FurtherAfrica met with Lanre Oloniniyi, co-founder and managing partner of Orbitt, a London based company matching investment opportunities in Africa with foreign institutional investors through its digital platform.
Fabio Scala: Lanre, thank you for taking the time today to chat with us. Your project is hands down one of the best ideas I’ve come across in terms of raising capital and finding investment-ready opportunities in Africa. For those unfamiliar with Orbitt, can you give us a bit of an introduction and tell us how the platform works?
Lanre Oloniniyi: Hi Fabio, thank you for inviting me and for your kind words. Orbitt is a deal origination and processing platform focused on Africa. We typically aim to connect investors with companies that are earning revenue and looking for growth capital. As it currently stands, we have profiles for over 450 Africa-focused investors on the platform for whom we’ve digitised the essential information about their investment mandate such as target sectors, geographic focus, deal size and capital type. By doing so, we can provide them with real-time, targeted deal pipelines as and when new investment opportunities are screened and approved on the platform using our smart matching algorithm.
We also support the entire investment ecosystem by working closely with intermediaries and investment professionals such as accountants, insurers and FX providers. These members are integral to our platform to ensure that each deal has the necessary resources for origination. In addition, intermediaries use Orbitt as a business development tool, based on the deals we present which need their expertise in their market.
Fabio Scala: Do you focus on opportunities in particular regions or do you cover the whole continent?
Lanre Oloniniyi: Orbitt is a pan-African platform, meaning we are able to unearth opportunities in all 54 countries across the continent. Because we are driven by investor demand we tend to have more engagement in regions that draw higher investor attention – currently West and East Africa. That being said, we do have a lot of users and deals coming in from all regions on the continent.
Fabio Scala: And do you cover all sectors?
Lanre Oloniniyi: Yes, the platform is designed to be sector agnostic and so we have buy-side and sell-side mandates across a variety of sectors. We are originating to supply the deal pipeline for investors, so we are driven by their investment mandates at any given moment. The key industry sectors where we are seeing large demand are agriculture (agri-processing), FMCG, healthcare, financial services, logistics, education, and hospitality. And these are all sectors underpinned by the African macroeconomic story.
Fabio Scala: How about ticket size? What are the smaller and larger opportunity sizes?
Lanre Oloniniyi: Our sweet spot is between $15m and $35m but our range is between $5m and $50m. There is some flexibility for smaller transactions, depending on the quality of the deals and the sectors. For example, we’ve helped close some deals around the $3m mark, while working on others in natural resources space in the region of $80m.
Fabio Scala: I understand you have a very good investor base. Can you tell us a bit about it?
Lanre Oloniniyi: Our investor base is quite diverse and we maintain close engagement with them. Because our tech can be leveraged across an array of sectors, transaction types and sizes, we have a wide investor pool ranging from private equity firms to debt houses, including mezzanine and trade finance funds. Most of them, up to 60%, have offices in the UK or are based elsewhere in Europe while a good number have a presence on the continent or in the United States, with a growing number in the Middle East and Asia.
Fabio Scala: One of the biggest challenges African companies face when trying to raise capital is preparing to go to market in both a comprehensive manner and a language that foreign investors can relate to. I understand that you guys have helped a lot of companies get investment-ready. Could you give our readers an overview of what investors are looking for when assessing an opportunity in Africa?
Lanre Oloniniyi: Prior to launching, my co-founder, Will Hunnam, and I worked on the continent managing portfolio companies on both the buy-and sell-side, giving us a good understanding of what companies need to be ‘investor ready’. We have taken that experience into fully developing our matchmaking offering by connecting projects and companies to capital and services.
That being said, we have really good relationships with our investors. We know exactly what questions they are likely to ask and what they are looking for, which could involve the amount of information they require or the financial profiles of the companies. Therefore, when we come across projects that are a potential match but missing key components, we can refer them to the intermediaries on our platform. They will have the expertise in that specific sector and region to package the deal and make it investor ready.
Fabio Scala: Finally, what do you see as the main challenges foreign investors face when looking to invest in Africa?
Lanre Oloniniyi: We find that there is a relatively limited network through which deals are sourced. Investment professionals based in London or Washington might fly into an African city to meet with investment banks or individuals to find companies looking to raise capital. Alternatively, fund managers might simply go through their contacts. This is fine, and these are the traditional methods of deal sourcing. However, the confined networks mean that many great opportunities that do not come through those channels will be missed.
The intersection of traditional networks, even within a limited sector in a specific market, does not necessarily provide a good diversity of opportunities in the way that a digital platform such as Orbitt might.
Beyond networks, the traditional origination process itself is a barrier. You may find a deal, but it could take 2-3 weeks to share and sign the NDA. By allowing people to share information securely and quickly, deals can move forward in a more efficient manner. Another point worth noting is the absorptive capacity issue faced by most Africa-focused investors. We believe that this is a challenge Orbitt can address through digitisation and better-targeted deal origination, which drives efficient allocation of capital and ultimately economic growth and job-creation across Africa.