ADVISORIES

Nigeria 2020 | FINANCE | B2B

Helping guide the right industries to their natural development point is crucial to building a country and continent that future generations will want to live in.

Johnson Chukwu
JOHNSON CHUKWU
Group ManaGing Director & CEO
Cowry Asset Management
John Opubor
JOHN OPUBOR
Managing Partner
Coronation Capital

How have you evolved in recent years to stay ahead of the curve?
JOHNSON CHUKWU You need to be prepared to disrupt the existing order if you aim to successfully penetrate the market. In that sense, if you are in the service industry you must consider the best standards of the existing operators as your minimum standard. We have studied and analyzed the market and are entering with service standards that are superior to other banks. Before we entered the capital market, we came in with standards that were alien to the existing operators; some of the banks consider us pioneers in areas such as allowing customers to place their orders remotely. With our entry into the market we will bring in standards, service and leadership attributes, and competencies that have not been applied in the banking industry before.

What are your core areas of expertise?
John Opubor We are still focusing on the three core areas of financial services and consumer and technical solutions, including fintech and perhaps insurance tech. Basically, we aim to cover any technology that helps to either enhance or change existing industries. An example would be the appropriate adoption of tracking and logistics software for some commercial consumer industries. On a few occasions, we have been able to apply these technologies to enhance some of the more traditional businesses.

How are you implementing your latest strategies?
JC We will use fintech as one of our competitive tools since we are building a structure that will not rely on the brick-and-mortar platform. We have also developed a strategy to adopt alternative strategies including some of the culturally embedded delivery channels similar to what the Equity Bank of Kenya did for selling financial services to farmers. We will leverage existing cultural banking systems. Every society has its own centuries-old unique banking system. In Nigeria, we have Isusu, a cooperative system that allows groups of people to come together and fund their business operations by borrowing from the cooperative. It is highly informal, but it serves the purpose for those who do not have the resources to borrow. We plan to formalize the existing banking structures within society. We will do things that are beyond what most banks are providing.

What are the advantages of working with more mature businesses?
JO One of the critical aspect of our model is that a clear set of conditions has to be present in order for us to invest in greenfield; if our conditions are met it makes all the sense in the world. For example, we have some experienced B2B businesses who are well-known to their customer base and have contracts with a guaranteed off-take from their customers. If we can successfully execute the build out of the manufacturing facility they have guaranteed off-take for, we can mitigate all the risks. For us that is a great deal because we get a low entry multiple and the possibility to get the expected exit multiples. Therefore, we are willing to invest in early stage businesses if the conditions are right for us. It is important to be assess a company's performance and impact. Impact investing has become quite a catch-phrase of late. I think the reality is that when you are in a market like ours much of what we are doing is impact investing in one way or another. Basically, you are creating an impact by creating jobs. Similarly, implementing good governance principle so that businesses are well run has a trading impact.