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The Nigerian investor behind some of Africa’s biggest deals

Tope Lawani

Interview with Tope Lawani

Lives in: United Kingdom

Nigerian-born investor Tope Lawani is the co-founder and managing partner of Helios Investment Partners, an Africa-focused private equity firm.

The article covers the following topics:

  • The founding and evolution of Helios Investment Partners
  • Making money in the telecom towers and fuel station industries
  • Challenges in selling hyperlocal companies
  • Strategies for hiring the best talent
  • The impact of hierarchy on entrepreneurialism

Over the past two decades, Helios Investment Partners has been involved in some of the biggest and most creative deals on the continent. The diverse range of businesses in which it has invested include the mobile telecoms towers company Helios Towers, Kenya-based banking group Equity, Nigerian payments company Interswitch, pan-African fuel station owner Vivo Energy, and Continental Outdoor Media, which was Africa’s largest outdoor advertiser at the time.

During a fireside chat at the recent annual conference of the African Private Capital Association (AVCA) in Johannesburg, Lawani shared insights on how to successfully exit investments in Africa – a key challenge for private equity investors on the continent. Private equity funds typically acquire companies, hold them for five to seven years, and then sell them at a profit to realise a return on investment.

Lawani emphasised that the ease of selling a company is directly related to the quality of the business. “You can sell a good company,” he remarked, adding that although businesses in Africa might fetch lower prices compared to their European counterparts, it is usually possible to exit a high-calibre enterprise.

He noted that Helios has encountered challenges when trying to sell ‘hyperlocal’ businesses – those that are not well understood outside of Africa. For example, he mentioned a hypothetical business that requires an understanding of the dynamics of small-scale farmer households in Malawi. He said that even if it is successful and profitable, such a business would be hard to sell to international buyers.

He also provided an example of an investment in a cement business in northern Nigeria that Helios considered several years ago. Lawani noted that the cement industry in the country is largely dominated by a single individual, likely referring to billionaire Aliko Dangote (Read more: The hectic schedule of Africa’s richest man Aliko Dangote), making competition in this market daunting. However, this particular business had a protected catchment area in a few northern Nigerian states and neighbouring Niger. Despite this, Lawani said that selling this business would have required convincing a prospective buyer of the viability of the cement business not just in Nigeria, but specifically in this region. He explained that it was too complex a narrative and the firm would likely have struggled to sell that business.

Helios prefers to invest in businesses that are familiar to potential buyers – those that already exist in other emerging markets such as Indonesia, Malaysia, India, and China, and have proven profitable for investors from outside these countries.

From Africa to the US, and back

Lawani grew up in Ibadan, Nigeria, and moved to the US for his tertiary education, earning a chemical engineering degree from the Massachusetts Institute of Technology, followed by a law degree and an MBA from Harvard University. He spent nine years with American private equity firm Texas Pacific Group in San Francisco and London, where he was involved in the acquisitions of Burger King, Debenhams, and J. Crew.

When he and co-founder Babatunde Soyoye conceptualised the firm, they did not intend to launch a traditional private equity fund. “We were interested in building businesses, investing in businesses with our capital, and then supplementing with third party capital,” he explained.

However, their path changed when OPIC (now the US Development Finance Corporation), which supported the struggling Modern Africa Growth Fund, approached Helios to manage the fund. After revamping the fund and realising good returns, Helios decided to pursue raising its own funds. In 2006, it raised its first fund of $305 million from a diverse set of investors, including development finance institutions, hedge funds from the US seeking exposure to Africa, and ultra-high-net-worth individuals from Lawani’s network.

The global financial crisis hit just as Helios was seeking investors for its second fund. “That was a lesson in grit and persistence,” Lawani recounted. “Most people who were raising capital during the global financial crisis basically stopped because no one was investing in funds anywhere … I think we didn’t know any better. So we kept going. What that meant was, once the window opened again, we were essentially first in line.” In 2011, Helios completed fundraising for its second fund at $900 million, the largest Africa-focused private equity vehicle at the time

Helios has gone on to raise several other funds and currently has over $3 billion in assets under management.

Helios’ investment playbook: Telecom towers, fuel stations, and beyond

In a 2015 statement announcing that Helios had raised $1.1 billion for its third fund, Lawani outlined the firm’s investment philosophy: “Much has been made of the rise of the African consumer, and that does, from time to time, give rise to potential investment opportunities. However, as discretionary incomes remain low and the cost of basic goods and services is high, Helios believes that addressing the supply side of the economy is generally more attractive. Helios’ strategy focuses on investing in businesses that lead the provision of core economic infrastructure: de-bottlenecking the economy; increasing efficiencies; and reducing living costs for households and operating costs for businesses.”

Some of Helios’ most noteworthy investments have been in the mobile telecom towers business. Lawani and Soyoye somewhat stumbled upon the industry when they were bidding for the third mobile telecommunications operator licence in Nigeria. During their analysis in preparation for the bid, it dawned on them that the vast majority of their capital expenditure was allocated to building mobile network towers. This was also the case for other Nigerian operators at that time, as each operator built and owned its own towers. However, running a network of mobile towers in Nigeria presents unique challenges compared to the Western world – due to unreliable electricity from the grid, each tower requires a backup diesel generator and security. In an environment characterised by scarce capital and high financing costs, the need for a shared infrastructure solution was clear.

After losing their bid for the operator’s licence, the Helios partners quickly pivoted to establish HTN Towers in 2005. Drawing from a business model pioneered in the US, the company constructed telecommunications towers and leased space on these structures to mobile providers in Nigeria. Encouraged by HTN’s success, Helios and a consortium of investors invested $350 million in 2009 to create Helios Towers, which developed a similar telecom towers business in ten African countries, including Senegal, Ghana, Chad, Gabon, Democratic Republic of the Congo, Malawi, Tanzania, and South Africa. In October 2019, Helios Towers went public on the London Stock Exchange with a market capitalisation of £1.15 billion ($1.44bn at the current exchange rate). Earlier, Helios had also divested its stake in HTN Towers to another industry player.

Another significant transaction for Helios was Vivo Energy, a deal Lawani has described as his most complicated. In 2011, Helios, in partnership with commodity trader Vitol Group, acquired a majority stake in Shell’s fuel stations in 14 African countries for approximately $1 billion. The complexity of the deal stemmed from the fact that these fuel stations were owned by roughly two dozen standalone companies, which Helios had to individually purchase and consolidate into a new entity, named Vivo Energy. In 2018, Vivo was listed on the London Stock Exchange at a market capitalisation of £1.98 billion (about $2.48 billion at the current exchange rate). In the IPO, Helios sold just under a third of its stake in the company, holding on to the remaining part. The following year, Vivo expanded further by acquiring 230 Engen-branded service stations in eight countries, increasing its network to over 2,000 service stations across 23 African markets. In 2022, Vitol acquired 100% of Vivo, providing Helios with a full exit from the venture.

In an earlier interview, Lawani stated: “When you operate in a developed economy with mature capital markets and a robust private equity industry, you can focus on what is for sale and whether you want to buy it. When you are operating in a less developed economy with far less developed capital markets and a more nascent private equity industry, you cannot do that. Instead of focusing on finding what is for sale, you need to focus on identifying the challenges you can solve in order to make money. That is the starting point and then putting a corporate deal around that comes next. That requires a truly entrepreneurial mindset.”

Traits over titles: Helios’ hiring philosophy

In terms of hiring the correct people for Helios’ team, Lawani asserts that the factors determining a person’s success in a job hinge more on personal traits than on education, background, or work experience. “It’s things like creativity, resilience, grit, adaptability, can-do,” he explained at the AVCA event.

This principle also applies to the leadership of companies in which Helios invests. Lawani recounted that he has been disappointed by people who, though highly qualified and experienced, did not perform as anticipated. On the other hand, individuals with less impressive credentials have exceeded expectations.

He observes that these traits, while pivotal, are difficult to test for in traditional job interviews.

Lawani explained that part of the Helios job interview process involves a candidate meeting most of the people in the firm. “We make our investment decisions collectively … Same thing with our team-building decisions: we collectively own the hire. And therefore, we’re all responsible and accountable … to ensure it’s successful.”

While the lengthy interview process might seem tedious to candidates, he said it highlights the importance Helios places on these decisions.

‘Hierarchy kills hustle’

Lawani is vocal about the pitfalls of corporate hierarchy: “Success breeds growth which breeds hierarchy. And hierarchy is the enemy of entrepreneurialism, it kills it … For this market that we operate in, you just have to be entrepreneurial. It’s all about hustle. And I think hierarchy kills hustle.”

He argues for the necessity of continually restructuring an organisation to prevent the solidification of hierarchical layers.

Looking to the future, Lawani said he is more excited about the business than he has been in a long time. The reason, he explained, is that over the past three years, the firm’s private equity business has undergone a restructuring with a greater emphasis on specialisation. As part of this strategy, the firm has narrowed its focus on select sectors and has appointed individuals with substantial expertise in these areas. “We’ve got a lot of entrepreneurs in our business … Everyone’s closer to the coalface. Everyone is more accountable. There’s more ownership … I feel like it’s going to be good,” he remarked.

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