Mid-market private equity firm Agile Capital has a further R900 million to deploy of its R1 billion Fund IV, looking to partner with management teams by taking significant minority stakes in businesses across various sectors.
Agile focuses on South African businesses in the mid-market space, with EBITDA (earnings before interest, taxes, depreciation and amortisation) of around R35 million and above.
The mandate is sector-agnostic, looking to identify businesses in areas where the team has skills and experience, and also to invest in companies with some exposure to the rest of the continent.
Headed by CEO Tshego Sefolo, the Agile team has a 10-year track record, with the company formed in 2015.
Agile has invested R1.3bn with funds committed by the FirstRand Group. Funds I and II fully are invested at R500 million each, and its R380 million Fund III also fully invested.
As CEO, Sefolo is responsible for overall management of the business and is involved in transaction origination, execution and post investment value management. Before establishing Agile Capital, Sefolo was the managing director of the Zico Group, an investment holding company with diverse interests in mining, gaming, industrial services and manufacturing, both within South Africa and across the continent. A chartered accountant, he holds an MBA from the University of Witwatersrand.
Investment principal Liz Kolobe, also a chartered accountant, joined Agile in 2019. She started her career at Deloitte before working at mid-market PE firm Kleoss Capital for five years.
The investment team includes associates Bulumko Ndema and Asavela Lumkwana, both experienced CAs.
Agile is 100% black-owned, bringing economic empowerment credentials to any potential shareholding.
The team believes it can add value by helping portfolio companies as a sounding board for new strategies for growth, working alongside management teams to help unlock business opportunities using its extensive market networks and harnessing synergies across its existing portfolios. By taking non-executive roles at board level, it is also able to contribute principled governance and best practices across its investee companies.
Focused on the mid-market sector, it does not invest in start-up and greenfields businesses, business rescue and turnaround cases, deep mining and exploration ventures, real estate or primary agriculture.
As a financial partner, Agile does not face exit timing pressures due to FirstRand’s long-term commitment, enabling it to forge enduring partnerships with the businesses it invests in, thereby generating superior returns.
Agile favours sectors which it understands well, and where it has enjoyed success in the past. These include the auto manufacturing industry, where it looks across the value chain, including suppliers to large OEMs (original equipment manufacturers) in South Africa as part of a drive to localise production of parts. In 2015, it exited successfully investments in parts distributor Autozone and Autovest, which manufactures and supplies automotive accessories.
It also likes the healthcare industry, with one investment already in the space, in the form of medical device distributor SA Biomedical Group.
Outsourced facilities management is another area of interest, and Agile currently owns stakes in Excellerate Services, a property management business, and Feedem, also in the service industry. SpillTech is another portfolio company, operating specialised cleaning services in the environmental sector.
Although its mandate excludes direct mining exposure, Agile does invest in the mining services space, including engineering businesses focused on energy management for the mines. Portfolio companies include ProVest, an integrated mining and construction services company, BBE Consulting, which provides ventilation, refrigeration and cooling to the mining industry and BBEnergy, which focuses on energy and water projects as well as data analytics.
It also invests in the outdoor media space, including a longstanding shareholding in out-of-home media specialist Provantage Media Group (PMG), a portfolio company that operates across Africa.
Fund IV has already invested in turnkey solutions provider Averge Technology and in UniQ Benefit Solutions, which has emerged out of Adcorp.
With patient funding, the team can focus on identifying and managing the best investments for the funds over the long term, with no pressure to exit.
“The name Agile means to build and we look at long-term investments,” says Kolobe, “We have held some businesses for more than 10 years – we are able to partner longer term with a management team and come up with an exit strategy that makes sense.”
“Last year was difficult and we have tried to address that in our deals, considering stricter transparency to protect the downside and deferred payment structures where it makes sense,” says Kolobe. “There are a few opportunities we are looking at, although valuations are a sticking point in any negotiation and sellers are asking us to look post-Covid. 2020 was difficult and in 2021 we are not out of the woods yet. Some businesses are looking to sell non-core assets so there are some great opportunities for companies, such as the recent Adcorp deal.”
Agile has a total of 14 portfolio companies spread across different sectors, and is looking to partner with strong management teams that have been able to conserve cash and limit debt in a difficult operating environment.
In keeping with its focus on sustainable development, Agile does consider ESG factors in its processes, with social and ethics considerations in place, and many of its portfolio companies have committed to OECD guidelines. Governance is the area where the team feels it can add significant value. Agile’s black-owned shareholding is an important factor in contributing to business sustainability and one that is important for its investee companies.
“We bring the BEE shareholding component and try to assist our portfolios companies in this area, but the other elements of the BEE scorecard remain important. When looking for investee companies, we need a good fit,” says Kolobe. “Businesses must have a strong track record and a solid growth story. Ultimately we work with people, so partnership with the management team is key. As private equity players, we are not passive shareholders, but we leave the management team to run the business. Many of these businesses are entrepreneur-built, and we enjoy being value-adding partners, helping to set up company boards, where required, on which we take non-executive roles and then helping portfolio companies with acquisition strategies of their own.”
“We see a lot of opportunities in South Africa with many entrepreneur-built businesses at a place in their life cycle where they need a partner to get to the next level.”
In addition to its portfolio partnerships, the Agile Foundation focuses on education. It has been involved in a skills development and training project in conjunction with one of Agile’s portfolio companies. The foundation has now identified a school with which it is building a long-term partnership.
