Eric Guichard’s company Homestrings gives foreign investors and the African diaspora access to investment opportunities in Africa and other emerging markets. How we made it in Africa’s Dinfin Mulupi talked with Guichard, a Guinean-American who is the CEO of Homestrings, about the firm’s model and the opportunities on the continent.[hidepost=9][/hidepost]
What inspired you to start Homestrings?
I worked for six years at the World Bank and a further 16 for a boutique asset management and advisory firm I founded, called Gravitas Capital. Over that time I found that I could not find a way for people like me to invest in projects back home, while still benefitting from the returns made in the institutional asset management space, by private equity funds for example.
So, I created a web portal to allow African diaspora investors to make a difference back home while also making the 20-30%-plus returns that before now were only available to institutional investors. But the thing is that while I was creating it, enough of my non-African friends mentioned that they had been looking for a way to personally invest in this way that I realised that it was not just something that the diaspora would use, and Homestrings is now marketing more widely to any investor with US$1,000-plus to invest in emerging markets.
Describe how your model works.
Homestrings allows individual and institutional investors with a means to direct their resources towards initiatives in the emerging markets. Our interactive web portal aggregates demand from investors and allows them targeted access to the same investments that, until now, were only available to the world’s institutional investors. These investments are via vetted opportunities with consistent track records, investing in emerging market projects including commercial real estate, telecoms and small-to-medium-sized enterprises.
What investment opportunities do you offer investors?
Our platform offers projects, funds, bonds and public-private partnership opportunities that focus on regions our members come from or which they care deeply about. Each of these investment opportunities is detailed in a fact sheet to provide the due diligence needed to make an investment decision. Once made, investments are monitored on a monthly or quarterly basis, depending on the nature of the underlying investment. Reports and individualised updates, which use a format similar to those of a mutual fund or unit trust, are sent directly to a personal dashboard.
We currently offer opportunities across Africa and India and have upcoming Asian and Latin American propositions. These opportunities are targeted at a range of sectors including agribusiness, real estate, financial services, SMEs and telecoms, to name a few. We aim to focus on the ‘productive sectors’ of the economy, in other words, the sectors and organisations that will help to generate long term sustainable development for the community and wider country. Most importantly though, we are a user-driven vehicle and therefore will respond to requests for regions for investment.
Why should foreign investors bet their money on Africa?
According to recent IMF stats, seven out of 10 of the world’s fastest growing economies are in Africa and the continent also has a growing middle class. According to the Africa Development Bank, the sub-Saharan region’s middle class has grown from approximately 26% of the population three decades ago, to about 34% currently. And by 2060, the percentage of Africa’s population that is middle class is projected to grow to 42% of the population, representing more than 1.1 billion people. The growth in the middle class is significant and durable and presents increased opportunities for investment in a multitude of sectors.
What milestones have you achieved since inception?
Since our UK launch in July 2011, Homestrings has mobilised funds in the region of $25 million. We have spread our geographical reach, covering 13 countries in Africa, and have a growing range of products, projects, funds, bonds and public-private partnership opportunities including a growing basket of branded products to be rolled out. We have included investment opportunities from a range of institutions in our catalogue, including the Government of Kenya, First Quantum Minerals, Republic of Ghana, Federal Republic of Nigeria, and Afren plc.
I would also count the development of our extensive network as a key milestone for the business. Our senior advisory team includes some of the industry’s most knowledgeable. Their experience and advice has been fundamental to the growth of the business, as has the interaction with our investors and potential investors across our various social media networks. As a user-driven platform, interaction with investors is fundamental to the success of Homestrings.
Tell us about the challenges you face.
We are fortunate that appetite is high for investment projects, funds or promoters from across some of the most investment-rich markets and sectors. Our challenge is really our great opportunity, to be able to service the high demand for new options for socio-economic impact and investment profitability. We conduct industry standard due diligence within US and UK regulatory frameworks, to ensure that what we are showcasing represents the best we can find, which of course takes time. We use a rigorous, multi-stage sponsor selection process: a prospective sponsor must register then submit track records, history, and evidence of its strict adherence to impact investing.
What advice would you give other entrepreneurs?
To base your business on sound market research. To be tenacious in achieving your goal and to be awake to new opportunities and trends that will help you to achieve that goal. Most of all, be prepared to listen to what your customers and clients want.