Investment Climate Heating Up in Africa
Moving to Nairobi from Singapore last year was a culture shock for Bryan Sun, '07 (AXP-6), managing director for sub-Saharan Africa for The Nielsen Company, the consumer products-tracking giant. The music and clothes hearkened back to the 1980s, he said, and poor roads and transportation made it difficult to get around.
But the growing middle class and appetite for consumer products, not only in Nairobi but across the continent, also have made Africa a ripe place for investment. "There's a huge opportunity here," Sun said. Annual growth in sub-Saharan Africa, for instance, has been in the 5 percent range, according to the International Monetary Fund. The potential is not lost on Booth graduates, many of whom are pursuing careers or investments on the continent.
Picking up on increased interest in the region, a fall Chicago Conversations program in London - Investing in Africa - explored investment hot spots and the best partners and products, as well as how to navigate the regulatory and policy environment when doing business in Africa.
London was a natural choice for the program, said Leslie Plaisted, associate director of employer relations, for Career Services in London, because many firms that invest in Africa are based in London and the London campus of the Executive MBA Program attracts Africans who plan to use their Booth education to help build and develop their respective countries.
The panel discussion drew nearly 200 attendees, many of whom were new to Booth and wanted to learn more about the topic, according to Plaisted. "We had a phenomenal turnout," she said. "Chicago Booth increasingly is focused on Africa and this event was evidence of that."
The panel was moderated by Lanre Akinola, editor of This is Africa magazine, a Financial Times publication. The panelists were Justin Abbott, managing partner of private equity firm Satya Capital in London; Kola Karim, group managing director and CEO of energy and infrastructure company Shoreline Energy International in Lagos, Nigeria; Marc Nahum, '90, director of investor development for London private equity firm Actis; and Ekwunife Okoli, managing director of Diageo Africa Regional Markets, an arm of London-based beer and spirits giant Diageo plc.
Nahum said in an interview that the growth of the middle class and the rise in discretionary income has created demand for products and services such as health care, quick-service restaurants, and consumer finance. One Actis investment in a manufacturer of apparel for affluent women in West Africa recently has been growing by more than 20 percent a year, he said.
Private equity in Africa still is in its infancy as compared to other emerging markets. "You have to dig deeper to find opportunities. But once you find them, there is less competition," Nahum said.
High returns are possible in Africa not just because of favorable demographics, but because government reforms have created a better investment climate, said Larry Seruma, '96, chief investment officer of Nile Capital Management LLC in Princeton, New Jersey, and portfolio manager of the publicly listed Nile Pan African Fund. In Nigeria, for example, "the banks are paying a dividend yielding 9 percent, but they are trading at a discount because people are skeptical that they are well managed."
Seruma started Nile in 2004 after investing in a small Ugandan energy company. He grew up in Uganda when the brutal dictator Idi Amin mismanaged the country's economy, but "the more I returned for visits in the post-Amin era, the more I saw the change - a 180-degree change."
Sun said skepticism is understandable because Western-style institutions and distribution systems are vastly underdeveloped. For example, an estimated 80 percent of food and consumer goods are sold through mom-and-pop stores and open-air markets, so sales and market share can't be captured by scanner data at checkouts. Instead, Nielsen gathers market intelligence by labor-intensive auditing of a sample group of outlets.
"You have to be willing to roll up your sleeves and take a few punches," Sun said. "It's not for people who need structure. But if you want life experience and opportunity, this is the place to be." - Judith Crown
Trekking Clears a Path to Informed Career Choices
During a five-day trip in December, students interested in investment management visited 14 East Coast firms, with sessions at Fidelity Investments and Acadian Asset Management in Boston, AllianceBernstein in New York, and T. Rowe Price in Baltimore. First-year Full-Time student Steven Leiva, AB '09, who coordinated the trip, along with Geoffrey Mrema, a fellow first-year student, found it an opportunity to assess different firms and narrow his job search. He was rewarded with an insider's look. "Most firms went out of their way to give us access to top decision makers and other high-level employees," he said.
Leiva and his classmates were participating in a trek - an increasingly popular way to absorb a company's personality and gain a detailed view of a particular field. Treks enable Booth students to gain a firsthand view of almost any field they may be considering, from venture capital and private equity to consumer goods and media.
The students come away with a more nuanced view than they would by online research or by meeting a campus recruiter, but without the pressure of a job interview. The sessions ultimately help students make more informed decisions about career choices.
"Anyone can read a job description, but treks give you a real sense of the responsibility of the job," said Christy Leak, director, employer relations, for Career Services.
Domestic treks during the 2012-13 academic year have explored alternative and conventional energy, retail, consumer goods, media and entertainment, banking, venture capital, private equity, hedge funds, and start-ups. International trips have included finance in Singapore and Hong Kong and banking and investment management in London.
Indeed, many Booth alumni like to think of the treks as opportunities to extend their hospitality to current students, provide a rich picture of their field, and offer advice ranging from the pace of career advancement to work-life balance.
When two groups of 12 Booth students each interested in start-ups headed for the San Francisco Bay Area, they visited more than 34 start-ups including Palo Alto-based Cooliris Inc., a developer of social media apps for photo browsing and sharing founded by Soujanya Bhumkar, '99. Bhumkar and three colleagues told students how they camped at the office until 3:30 a.m. the week leading up to, and after, the launch of mobile app Cooliris. "A sense of common passion is what keeps us working late nights," Bhumkar told students.
Will Lee, a first-year Full-Time student who helped plan the trek, said many of the entrepreneurs' David-and-Goliath stories were reassuring. One start-up publisher, he recalled, worried that if he enjoyed just a little bit of success, the publishing giants would notice and crush them. But the founders learned that those giants are distracted by dozens of challenges at a time, and they couldn't respond quickly to a nimble start-up. "So the start-up founders continued to execute on their mission and on their vision," Lee said.
At AllianceBernstein in New York, students met Ram Parameswaran, '11, assistant vice president and senior equity research associate, who emphasized the importance of becoming the go-to person for anything related to a specific set of stocks. Parameswaran cited his firm's prescient rating of Facebook as an underperformer when the social media site went public. "When we published our work on Google, we got feedback that our analysis was deep, thorough, and well-thought-out," Parameswaran said. "You continuously need to keep clients and the industry engaged in what you have to say."
The comments by Parameswaran and others helped Leiva and his classmates understand how different firms structure their analytical work and how decisions are made. And the perspective of Bhumkar on the West Coast helped students understand how start-ups adapt their products and services based on customer feedback, according to Kirsten Nelson, senior associate director, career management, for Career Services. "It was enlightening for them to hear what it takes to keep a start-up running," she said. - Sandra Swanson