Q&A with Bopa Moruo

Bopa Moruo is a relatively new South African private equity manager, which already has some significant deals under the belt. SAVCA spoke to Nthime Khoele (NK) and Tumi Tlhabanelo (TT), directors of the firm, about their plans.

What is your identity as a firm and what are your plans with Fund l?

NK and TT: Bopa Moruo is foremost a mid-market private equity and private capital firm that is focused on generating long-term capital appreciation by building great businesses. Our name Bopa Moruo speaks to the core of what we do as a business. Bopa Moruo is a seSotho phrase meaning ~ Bopa (verb.) – build, shape, mould, create and Moruo (noun.) – wealth, capital, economy. We’re in the business of building capital and shaping the economic landscape through the investments we make.

Our plans for Fund I are to complete the Fund I investment programme started in late 2013, and adding to the high-quality businesses we currently have in our portfolio. As a first-time fund manager, we’ve taken particular care in the portfolio construction of Fund I, and as such have been more discerning in the investments we make in Fund I.

What are the ideal deals which you are pursuing? How would you describe the state of the market for these deals?

NK and TT: While the current economic environment is challenging and various sectors have a choppy outlook, we believe this presents some attractive private equity investment opportunities. It also presents opportunities for our portfolio companies to further improve their strong market positioning, and that’s where we’re seeing a lot of activity.

We’ve seen heightened competition for good companies in our space and that has obviously impacted pricing. However, weaker earnings visibility in businesses driven by muted GDP growth, weaker disposable income and a rising interest rate cycle, means that pricing should become more reflective of the environment.

You both have extensive experience in private equity and investments. How would you describe this new career as a first-time fund manager?

NK and TT: The nature of the private equity industry, which places great emphasis on track record and the investment team having worked together, has always presented a massive challenge to first-time managers. We were no different. However, having both previously worked at Brait and thereafter on a club deal when Nthime was at Brait and Tumi was at Development Partners International, really helped us get going quicker and mitigated the team dynamic that many first-time managers from disparate backgrounds face, as we shared a common value system, common investment philosophy and investment process, and shared aspirations. The challenges of being an entrepreneur and building a business in the current environment are not insignificant, but this has been a fulfilling journey and we love what we do.

What is your understanding of the nature of partnership provided by private equity? Do you believe that the industry delivers on this?

NK and TT: We certainly believe that private equity offers the greatest opportunity for sustainable, value-creating partnerships that blend capital, expertise and active support, and whose outcomes are objectively measurable. However that partnership quotient provided by private equity differs from manager to manager, and also from investment to investment. Speaking for ourselves, we see the partnership quotient being variable by activity and intensity across our portfolio, ranging from unlocking new opportunities and new human capital opportunities to providing proactive support when a company hits a bump in the road. We believe great businesses and great investments come from building true partnerships with the leaders and companies in which we’re invested.