Share With
Ask anyone in business what the past two years have been like, and you’re met with a less than rosy report by most.
That said, however, others have achieved phenomenal outcomes, both within their businesses and, in the case of Vuna Partners (Vuna), for the SMEs they’ve invested in too.
Launching a budding enterprise in such economically volatile, pandemic-riddled times not only talks to the wealth of experience of the leadership team, made up of Shafiek Rawoot, Siya Nhlumayo and Lungile Malinga-Qangule, but also to the power of partnerships with key stakeholders.
That value proposition is compelling, worthy of merit and recognition, not only for Vuna’s agility and expertise, but also for its innate ability to onboard and invest in scalable businesses, given their level of financial, technical, and business acumen.
Minding their own business
“The entire premise of Thuso is very much bringing majority, black-owned or wholly black-owned, best-of-breed fund managers into the asset management sector,” Chief Investment Officer at Thuso, Carlo Dickson shares. “The asset management sector is still a very concentrated private sector, with a few very big players, and quite a few satellite players, most of whom it’s doubtful that they can survive, for one of a few reasons. Either because they either haven’t grown, at the scale, the assets under management or they haven’t had a big brother or backer to support them, and that’s where we look to impute ourselves with the incubatees, while not interfering with their day-to-day business, if only because it is theirs run.”
Timing is everything
Thuso’s programme for first-time funds does not imply each is made up of first-time money management professionals. Case in point, Vuna, along with its founders Shafiek and Siya, was on Thuso’s radar of possible partnerships. It was always an aspiration of theirs to engage, at a point in time, should Vuna have wanted to open a discussion around support.
“We didn’t think we’d have the privilege of doing that any time soon,” Carlo recalls. “We were initially thinking more within a three-to-five-year target range, but they were always top-drawer prospects in the private equity space. Fortunately for us, and hopefully fortunately for them, at the time, an initiative Vuna was involved in was just starting to unravel, for reasons completely out of their control, but it benefited us, and I think the timing was fortuitous. We executed rather quickly in discussions, closed the loop and now we’re in a situation where we believe we’ve backed a best of breed private equity and wholly owned black fund manager with capacity that simply didn’t exist before.
“When we talk about capacity, we talk about the opportunities that pension funds or family offices, or any other manner of capital allocators into South African private equity would have an opportunity to get exposure to.”
Gearing up
Thuso’s commitment to Vuna very clearly illustrates the former’s mission statement and overall resolve. With the partnership now live and an initial commitment from Thuso in place, with a follow-on pledge that’s all but wrapped from one of their peers, Vuna is now well placed and able to support and grow its investments.
“That was a process we got involved with, as Thuso, as well,” Carlo points out, “because there are always frictional discussions, meaning every investor is not the same as the next investor, in terms of what they require. So, we get involved in that engagement, which we field, and that greatly assists the process and elevates the probability of more investments going into Vuna’s funds.”
Ground up
The conception of what Vuna has since become began at African Phoenix. “That was where Siya and I were able to find one another and better understand what would and would not work, in terms of our future partnership,” Shafiek recalls. “The two-year period we were there was key in bedding down the infrastructure that informed the creation of Vuna Partners.”
At the start of 2020, Vuna opened for business, just as the world was preparing to lockdown. “Our first close was in August of last year, with the Thuso team,” Shafiek shares.
So, with backing in place, additional funding was required for Vuna to conclude their critical acquisitions. That was where, through Thuso partnering, 27four came in to invest in closing the final second funding stage required.
“It’s something that would have been harder to realise, if not impossible, without their initial vote of confidence in our ability to deliver.”
“What we’ve been doing since then is looking at the pipeline and further investments,” he continues. “Our mandate and what we’re looking to achieve, as Vuna Partners, is a R600M investment target, with a view of doing at least six to seven deals with that capital.”
Less is more
With an achievable investment target and portfolio diversification focal, Vuna’s strategy has already realised investment growth with the likes of 4PL.
“That’s the key thing to us and doesn’t only benefit the portfolio company and ourselves, as the fund manager, but it further benefits our partners, in terms of Thuso and the other limited partners, in the fund.”
Playing to their strengths
Shafiek and Siya bring investment and private equity experience with complementary skill sets that combined not only make them attractive to the market but sufficiently so for Thuso to partner up with Vuna when they did.
Today Vuna is a relevant and thriving partner for capital in the SME business space, with a strong empowerment bent, but what separates it from its peers is its legacy intent. “What’s important for us is what we leave behind,” Siya asserts. “We want to exit businesses within our investment cycle, having delivered growth through empowerment.
“Historically, in South Africa, there has been a misconception of private equity and what private equity does,” Shafiek adds. “What we’re very clear on is, the businesses we look to acquire and the investment strategy we employ to grow each need to reflect a meaningful impact by the time we divest.”
Time in
Over many years, the founders, and the key executive within Thuso have built up an impressive amount of experience in building businesses and backing people. “We feel that we are very good at identifying and partnering the right people,” Carlo concurs.
“In this programme, most of the partnerings, less so with Vuna, come about, where, for the first time, two or three people that work in the same organisation work together,” he continues. “It’s a marriage. We say it’s a marriage because we’re in it together for the long term. So, we have got to be keenly aware and acutely focused on the personalities. We’re almost like forensic psychologists if only because we spend a lot of time focused on our processes, getting to know the intended or potential incubatees, and we observe them in action.
“When they’re engaging with us, we’re very quickly able to pick up who is the stronger personality, who is the weaker personality, and invariably you’re going to have personalities that differ. Where there is a significantly stronger personality versus the weaker, we get a bit concerned, because it could result in a damaging situation later and what we’ve seen happen before. So, we must get the balance right, based on our internal observations, and it becomes a blend of science and art.”
It’s a testament to what Vuna will experience as the business grows and the onboard personnel because the nature of their business is long term, hence anyone they bring into the organisation that investment is great in time. “They have to be acutely aware of what type of person and personality they’re looking for, what sort of skills they’re looking for, and whether it will gel with them, as founders,” Carlo points out.
Due diligence
“It’s a very interesting and nuanced programme, one that I don’t think the audience out there, those who we are trying to bring into what’s happening, see. So, yes, it’s often a frustration we face when asked why we take so long in our process to onboard new incubatees, but without it, everyone would be compromised.”
Thuso is doing private equity, within private equity. They’re looking to back and assist in the building of businesses for the long term, as opposed to the normally established managers that are out there. The latter is already established, and yes, wanting to raise more money, but they don’t need incubation; they don’t need a great amount of assistance.
Like attracts like
“Thuso supports experienced transactors who have never run their own organisations, and that’s the bridge we’ve benefited from, in partnership with Thuso,” Siya commends. “It’s difficult to raise capital in our current collective environment, that’s true, so how do you get these first-time fund managers to progress?”
As Vuna matures so do their investments, and while that’s happening Shafiek and Siya are out prospecting and harvesting new business, in tandem with Thuso, at a pace that will surely see them onboarding more before the year is out.