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SAVCA Newsletter Feature: Q&A with Sanari Capital

SAVCA speaks to Sanari Capital Founder and CEO, Samantha Pokroy (SP), as the firm celebrates its fourth birthday. What did it take to get here and how do they plan to ensure many happy returns?

Tell us a bit about Sanari Capital.

SP: Sanari Capital specialises in investing in founder-run, owner-managed or family-owned businesses in the lower mid-market.
As a founder-run, owner-managed business ourselves, we have a deep understanding of the particular needs, challenges and aspirations of this market. Our prior investment experience in this niche means we’re able to recognise and address the obstacles that often stand in the way of growth, and create a disconnect between owner-management and their private equity investors.
Our understanding, coupled with our experience of institutional investment best practice, enables us to unlock the significant value that exists in these businesses, filling a gap in the traditional private equity market.

We differ in other ways too. To drive investment returns for investor and investee alike, we have developed our forward-thinking 3S Solution which focuses on Sustainability, Scalability and Saleability.

We’ve always appreciated the benefits of having an investment team with a long track record and a host of successful realised investments. Our diverse backgrounds and perspectives bring a new and necessary quality to the PE market which supports transformation and diversity, but there is one thing we all have in common: the goal of Profit with a Purpose.

The capital we invest confers 100% black ownership and significant black women ownership and management to our underlying investments, helping companies achieve their transformation objectives and resulting in significant competitive advantage.

What have Sanari Capital’s deal activity highlights been in the past year or two?

SP: In the past 12 months we have made one new investment into Fernridge Solutions, a follow-on investment into JAYCOR International, and we’re currently working on a third investment.

Our Fernridge investment fits with our targeted investment theme: ‘Data is the new gold’. This company is a leading geo-spatial data and solutions provider. We intend leveraging and expanding their proprietary datasets to provide clients with ever richer business insights.

In just six months, we have effectively deployed key components of our 3S Solution, including strategy formulation and organisational architecture to deliver a new CEO and introduce world-class business development capabilities and data expertise.
JAYCOR fits in with our ‘Connected World / Industry 4.0’ investment theme, distributing components critical to the connectivity and automation needs of a variety of industries.

What are some of the major challenges that Sanari Capital has faced in its four years of existence and how were they overcome?

SP: Our investment focus was clear from day one; how we would raise capital as a new entrant was less clear. We chose to fund our investments on a deal-by-deal basis while we built our track record, which we have done, but the lack of committed capital has at times slowed our progress.

Consequently we are beginning capital raising for our Lower-Mid Market fund, targeting investments with enterprise values up to R500M in South Africa, and incrementally into other select Sub-Saharan African markets. In the interim, we continue to fund investments deal-by-deal and through our Section 12J co-investment vehicle.

The other big challenge, as any new fund manager will testify, is resourcing your investment strategy prior to having committed capital! We’ve been fortunate to have the support of many members of the industry and have even become a huge fan of lawyers, given the critical support we’re received from our legal and tax advisors at Bowmans, ENS and Cliffe Dekker Hofmeyr.

What can we expect from Sanari Capital in the next 12 months?

SP: Our priorities are to conclude our next investment; complete targeted acquisitions in our portfolio; support our portfolio companies in the deployment of the 3S Solution; and raise capital.

Like everyone else we’d like to see South Africa embark on a more sustainable and prosperous path. That said, we are entrepreneurs: no matter what the environment, we have the mindset and investment discipline to unlock opportunity, whether in capital raising, deal making or post-transaction investment management.