Investment Methodology

Flexible Structuring Mechanisms

Brightmore Capital utilizes a variety of structuring mechanisms to achieve downside protection while maintaining upside potential
Low capital risk while maintaining meaningful upside participation:
  • Where appropriate, use quasi-equity instruments and equity-linked instruments with conversion rights
  • Can potentially generate returns comparable to those of equity given scarcity of alternative financing sources for companies in Africa
Structuring management incentives to ensure alignment with Brightmore Capital:
  • Competitive performance based compensation
  • Institute stock option plans and tie-ins for senior management
We insist on investment participation from all key project stakeholders

Multiple Exit Opportunities

Increasing M&A activity of financial and strategic buyers:
  • An increasing number of both local and international strategic buyers have expressed interest in the region
  • Recent sales of PE-backed companies to strategic buyers1
  • As more capital has been raised in the region, sales to financial buyers are becoming more common
  • Rising economic interest in the African continuant by foreign investors
Sources:

  1. Private Equity Africa. Deals: Exit.

Post-Investment Value Creation

Create tangible operational value-add for each project invested:
  • Identify additional value creation opportunities (i.e. beyond initial business plans) during the due diligence phase
  • Work with management to develop and implement detailed financial, operational, and strategic plans
  • Agree on key performance indicators (KPIs) in collaboration with management
  • Ensure organization is optimally structured, address any balance sheet inefficiencies, and reinforce management team
Structure business operations to generate positive economic and social impact:
  • Set impact targets for each investment made and structure activities for their realization
  • Define a set of specific performance metrics against which to track investment impact, in conjunction with commonly-used benchmarks (e.g. GIIRS, GIIN IRIS)
Ensure portfolio companies benefit from our regional network of business and governmental connections:
  • Leverage presence, experience and network to assist companies in growing into adjacent markets
  • Build market-leading and professionally operated businesses that achieve significant scale to attract strategic players increasingly interested in establishing or broadening their African presence