As the Federal Government seeks both local and foreign private sector investment to help revive the economy, two experts and founders of Helios Investment Partners, Temitope Lawani and Babatunde Soyoye, have proffered useful tips on existing opportunities to attract foreign direct investment (FDI). Abimbola Akosile writes
Nigeria, which was rebased as Africa’s largest economy in 2014, is in need of more investments, after taking huge hits from global crashes in prices of crude oil – its main source of revenue – with resultant impacts on the economy, local currency, employment, infrastructure and poverty.
Many analysts and experts have suggested various ways to help get the Nigerian economy back to its feet, with options like intensive mechanised agriculture and agro-processing, economic diversification, and greater foreign direct investment among the tips to help rescue the economy from the current recession.
Two financial experts and investment consultants, Temitope Lawani and Babatunde Soyoye, who are founding partners of Helios Investment Partners, a global investment firm with Nigerian roots, speak extensively on what could be done to turn the situation around for the better.
Continental Impact
Highlighting Helios’ impact on Africa and Nigeria’s growth, Lawani and Soyoye explained that, “Today, Helios is one of the few independent pan-African private investment firms founded and led by Africans. We believe that the firm effectively serves as a “bridge” between Africa, on the one hand, and Europe, North America and Asia, on the other, and that our investment approach yields opportunities to generate attractive risk-adjusted returns for our investors while at the same time contributing to the socioeconomic development of the continent.
“The Helios private equity platform invests across a full range of investment types, including business formations, growth equity investments, structured investments in listed entities and large scale leveraged acquisitions. To date, Helios has successfully raised three private equity funds and manages approximately $3 billion. Last year the firm established Helios Credit Partners, a dedicated credit platform to address what we believe is an unmet need in Nigeria and, more broadly, Africa for appropriately structured, flexible, commercially viable and tailored credit to support the growth of African companies.”
Retaining FDI
With regards to retaining and increasing foreign direct investment in Nigeria, they noted, “In our view the current administration is making headway on the priorities outlined by the President, and we are encouraged by this. As business builders and investors, we believe the key issues to tackle within government are transparency, accountability, empowerment and legal protection for investor rights. At the same time real, sustainable momentum needs to be injected into the economy if we are to stave off present and future social instability.
Nigeria has such a massive youth population and, if we are to improve the productive capacity of the economy, we need to improve labour productivity. Put simply, the quality of the labour force has to get better.
“Aside from the scale of its economy, Nigeria has immense comparative advantages including rising incomes, growing urbanisation and increasing diversification into service sectors such as financial services and telecommunications. However, without structural reform, it will continue to lurch from one crisis to another letting these opportunities pass it by.”
Notable Investments
Speaking on their organisation’s investments move to showcase their faith in Nigeria, Lawani and Soyoye noted that, “Over the past ten years, Helios has made private equity investments in 23 businesses, 10 of which operate in Nigeria, including starting one business, HTN Towers, from scratch.
In each case, the capital we invest is to drive growth within a business, which has a positive effect, not only on the company itself but more broadly on consumers. For example, by enhancing lives through access to information and technology as in the case of HTN Towers, Interswitch and Mall for Africa; creating financial security and financial inclusion at ARM Pensions, Crown Agents Bank and Investment Management, FCMB and Interswitch; improving environmental care and quality for example with Eland Oil & Gas and Petrobras Africa, and providing clean energy access through Oando Gas and Power.”
“We have also made one credit investment in Nigeria. Last year, Helios Credit completed a secured asset financing of Starzs Investments, a leading indigenous Nigerian offshore oil and gas company”, they added.
Positive Commitment
According to them, “Our commitment to Nigeria is commensurate with the country’s position as the largest economy on the continent, and consistent with our investment strategy, which is to buy and build market-leading, diversified platform companies operating in the core economic sectors of key African markets like Nigeria.
For Helios, making financial investments entails a focus on driving value creation throughout the course of our ownership.
“While the Nigerian economy has indeed entered a recession, with a slowing of domestic demand, investment and private sector activity, we continue to find interesting opportunities to invest in companies we believe are core to the functioning of the economy; and we are confident that the current environment is a good one in which to continue to make long-term investments in the country. We believe that the next few years provide a real opportunity for businesses with strong fundamentals to differentiate themselves, and really contribute to the recovery and growth of the economy in the medium term; and we remain excited about the opportunities to partner with such businesses”, they added.
Clarion Call
Considering the federal government’s call for vital foreign direct investment (FDI) and how this can be achieved, the investment experts said, “There are indeed many investment opportunities in Nigeria, which make it an interesting destination for FDI, evidenced by the fact that in the last 10 years, Nigeria has received nearly a fifth of FDI flows into sub-Saharan Africa.
As with all our investments, we ensure that the integrity of the Helios investment process is maintained as we rigorously follow our investment strategy, and the way in which we conduct our business and our disciplined investment approach is therefore designed accordingly”, they added.
Fresh Plans
Responding to inquiries on whether the firm is planning other investments in Africa and Nigeria after investing billions of dollars already, Lawani and Soyoye noted that, “While we have indeed invested over $2 billion across the continent, our total investment into Nigerian businesses is more than 30 per cent of the total invested, which is consistent with our guidelines on prudent diversification by country. “We are now halfway through the investment period of our third private equity fund, and have to date committed over half the available capital. We have built a strong pipeline of opportunities across the continent, and look forward to making additional investments into businesses that operate in Nigeria. We continually evaluate a wide variety of opportunities, and remain active in many areas” they added.
Future Outlook
Situating Helios in the development process of Nigeria and Africa in the next five years, they said, “By investing across the capital structure, in both our private equity and direct lending businesses, we help businesses in Nigeria and across Africa to grow. Over the next five years, we foresee the impact of our existing investments increasing, and we expect that Helios will continue to commit significant amounts of capital.
“As Nigerians who have had the good fortune to be exposed to various cultures, and to have built successful careers outside of the continent, we decided to turn our attention and energies to Africa in the desire to contribute to the economic and social development of the continent. We believe that, as individuals, we have an obligation to use our capabilities and resources to make a positive and sustained impact on the region.
“As a firm, we believe that the greatest contribution to regional development will come from the building of profitable, value-creating, and socially responsible private enterprises. In so doing, we hope to demonstrate that the duty of firms such as Helios to earn acceptable risk-adjusted returns for their investors is not in fact at odds with the goal of social and economic development in Africa”, they added.
