The  Africonomist   presents:  

Q&A  with  Kofi  Bucknor  

Kofi  Bucknor
 of  Kingdom  Zephyr  Africa  Management  
                                                                                                                                                                   The  Investment  HoundS                                                                                                                                                        September  

  Armed  with  a  $492  million  (USD)  war  chest,   of  debt  leverage,  which  is  hard  to  come  by  in  the  
Kofi  Bucknor  and  a  team  of  investment  profession-­ current  environment.  
als  are  scouring  the  African  continent  for  standout  
investment  opportunities.   Do  you  like  to  invest  alone  or  go  in  with  other  
private  equity  investors?  
  Bucknor,  managing  partner  at  Kingdom  
Zephyr  Africa  Management  Co.,  and  his  team  are   We  prefer  to  lead,  but  invariably,  the  best  deals  are  
no  rookies  at  this  sport.  This  is  their  second  Africa   always  looked  at  by  other  people.  
fund  in  seven  years,  
and  already  they   Do  you  go  into  any  investment  with  an  exit  
have  deployed  18%   strategy  in  mind?  
of  the  latest  capital  
Typically,  private  equity  funds  would  hold  their  in-­
commitment.  At  a  
vestments  5  to  7  years  on  average,  and  look  to  
meeting  in  Accra  
exit.  Public  listings  are  always  a  good  way  to  exit,  
with  The  Africono-­
but  they  are  not  always  available  because  you  have  
mist  editor  David  
to  be  in  the  right  market  that  would  give  you  the  
Dankwa,  Bucknor  
right  valuation.  You  
describes  the  private  
Fast  Facts:     can  exit  in  other  
HTXLW\IXQG¶VVWUDW
ways,  such  as  a  stra-­
egy  and  opportuni-­ Kingdom  Zephyr  
tegic  sale.  So,  we  
ties,  as  well  as  some    
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of  the  risks  investors   Investing  in  Africa  since:  
exit  strategy.  Eco-­
Kofi  Bucknor   face  in  that  part  of  the   1995  
  Bank,  for  instance,  
world.  
Ownership:  Kingdom   listed  shortly  after  
The  Africonomist:  Is  the  new  fund  focused  on  
Holding  Co.  and  Zephyr   we  invested  in  it.  
Management  LP  
any  particular  country  or  countries  in  Africa?     Talk  about  the  
Current  Holdings:  Thun- quality  of  invest-­
Bucknor:  No.  In  fact,  the  more  companies  we  find   nus  Overseas  Group;  
that  have  a  presence  in  multiple  countries,  the  bet-­ ment  proposals  
Buildworks  Group  Ltd.;   that  are  coming  
ter.  We  think  that  many  of  the  opportunities  in  Af-­ Mixta  Africa  S.A.;  Let-
rica  involve  cross-­country,  regional  diversification   across  your  desk?  
shego  Holdings  Ltd.  
players.  
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In  terms  of  sectors,  do  you  have  a  particular   and  more  sophisticated.  Companies  are  preparing  
focus?   themselves  better  to  speak  the  language  that  we  as  
private  equity  investors  find  attractive.  That  said,  it  
1RZH¶UHORRNLQJIRUDQ\VHFWRUWKDWVKRZVVWURQJ varies  from  country  to  country.  Larger  markets  like  
growth  potential  in  Africa.   Egypt,  Nigeria  and  Morocco  have  become  pretty  
VRSKLVWLFDWHG7KHUH¶VVWLOODELJJDSSDUWLFXODUO\LQ
Would  you  consider  any  form  of  investment,   Francophone  Africa,  in  terms  of  information  flow  
such  as  management  buyouts?     that  allows  investors  to  zero  in  very  quickly  on  
what  the  opportunity  is.  
:H¶UHORRNLQJIRUVLJQLILFDQWPLQRULW\VWDNHVZLWKD
minimum  investment  size  of  about  $30  million   Why  do  you  believe  there  is  an  information  
(USD).  We  may  do  a  controlled  investment  but  that   flow  gap  in  Francophone  countries?  
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outs,  but  that  is  also  dependent  on  the  availability   The  culture  of  private  equity  is  very  new.  It  is  a  
Continued  on  Page  2  
 Q&A  with  Kofi  Bucknor  

Page  2  

new  asset  class  in  Africa.  We  are  very  much  the   and  the  profitability  goals  that  you  set  out  to  
pioneers,  with  the  exception  of  South  Africa  where   DFKLHYH:H¶UHHVVHQWLDOO\LQYHVWLQJLQFRPSDQLHV
it  started  in  the  early  90s.  Private  equity  started  [in   that  we  think  have  better-­than-­average  growth  po-­
our  region]  in  2000.   WHQWLDO:H¶UHEHWWLQJRQDEXVLQHVVPRGHODQGD
set  of  circumstances  and  parameters  in  the  market,  
From  your  vantage  point,  are  you  seeing  the   such  as  consumer  demand,  prices,  manufacturing  
effects  of  brain  drain  on  the  quality  of  man-­ capacity,  cost  of  production,  access  to  certain  mar-­
agement?   kets  and  a  whole  host  of  things  that  would  help  
achieve  those  goals.  A  lot  of  things  could  go  wrong.  
I  think  it  is  improving.  If  you  look  at  the  banking  
scene  in  Nigeria,  for  instance,  the  quality  of  middle-­ But  that  is  not  unique  to  Africa,  is  it?  
tier  management  has  improved  considerably.  
Across  the  board,  at  least  in  the  companies  in   It  is  not  unique,  but  it  is  a  bigger  challenge  in  Af-­
ZKLFKZHKDYHLQYHVWHGZH¶YHIRXQGWKDW>WKHUH rica.  Typically,  the  companies  that  you  invest  in  
DUH@JRRGPDQDJHPHQWWHDPVDQGWKHUH¶VDYHU\ would  be  pioneers  in  their  business.  They  would  
conscious  effort  to  strengthen  and  improve  the   have  a  strong  position  in  the  market,  there  may  be  
quality  of  the  management  teams.  Even  in  our  own   barriers  to  entry  into  the  business  or  they  may  be  
fund,  we  faced  challenges  attracting  the  right  level   innovators  in  what  they  are  doing.  The  whole  story  
of  talent.  However,  the  pool  of  talent  that  is  avail-­ of  Africa  is  about  getting  in  early  and  creating  inno-­
able  to  us  today  has  improved  considerably.  One   vation.  If  you  invest  in  a  bank  that  is  growing  in  
reason  for  this  is  many  Africans  who  have  spent   Africa  and  looking  to  open  in  many  countries,  it  is  
time  abroad  are  returning.   still  theoretical.  Not  many  banks  have  done  it  so  
WKHUHLVQ¶WDWUDFNUHFRUG  
Is  it  a  common  practice  to  change  manage-­
ment  teams  following  an  investment?   What  other  risks  would  you  put  at  the  top?  

Typically,  we  like  to  identify  a  strong  management   The  sustainability  and  caliber  of  management  is  al-­
team  before  our  investment  and  align  our  interest   ways  a  big  risk.  Finding  an  exit  is  also  a  challenge  
with  that  management  team.  That  is  our  ideal  sce-­ because  the  market  is  not  always  liquid  and  strate-­
QDULREXWLWGRHVQ¶WDOZD\VKDSSHQ$VDSULYDWH gic  buyers  are  hard  to  find.  
equity  investor,  we  have  to  have  the  presence  of  
mind  and  boldness  to  make  changes  when  [they   What  about  political  risk?  It  comes  across  as  a  
are]  necessary.   ELJLVVXHZKHQ\RX¶UHRXWVLGHWKHFRQWLQHQW  

If  you  had  to  rank  the  most  significant  risks   ,W¶VQRWDELJLVVXHLI\RXDUHFDUHIXOLQ\RXUGXH

facing  a  private  equity  investor  in  Africa,   diligence.  You  avoid  investing  alongside  politically-­
which  ones  would  you  put  at  the  top?   exposed  people,  you  avoid  investing  in  sectors  that  
are  highly  dependent  on  political  trends,  you  make  
,¶GVD\WKHELJJHVWULVNLVGHOLYHULQJRQWKHEXVLQHVV sure  you  understand  the  rules  of  the  country  and  
plan  and  achieving  the  growth  targets,  the  margins   you  invest  with  private  businesses.    

The  Africonomist,  launched  in  Feb.  2009,  is  a  financial  newsletter  focused  on    
investments  and  economic  development  in  Africa.    
Our  primary  goal  is  to  inform  our  readers  about  the  people  and  events  shaping  the    
economic  landscape  in  Africa.    
 
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Editor  in  chief,  David  Dankwa  (New  York)  
Economist/advisor,  Asha  attoh  ±okine    (Pennsylvania)