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.

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

Multiple Exit Opportunities

  • An increasing number of both local and international strategic buyers have expressed interest in the region
  • Recent sales of PE-backed companies to strategic buyers (1)
  • 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.