Ideal tick size: R3-15M (a few ~R30M investments for opportunistic platform plays)
Typical % ownership: 20-70%
Sectors of interest: FMCG, agribusiness, healthcare, light manufacturing and business-enabling services
Geographic focus: Southern Africa, including South Africa, Botswana, Eswatini, Lesotho, Mozambique, Namibia and Zambia
Investment theme: Local champions with local and market-expanding solutions. Niche, growth verticals; large, dormant markets that can be re-invigorated
scalable businesses via strong management teams, sustainable competitive advantages and quality earnings
Minimum revenue: R15-120M revenue with positive gross margins
Example Current Evergreen Investment Theses include: Manufacturing: Local consolidation, import substitution; Agribusiness: Yield-loss minimisation; FMCG: Innovative route-to-market; Healthcare: Access via distributed delivery
Read more about our impact, investments and progress to date here: Secha Capital 2020 Portfolio Growth and Impact Report
High level
At Secha, we look for established South African SMEs (R5-R50M annual revenue, 5 to 75 employees) in the FMCG, agribusiness, healthcare, light manufacturing and business-enabling services sectors that need both growth capital (~R1M - R15M) and management support to grow and reach full potential. We invest and provide support as equity partners to the SMEs. We invest for 10-30% equity in companies, with up to 70% for companies that form part of a platform investment within an industry vertical.
We like large, fragmented, often "boring" sectors. These are often niche growth verticals adjacent to larger markets (e.g. our natural hair nativechild investment or dry hair, Hair City & WUKINA investment) or large, dormant markets that can be reinvigorated (e.g. our Stoffelberg Biltong investment). This usually means 1) the SME has a proven business model and clear impact mission and 2) Secha can invest at an inflection point where growth capital can fuel revenue and profitability growth.
OTHER ATTRIBUTES
Founder-run, reliable team
Simple revenue model, stress margin over revenue
Expandable market not at risk of changes in imports/exports or government intervention
Ruthless focus on distribution
Segmented / prioritised, multi-tier sales channels
Clear product advantage: e.g. localised, bundled, an enabling service, it cultivates a customer peer group
High frequency use case designed to increase incremental purchases
Strong scale cost advantage with a reliable supply chain (low capital intensity)
Salient brand in both modern and traditional trade