Agile Capital looks to ‘soft services’ for R900m war chest deployment

Agile Capital, the black-owned and managed private equity firm, says it has about R900m in capital available that it wants to invest and is particularly interested in businesses engaged in “soft services” such as catering and facilities management as acquisition targets.
The Johannesburg-based firm started investing in 2008 through a R500m capital injection from FirstRand-owned Rand Merchant Bank (RMB), though it only took on the name Agile Capital in 2015. Since then it has established a strong track record in the private equity industry, having invested a combined R1.4bn across three separate funds (R500m each in Fund I and II with R400m allocated to Fund III).
Agile is now building out its R1bn Fund IV, which has already taken stakes in Averge Technologies and UniQ Benefit Solutions, leaving it with about R900m available for deployment into soft services acquisitions — such as facilities management — and other sectors.
Having successfully exited Autovest, one of SA’s biggest suppliers of approved vehicle accessories, as well as AutoZone, the largest privately owned automotive parts retailer and wholesaler in Southern Africa, Agile is also interested in making additional investments in the automotive component and vehicle manufacturing supply chains. It holds a stake in Henkel SA, which supplies adhesives products to the automotive original equipment manufacturers (OEMs).

“We like the services sector because it gives you the flexibility to either scale up or scale down fairly quickly in response to fluctuations in economic activity,” says CEO and founder Tshego Sefolo, a chartered accountant by training who was among the first black private equity professionals in SA. “That’s one thing Covid taught us — you need to be in businesses that allow you to either flex upwards or downwards in step with changes in the economic cycle.”
Many of those pandemic-driven lessons would have been learnt through the likes of Excellerate Services, the property and facilities management firm in which Agile has a stake via its third fund. It also resonates nicely with the firm’s name, which interestingly Sefolo says is pronounced ach-hee-leh, a Setswana word thatmeans “to build”.
“To build you also have to be agile,” he says.
Feedem, another of Agile’s portfolio companies, which provides catering, cleaning and hygiene services across SA, is exactly the sort of company the firm is looking to invest in as it builds out its fourth fund. The business manages more than 250 sites where it serves 50,000 meals a day and employs more than 3,000 people, ranging from dietitians, chefs and human capital specialists to hygiene experts.

“Those sort of soft services are exactly what we’re looking for,” says Liz Kolobe, a business science graduate from the University of Cape Town who also holds a CA (SA) designation, and is Agile’s principal transactor who participates across the deal cycle from origination to execution and sits on the boards of several of its investee companies.
“By soft services we mean areas like cleaning, catering, hygiene and waste management, pest control — the facilities management activities that aren’t integrated into the physical premises or buildings of our clients.”
One area where Agile feels it has significant exposure is mining, a sector where the firm has built up investments such as ProVest, a specialist supplier of shotcreting (the process of insulating shaft walls by cement spraying). Aquatico, a water testing and laboratory services provider, also serves the mining industry though its services are also applicable in industrial and other sectors. Agile also holds investments in BBE Group, a specialist mine ventilation and refrigeration engineering firm, as well as BBEnergy, providing energy, water and analytics services to the mining sector, among others.
“We find that in the mining sector the benefits of the commodity boom don’t always trickle downwards as much as one might think,” says Sefolo. “The mines tend to take a somewhat commoditised view of service providers.”
One area Sefolo regards as non-negotiable for potential investment targets is the quality of the underlying business model. While he echoes the experience of many investors in mentioning the effect of the Covid-19 pandemic, which left private equity firms with a veritable smorgasbord of distressed entities looking to exchange equity for capital, he says Agile only made one investment during that time.
“We looked at a few potential investments during and after Covid-19, but to be honest we weren’t satisfied with the underlying quality of the businesses relative to the price expectations,” he says. “That’s something you have to have in a business before you invest in it, otherwise you’re just setting yourself up for failure.”
In terms of cheque size, Agile looks to deploy between R75m and R150m in capital per investment, while its ideal target size is a company with an enterprise value of R300m-R1bn. Its preference is to take either significant minority or controlling stakes in target firms while partnering with management teams, but thanks to its capital support from RMB, it does not have the same exit pressure that causes most private equity firms to remain invested for no longer than five- to seven-year cycles.
“That’s where having a partner like RMB is so helpful,” says Sefolo. “We don’t have that gun to our head from investors, which means we can remain invested for far longer than your typical private equity partner.”

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