Picture: 123RF/PICHETW
Picture: 123RF/PICHETW

RMB Corvest invests in well-managed, medium-sized businesses across sub-Saharan Africa, and throughout its 29-year history it has followed a consistent approach for each of its investments.

“Our interest lies in forming long-term partnerships that yield maximum returns for all parties involved,” says Mike Donaldson, CEO of RMB Corvest. “Establishing strong relationships with proven management teams is typically a key component of every successful transaction.”

To maximise the potential of every investment opportunity, management alignment and participation are critical.

“Alignment of management at shareholder level is crucial,” says Shaun Cabrita, an executive at RMB Corvest. “Management can then be empowered to run the day-to-day operations, while we will focus on providing strategic input and monitoring the performance of the business at board level.”

This level of direct participation creates the right incentive framework for the key role-players. “Having some ‘skin in the game’ gets everyone thinking like shareholders,” says Cabrita. “We can then generally be assured that we are all pulling in the same direction with a common end goal in mind.”

Through meaningful long-term partnerships, RMB Corvest has seen many of its investments grow and mature, ultimately leading to a successful exit.

“A recent example is our involvement in the Micros business,” says Cabrita. “Having previously been invested in Micros, we were presented with another opportunity to conclude a black economic empowerment (BEE) and re-leverage transaction with the business in 2007. We knew the business and the management team well and were keen to partner with management once again.”

RMB Corvest concluded the transaction with BEE partner Safika Investments to acquire a combined 49% stake in Micros, while management retained 51% of the business. This partnership continued for many years, ultimately leading to a successful exit for all of the stakeholders in 2017.

“While certain management shareholders exited during the investment, up-and-coming management had the opportunity to increase their shareholding in the business, continuing and entrenching our partnership philosophy,” says Cabrita.

RMB Corvest offers both strategic and financial support to skilful management teams with the entrepreneurial acumen to run their own businesses, in concluding leveraged and management buy-outs.

“The local market demands entrepreneurial thinking, particularly for mid-sized, privately owned companies,” says Cabrita. “We are able to offer such entrepreneurial management teams the ideal tools to become co-owners of their businesses.”

This is precisely the formula applied to the Micros acquisition. By 2017, having grown the business organically since making the investment, as well as concluding a small, complementary bolt-on acquisition, management was introduced to Adapt IT, a JSE-listed company, which expressed interest in acquiring Micros.

“After preliminary negotiations, a valuation and transaction structure was agreed upon,” says Cabrita. “Given management’s desire to exit at the proposed value, we supported the transaction and brokered an efficient exit for all parties.”

Today, Micros continues to provide world-class software for the hospitality industry within the Adapt IT stable. While the acquisition will enhance Adapt IT’s position as an information and communications technology sector leader, Micros will benefit from Adapt IT’s advantages of scale and key relationships.

“This was a win-win transaction,” says Cabrita. “Precisely because, as a specialist private equity player, we understand the intricacies of identifying and acquiring attractive small to medium-sized businesses; facilitating adept management teams to acquire equity alongside us; and then supporting management in growing the business to the next level in its life cycle – the basis for a successful partnership and investment for all parties.”

About RMB Corvest

RMB Corvest is an on-balance sheet provider of private equity for mid-sized management buyouts, leveraged buyouts, development capital and funded black economic empowerment solutions. For more information, visit www.rmbcorvest.co.za.

This article was paid for by RMB.