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.

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South African-based private equity firm, Agile Capital, was launched in 2015 as a result of a management buy-out. The name means ‘to build’ in Tswana and in English defines agility and speed.

How we made it in Africa sat down with CEO Tshego Sefolo, to find out how he approaches his investments.

Can you single out one of your greatest challenges in establishing Agile?

The biggest challenge is [getting] the right people. The saying goes that people are your greatest assets, and I always say that in any organisation or business, good and competent people are your greatest assets, not just any person. And that’s been the greatest challenge.

More importantly, that you’ve got ethical people, who, when confronted with very tough options, choose to do the right thing because very often when pressure is mounting there is a temptation to sometimes push the envelope a bit and you need people who are going to say “wait”, and draw the line.

If you were to look at investment lessons, one of your most important that you’ve learned in your career, what would that be?

That you need a combination of good people and a good business. It doesn’t help having a good business being led by bad people and the converse is true. As part of your investment thesis and programme you must identify very early on which of those two variables is missing because when you get the combination wrong, that’s when you lose money.

Where we’ve done well is where we’ve backed very solid management teams in companies that have had very good businesses. In terms of market position, they’ve got the right products, they’ve been developed over time, there’s tangible track record and there’s a very compelling value proposition. And if you get that right, that’s when we’ve done very well.

Identify an untapped opportunity for private equity investors in Africa.

If I look at South Africa and the rest of Africa, there are two particular investment themes that we’re seeing. Infrastructure is one of the them, and when I talk about infrastructure it means [not only] roads and dams and other facilities, but also investments aligned to that, such as the funding of the infrastructure. If you can find some clever funding models to be able to facilitate [infrastructure] you can generate a good return.

You go to places like Tanzania and Nigeria and you look at the amount of air traffic that is currently being experienced – any kind of funding solution, and product, that is aimed at the aviation space, would be quite useful in a market like that. There are pockets of value that one can identify.

In South Africa specifically we’re seeing agro-processing and food production becoming quite topical. If you pick the right investments here you can generate superior returns.

What are the skills required to succeed in Africa?

The South African market and private equity industry is quite mature and its well understood. When you go further north there is an education process that goes with what you’re offering. The idea of having an equity partner who is not active in the business, for a founder and entrepreneur, is quite unique.

I find that some of the businesses that you look at in our space, they are family businesses that have gone through generations and now they’re bringing in a professional investor; that marriage really needs to be handled very carefully because they’re not used to that. Even if you reduce it into an agreement you cannot just leave it there. You need to make sure you are integral to the business and spend time developing the relationship and therefore your interpersonal skills are under the spotlight.

What sort of work goes into fostering those relationships?

If I look at where we’ve managed to have those fruitful relationships and partnerships, they’ve come through other relationships that we’ve had in some of those markets. You go into Tanzania, for example, and – getting into the retail space – what we have found is to the extent that we already have an existing relationship with a particular party, it becomes easier to leverage off that when building the network. For you to parachute yourself into the DRC and think you’re going to do deals, you’re going to find it very challenging.