KEEP THE BALL ROLLING

Nigeria 2019 | FINANCE | INTERVIEW

By inculcating firms with a strong sense of environmental, social, and governance responsibility and harnessing Africa's greatest demographic advantages, Coronation is helping launch the continent's next batch of corporate leaders.

John Opubor
BIOGRAPHY
John Opubor has enjoyed a 20-year career as a principal investor and investment banker in developed, emerging, and frontier markets and acted as a principal or advisor on a broad array of transactions in the Americas, Europe, Asia, and Africa. As a principal investor he has deployed capital and exited deals in both early stage and growth stage businesses within the retail, media, consumer, manufacturing, and financial services sectors in Africa and North America. He has also advised clients on USD50 billion transactions in the industrial, telecoms, retail & consumer, and healthcare sectors. He previously held senior positions at Actis in Lagos and Credit Suisse in New York. He earned a BA in economics from Columbia University.

Can you give us some background into your business and activities?

Coronation Capital is focused on the key sectors of financial services, consumer goods and services, and technology solutions in Nigeria and other West African economies. We bring together dynamic businesses and strong management teams that together create stable platforms for future growth and expansion in home markets and throughout West Africa and the entire continent. Our goal is to create African champions. All businesses in Africa, even those that have performed well over time, require a great deal of work to develop into champions. For us, a major component of that success comes from focusing on environmental, social, and governance issues (ESG). In order to create a sustainable and successful business, one must be focused on successfully addressing ESG issues. We spend a great deal of time working with companies to inculcate these vital aspects of a modern business.

What is your strategy to identify companies with attractive investment opportunities?

We focus on our strengths. For example, we actively seek to invest in the financial services sector where we have deep institutional knowledge and a history of real leadership from both an operations and investment perspective. We are also focused broadly on consumer products and services. For us, this includes food and beverage, retail, and fast-food restaurants, as well as light manufacturing, education, and healthcare. The consumer space is important for us, because a large part of the Nigerian and African story are the attractive demographics. These demographics speak to a growing young population moving into the middle class that demands products and services. Additionally, we look at technology-enabled solutions. This includes fintech, online insurance products, or any innovative way that solves a problem we find in our market.

How large is the typical company you invest in?

We typically look to write equity checks of USD10-25 million. If we are investing in a platform we may scale that investment over time with add-on acquisitions. This generally translates into companies with USD15-50 million. We are able to structure our transactions in a way that meet the needs of investee company shareholders and also provide us the flexibility to optimally manage our investments and exits.

What is the role of capital markets in the economic development of Nigeria?

This is an interesting and vexing question. Our capital markets are not as robust as they could be. Capital markets are a way that many companies around the world finance their operations. However, the lack of IPOs is a real challenge in this market. It is a multifaceted issue, and there are different ways to tackle it. As a nation and as individual market participants, we are trying to find ways to keep the ball rolling. For example, we have a budding pension industry in Nigeria, which is broadly modeled off the Chilean system. This model has proven to be a huge success in Chile. At one point, there were 20 or so pension businesses, though over time regulations and business development whittled this down to a handful of strong players. The contribution scheme is such that pension funds have to invest a large amount of capital into the Chilean stock market. This created a robust capital market in Chile, and it has been an engine of growth in the country. We hope for something like that to occur here. We still have many pension businesses, though there will be a great deal of consolidation over time.