Due Diligence: AfricInvest fund head shares why he shies away from turnarounds

Brahim El Jaî

How we made it in Africa’s ‘Due Diligence’ series asks top players in Africa’s private equity industry about how they are mastering the art and science of profitable dealmaking and fundraising. Doing the due diligence on those who do due diligence for a living.

This article is published in association with Africa Private Equity News, a one-stop source for industry-related information. Stay up to date by downloading the free Africa Private Equity News app: Android | iOSScan QR code from desktop


Pan-African mid-cap focused private equity firm AfricInvest recently announced the €194m final close of its Maghreb Private Equity Fund IV, which targets investments in North Africa. AfricInvest was founded in 1994 and currently has around US$1.5bn of assets under management across 18 funds.

In an interview with Africa Private Equity News, Brahim El Jaî, who heads up the firm’s new North African fund, shares some of the investment lessons he’s learnt, discusses why he is no fan of turnaround investments, and reveals the one deal he wishes he invested in. Here are slightly edited excerpts.

What is it you look for in an investment?

  • First and foremost, a strong management team
  • Sector and sub-sector attractiveness in a macro- and micro-economic context
  • High barriers to entry, a leading market position, and a superior competitive edge (know-how, efficient use of resources, proprietary solutions/services, etc.)
  • A unique business model, viability and profitability with the ability to scale locally, regionally, and eventually continentally via organic and inorganic avenues

Describe the greatest investment lesson you’ve learnt.

We have realised over 130 transactions since our inception. While our core business remains focused on growth capital with influential minority positions, we have structured almost all types of operations imaginable, going from startups to restructuring as well as majority deals. All the success we have enjoyed up until now, as much as the failures, taught us time and time again that the key to success is based on the quality of the management teams that we partner up with.

I’d also like to mention the lessons learnt from investing in turnaround situations. And while they are important deals to do, and they provide great value to economies and corporate ecosystems, they are not suited for a private equity fund structure which has a strict time limit and focuses on internal rate of return (IRR).

Please expand on why you say turnaround investments (the financial recovery of a company that has been performing poorly for an extended time) are not suitable for private equity in Africa?

We have invested in some turnarounds, especially here in Morocco and Tunisia. However, we’ve arrived at the conclusion that these investments need more of an operational approach than a private equity approach. When you buy a company in a difficult situation, you need to manage it and you need to be there every day. Even if you have your management team, you need to provide a lot of support.

This is completely different from the companies we normally support and finance. Usually our investments are in mature companies with good managements teams – we just come in and add what they require. In the case of a turnaround, the investor has to deal with every aspect of the business. This implies a lot of time from our teams and we don’t necessarily have all the expertise in house.

Name the one deal you wish you invested in.

Saham Insurance, which is a unique success story within our continent. It is an entrepreneurial journey that started up all the way in North Africa, in Morocco, with the acquisition of a mid-sized insurance company followed by its merger with a second mid-sized insurance company. Saham relied heavily on a proactive M&A strategy throughout the African continent, which led to its presence across more than 20 countries.

The company then became an ideal target for Sanlam, one of the leading insurance players in South Africa. The buyout by Sanlam in 2018 led to the creation of the first fully pan-African insurance group, becoming the intersection of two entrepreneurial journeys that started on both ends of the continent.