WHEN in 2010, astute banker and philanthropist, Tony Elumelu founded Heirs Holdings – an African propriety investment company – his vision was to help build some of Africa’s economic opportunities. Driven by the thought that Africans are indeed heir apparent to a vast untapped wealth, the vision was premised on his “Africapitalism” philosophy: To drive ‘Investments in the continent’s key sector with the sole aim of creating a lasting economic legacy for Africans’. Since founding, Heirs has invested in and managed a wide portfolio comprising high-growth companies and assets. Now in its seventh year, the company boasts a Trillion- Dollar investment on the continent’s financial services, real estate, energy, hospitality and agriculture sectors.
Guiding investment strategies and research on macroeconomics at Heirs is Samuel Nwanze; a sterling reference to the noble reputation of the Elumelu mentorship. Before joining Heirs, Nwanze spent more than a decade at various financial institutions, gaining exposure to a number of areas within the banking sector. He was a member of the team that brokered the milestone STB-UBA merger in 2005. His vast knowledge of financials enables him to combine his role at Heirs with being CEO of HH Capital, a subsidiary that provides strategic advisory services to the Heirs’ investments and senior management across a range of activities relating to acquisition, divestitures and financial restructuring. He tells Meet The Boss the significant progress made and how judicious financial management remains central to the company’s success.
By Onome Amawhe
HEIRS Holdings have a relatively broad investment mandate as “an African propriety investment company.” What do you look for in a prospective investment, what makes you say, “yes we want that” or ”no we don’t?”
There are two broad aspects we look at before investing in projects. The first is the commercial viability. And the second is the developmental impact. On the side of the commercial viability, we want to be sure that an investment can meet a certain benchmark return.
We also like to see that the business has the ability to grow from a small business to something that is scalable over time because as a long-term investor, that’s extremely important for us.
Another thing we like to see is that before investing, we like to know the team or people behind the project. And then, we also look at how we’ll be able to add more value to the investments we’re making. On the side of the developmental impact, we look at how many jobs an investment could create and the kind of impact it could have on the local economy because our goal at Heirs Holdings is to invest in projects that makes developmental impact on the continent.
Why is Africa a priority for Heirs Holdings in terms of investment?
Well, that can be traced back to the history of our founder, Tony Elumelu; who himself is a Pan-Africanist that is very passionate about the continent. Apart from the fact that he was born here, schooled here, made his money here, became very successful here; he’salways been an advocate of the fact that investment is the best tool that can be used to develop the continent.
The UBA story is a classic example. When STB merged with UBA in 2005, the bank had presence in Nigeria and New York only. Five years after the merger, he was able to move UBA into 18 African countries.
That goes to show the kind of passion he has for the continent. And it’s this same passion that made him come up with his concept of “Africapitalism” a call-to-action for Africans to take primary responsibility for our own development through long-term investments and for non-Africans to evolve their thinking about how best to channel their efforts and investments in the region.
So now, would you mind sharing some of your current holdings?
We invest in a couple of sectors. In the financial services space, we are an investor in UBA, and other investment banking related businesses. We also have investments in insurance brokerage firms and the energy space; where we have two upstream oil and gas asset in our portfolio.
We are on the verge of building a mid-stream business as well. We also have investments in power. There are investments in real estate, where we have well over 250 properties across Nigeria,and hospitality like the Transcorp Hilton in Abuja, and the Transcorp Hotel in Calabar. We are currently working on a Transcorp Hilton project in Lagos; there’s another one that will come up in Port Harcourt later.
The healthcare sector is another area where we have investment through our hospital with a number of clinics around the country. There’s also a health insurance business. In agriculture, we have investments in Nigeria, Tanzania and Rwanda.
For now, these are our current holdings, but a big focus for us over the next couple of years is to grow our energy business because we expect that in the next couple of years, that sector would have a significant portion of our entire portfolio investment.
How does Heir’s operating model differ from traditional private equity (PE) houses?
A typical PE firm goes out to raise money, invests over a certain period and then they begin to divest over another period, with the hope that the money they’ve invested would have made returns.
So, PE investors are medium term investors who are more concerned with making returns on their investments and then exiting their investments. In our case, we are a long-term investor because we enter into businesses with our own money and grow them into global champions…just like what happened with UBA that we took up as a local bank, got it to a regional level and then to the global level . We always feel that long-term investing gives the opportunity to maximize returns. And that’s one of the ways that we’re different from PEs.
In 2011, you were appointed CEO HH Capital. What are the workings of HH Capital?
We set up HH Capital for a couple of reasons. One of the reasons is that we have realized that on a lot of deals, we have skills in-house to provide advisory services. So, we wanted to have an entity that gives us the opportunity to be able to do that for ourselves and to also help our investing companies whenever they have to look at an opportunity. It’s more of an in-house financial advisory firm.
How does your remit at HH Capital differ from those of Heirs Holdings?
As Chief Investment Officer and Finance Director at Heirs Holdings, I have responsibility for origination, execution and portfolio management. So, I work with all the companies on their boards to keep them going. More importantly, I also have responsibility for finance so I look at everything from a finance point of view.
Your career in the finance world started from the banking sector where you were described as an individual with capacity to handle ”responsibilities way beyond your age, and leaving indelible marks”. Looking back today, what do you consider your milestone achievement?
I became a Chief Financial Officer at the Platinum Bank in my 20s. At the time, they had a couple of issues bordering on profitability and liquidity. And I was thrown in that deep ends.
That was a defining moment for my career because I just had to prove myself that I was able to work with the team to restructure those issues and put them back on track.
You were part of the core team responsible for the STB-UBA merger. What were the things you did that made impact and added value to that transaction as a whole?
Yes, that was a great time. What happened was that whilst the deal was being worked on, Mr Elumelu put a team together to study the post-acquisition integration issues. And I worked with that group to define what the new bank would look like and identify all the different areas in the bank that needed to be worked on. In doing that, I was assigned to work with the team from Mckinsey.
And so, the first set of management accounts and reports that we had for the new UBA were the ones I prepared. During this time, we hadn’t had the two banking applications working together, but working with the team, we were able to present one picture and that took a lot of digging deep into certain skills I’d learnt over time to be able to get us to achieve that. The task was big and monstrous but it was also one of the high points of my entire career.
So, what’s next for you? What will success look like to you in the coming years?
What I always want to do is to take all that I have learnt over the course of my career, fuse all of that together so that I can continue to be relevant in the investment space.