Bedu chairman Disele Phologane said: “We hope this will herald a new life, a new way and a new thinking, which will be good for the development of the community.”

Mr Chauke, also general secretary of the Association of Public Accounts Committees in SA, said the intervention demonstrated the government’s commitment to accountability. “Our role from government point of view is to make sure that our people are guided properly. And that as we administer minerals on behalf of our communities we do it properly so that there is a benefit for our people.”

An article published in the Business Day on Tuesday, 27 May 2014

http://www.bdlive.co.za/business/2014/05/27/bakubung-factions-bury-their-seven-year-hatchet

27-May-2014 | Setumo Stone

The Musa Capital & MAD Charity Internship Programme

Musa-Capital-Interns-at

During the 2013 university holidays, Musa Capital hosted an outreach opportunity for learners in order to provide them with the pathway to advancing their futures. In direction to do this, Musa Capital invited four MAD (Make A Difference) CHARITYTM learners to participate in their ‘Emerging Business Leader Internship Programme’ at the Musa offices in Sandhurst, Johannesburg.

The learners who participated in the programme were: Claudia Masemola (3rd Year, African Development and Economics, Becknell University, USA), Japhta Lekalakala (2nd Year, LLB, at Rhodes University), Gadaffi Nkosi (4th Year, LLB, at University of Cape Town) and Sidwell Mashile (3rd Year, B Comm Economics, at Rhodes University). They all received the opportunity to intern at Musa Capital and pick up valuable skills needed for the world of business.

From the right: Japhta Lekalakala, Gadaffi Nkosi, and Sidwell Mashile at the MUSA Capital Head Office

If you can assist with an internship/job shadowing opportunity at your company or know of an opportunity, please contact Angelique Krause at MAD on angelique@madcharity.org