Andile Ngcaba’s Pan-African Private Equity Tech Investor Links Africa To The Digital World
Andile Ngcaba’s Pan-African Private Equity Tech Investor Links Africa To The Digital World
Andile Ngcaba – a South African tech entrepreneur and founder of Convergence Partners – moved to Silicon Valley in California, United States, few people paid attention.
He set up his office in Mountain View, the suburb, where big tech giants such as Google, Facebook, and LinkedIn are headquartered.
Ngcaba was daring enough to swim with the sharks of the tech industry.
“If you swim with sharks, make sure you have the appetite of a whale,” to quote Matshona Dhliwayo, a Canadian-based philosopher and entrepreneur.
Speaking to TechFinancials, Ngcaba confirms he has “been part of the Silicon Valley community for some time and will continue to be”.
“My presence in Silicon Valley has enabled me to develop a critical understanding of technology advancement and apply them in Africa to ensure we keep pace with the rest of the world,” says Ngcaba.
“One of our portfolio companies Comsol, collaborated with Verizon to launch 5G fixed wireless trials in South Africa in 2019.”
Other portfolio companies such as Snapt have gone on to establish themselves in the US.
“Making Africa Open Source, Decentralised Finance, Blockchain, and Open Radio Access Network continent will remain at the epicentre of our strategy,” explains Ngcaba.
“This will be done by building a bridge between Silicon Valley and Africa,” he paused as if to bring attention to his next point.
“It will remain our long-term objective.”
Assets under management
Already the private equity firm is a serious player in Africa with R4,3 billion (c.$300 million) in assets under its control.
The firm says it aims to have assets under management of R8,5 billion ($600 million) within a few weeks.
Brandon Doyle, a co-founder of Convergence Partners, who serves as CEO, says the private equity investor recently launched a fundraiser for a new R3,6 billion ($250 million) Convergence Partners Digital Infrastructure Fund.
“We anticipate the first close in the coming weeks,” says Doyle.
“In addition, we can raise additional growth capital on the balance sheets of existing portfolio companies, both in the form of debt and equity.”
Ngcaba says Africa continues to offer significant growth opportunities.
“Together with digital transformation trends, the youth demographic presents the most incredible opportunity of the 21st century,” he explains.
Over-The-Top (OTT) players recognise this reality.
“Undoubtedly, the next frontier for growth is Africa because ICT is critical to the future of the 1.3 billion-plus people with the youngest populations in the world,” says Ngcaba.
“Cloud, Edge AI, Lakehouse, Deep Learning, Automotive Ethernet or Software Defined Automotive or Vehicle, Message Queuing Telemetry Transport and Internet of Things are some of the cutting-edge technologies that we are now bringing into the African Market.”
Convergence Partners, with the insight of Ngcaba, are demonstrating they indeed have the “appetite for a whale”.
The Pan-African equity investor is positioning itself for vast opportunities in Africa.
Convergence Partners is creating a unified pan-African cloud and digital service provider, bringing to market a truly relevant suite of next-generation technology solutions in the fields of Edge, AI, NFV, and Cloud.
This is through inq. created in 2019 via the acquisition of Vodacom Business assets and a combination of existing businesses.
The private equity investor recently snapped up 100% of Ctrack’s operations in Africa and the Middle East from Nasdaq-listed Inseego.
Ctrack is a telematics software-as-a-service digital infrastructure platform providing fleet management, insurance, and weather telematics solutions as well as asset tracking solutions.
The business is well poised to use its market advantage to further its ambitions in the automotive technology (AutoTech) space by continuing to develop its internet of things (IoT) and artificial intelligence (AI) competencies.
“Ctrack will be the first investment in our new fund, the Convergence Partners Digital Infrastructure Fund,” says Doyle.
“It is a business that occupies a very interesting space in two of the five key emerging growth themes we see in our chosen sector; IoT and AI (and the intersection between the two).
“The other vital themes driving our future investment focus are 5G, the Cloud (especially public cloud) and network virtualisation.”
All these opportunities and solutions are primarily identified with Silicon Valley giants, but Convergence Partners is bringing them to Africa.
Asked whether Ctrack is the most significant investment for Convergence Partners to date, Doyle says there have been several landmark African ICT infrastructure investments that have made a substantial change to the market structure in sub-Saharan Africa.
The company is one of the catalysts for the emergence of open-access infrastructure class in Africa, he explains.
Ngcaba concurs, saying through landmark transactions such as New Dawn Satellite, Seacom, CSquared, Dark Fibre Africa, and Comsol, Convergence Partners has shown that Africa can be a leader in developing and delivering ground-breaking technologies and services.
“We are further demonstrating that such initiatives could be conceptualised and developed by Africans for Africans,” Ngcaba says proudly.
“Through this world-class broadband infrastructure, Africa could become a part of the global information society and participate in the fourth industrial revolution.”
Ngcaba says this has enabled Convergence Partners to establish dominant market positions while still delivering meaningful and sustainable impact to the markets it serves.
As it attracts more notice, Convergence Partners seems to be the new Remgro or Berkshire Hathway of Africa.
“What sets us apart from these diversified powerhouses is our exclusive focus on the ICT sector in Africa,” says Doyle.
“We consider ourselves to be value investors with a returns-first approach where social impact forms a key part of the assessment of the success of our investments.”
In the interview, TechFinancials asks Doyle if Convergence Partners was the latest hot investment company looking to flip companies?
“We have multiple balance sheets that we manage, both permanent capital and more classic private equity,” reveals Doyle.
“In the more classic private equity category, we are of course by definition required to seek exits from time to time, but we still consider ourselves longer-term investors with our longer-period funds,” says Doyle.
He says the company also actively seeks out market consolidation plays, both within its portfolios and beyond.
“We are looking to build a portfolio that delivers superior financial returns while simultaneously participating meaningfully in the build-out of Africa’s digital infrastructure,” says Doyle.
“We also want to boost entrepreneurship, innovation, skills development, and job creation via ubiquitous access to the internet and all the critical digital tools it offers.”
Founded in 2006 by Ngcaba, Doyle, Stefan Ferreira, CFO, and Idan Segal, who serves as Chief Investment Officer, Convergence Partners is already the largest private equity investor in Africa.
It is dedicated solely to communications infrastructure in Africa and has significant investments in other tech segments, including FinTech.
The company is more than 50% broad-based black economic empowerment owned.
In the past 15 years, Convergence Partners has cumulatively invested c.$230 million (R3,3 billion) in 34 companies operating in 24 countries in Africa.
The company has realised 17 of those investments.
The Convergence Partners Fund I has the following held investments: 4Di Capital, Convergence Border Management Solutions, Convergence Partners Communications Infrastructure Fund, CPI 4Di Venture Fund, ESET, Inala Broadcast, Inquba, and Snapt. The following assets have been realised: Bloodhound, Britehouse, Comsol, Dimension Data Middle East & Africa, FibreCo, Gemalto, Inala Technologies, Integrat, IS Mozambique, Life Q, Nedbank, New Dawn Satellite Co., Seacom, Skillpod and Vodacom.
In Fund II, Convergence Partners realised investments for FibreCop and Nigeria’s Venture Gardens. These assets remain held by the company: Comsol, inq., e4, CIVH, Vumacam, CSquared, Channel VAS and rack Centre.
“Our investments have spanned the entire ecosystem of ICT infrastructure,” says Doyle.
They include access, metro, backhaul, long-haul and international connectivity, across fibre, wireless and satellite technologies, for enterprise, wholesale and consumer end-users.
Doyle says the company also invests in delivering broadband, GSM, and IoT functionality, and incorporating physical infrastructures such as datacentres and towers.
He says the company enjoys solid performances across its portfolio despite the current challenging climate.
“We continue to deliver returns in line with our and our investors’ expectations. We are recognised as a top-quartile private equity funds manager on the continent,” says Doyle.
“This is a testament to the robustness of the tech sector and the quality of the businesses and management teams that we back.”
“The Pan-African Telecommunications Network strategy to create direct intra-African communication links critical to economic and social development in the region inspired my vision for Convergence Partners,” Ngcaba told TechFinancials.
“I wanted to bring to market an investment that would expand ICT services on the continent, ensuring African connectivity while maximising ICT investments in Africa.”
Such connectivity includes Space/satellite, land, wireless and Submarine.
“I am happy to say that what we have built on and surpassed that vision,” says Ngcaba.
Africa is by far the most under-served region in the world in terms of broadband and digital technology access.
The price points per unit of bandwidth delivered in Africa remain stubbornly ahead of other markets in absolute terms and, as a result, the region faces the risk of being further left behind in the fourth industrial revolution.
“We believe broadband infrastructure is critical for the continent to leapfrog into the digital services world and begin to tackle the social deficit in baseline service delivery,” says Doyle.
Baseline service delivery includes healthcare, education, security, payments, finance and information.
The company is looking to run up the big push into AI, IoT, Cloud, AutoTech, and network virtualisation in Africa.
The secret is out: Convergence Partners is an African powerhouse on the prowl.
“Yes, we are always on the lookout for high growth companies with strong management teams; both for new primary investment on our managed portfolios as well as follow-on investments into existing portfolio companies,” says Doyle.
“To this end, we have a proven ability to launch and grow sustainable technology platforms that show great potential and where we have the ability to actively participate in adding value.”
The company’s Fund I: Convergence Partners Investments (CPI) at its peak was a c.R1.5 billion investment.
“We do however have access to investable capital on the balance sheet and, as a permanent capital vehicle, continue to invest in select opportunities in CPI,” says Doyle.
He says the journey started almost 20 years ago with the idea of helping to reshape the industry as a small investor.
“In those days markets across the continent were still going through various stages of liberalisation and the mobile operators were the dominant players,” says Doyle.
“Terms such as wholesale open access and independent infrastructure ownership were not around. We’d like to think we played a key role in helping make the current market structure a reality.
“Not only that but have found investable business models to do so and have generated solid investment returns in the process.”
The challenge the African telco industry faces is 3-fold; reach, quality and pricing on networks.
“From an impact point of view, we have been actively tackling these shortcomings – shifting the narrative from the so-called digital divide to digital inclusivity,” says Doyle. – firstname.lastname@example.org