What informed Actis' decision to invest in UACN?
Ans. There were three things: A well established Nigerian business where the management has been able to achieve a turn round from the late ‘90s. We have a company with a management which proved itself in difficult circumstances and came through.
We have a company which business principles were closely aligned with Actis'; as we are concerned about practices around the world.
There are parts of UACN businesses that seemed to have good growth potential. We decided to bring in capital to help them grow. We felt would be able t add value and bring broadening perspective from beyond the borders of Nigeria.
The approval for the Actis' investment in UACN did not go as smoothly as expected. How did Actis see the development? Has Actis experienced this kind of reception elsewhere in Africa?
Ans. My understanding is that the shareholders did not get the disclosure about who Actis was in December. I am not aware that there was any disquiet about Actis. The shareholders wanted to know who the big shareholder was. This was quite an unusual transaction. We have not gone into business using a similar process. I can't think of any parallel.
Actis appear to have an investment thrust that is geared towards the short-term. Is this strategy deliberate? If so, what informs it?
Ans. Actis is a fund manager and we have raised money to invest in Africa from a number of investors, including CDC (Commonwealth Development Corporation). Our funds have a 10-year span. At the beginning of three years, we invest and return the investment after 7 years. Our typical investment has 5-8 years span. It is enough for Actis to come along identify with UACN's growth ad evolution.
What are Actis' expectations vis-à-vis its investments in UACN?
Ans. We want to see continued growth; we want to be in a place that will attract excellent people and reward its employees and shareholders. Success through success. We will be delighted to see the company go through a positive cycle of growth and success.
Did UACN's track record assist in convincing Actis that it was making a good investment?
Ans. One of the things that struck us was that the management team has done a good job in a difficult situation. That track record was important. Its involvement in Quick Service Restaurant was interesting. That's the most tangible side of a real growth. It's a sign of track record that was impressive.
Besides good returns, what else does Actis' emphasize in its investment drive?
Ans. We are concerned with business that has a good corporate citizenship, sensitive to the environment, good standards in occupational health and hygiene and the ethical standards are good. These are as important to us as good returns. It is not enough to make money and do things that are damaging. Also, it is not enough to be good corporate citizen and make no returns. We see UACN as a company that is working to do both.
From your study of the Nigerian economy, what do you hope to see in the country?
Ans. I am impressed with what the reforms have been able to achieve in terms of the macro-economics environment. Inflation and interests rates are declining; the budget deficit is declining, a sign that the government is not spending irresponsibly. The exchange rate has become more stable. Reforms are coming to duties, the laor and power sectors while there is a drive towards good governance. All these things make the country an interesting investment environment. These things need to be sustained. If these developments are sustained, I see more foreign investments. Then, the fact that Actis has invested $70 million in Nigeria in the last 12 months will not be unusual.
What can UACN expect to benefit from the Actis investment in the short and long term?
Ans. I hope now that Actis has representatives on the Board, they will bring investment experience which the company (UACN) will benefit from. And we have indicated that in whatever way we can help the business, we would be ready to do so. We have started exploring how we may be able to help. In the short term, the key benefit is the fund we have injected into the business which has created headroom for investment.
What opportunities exist generally in Africa for similar foreign investments?
Ans. Nigeria is one of the pioneer markets in Africa for consumer goods because it has a large population. It is possible to have equally large businesses in Nigeria servicing the market, even though income per head in that market is still low. Other countries with similar incomes and fewer people will not be able to support large companies.
Our investments in Nigeria include:
- Palm Shopping Mall
- UAC of Nigeria PLC and
- Starcomms.
Culled from the 26th Volume, Number 1 Edition of UAC Link Magazine
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