Helios eyes South Africa for opportunities, says pessimism is 'overdone'

Dino Lloyd, Gallo Images
Dino Lloyd, Gallo Images
  • Africa-focused private-equity firm Helios Investment Partners is looking to do more deals in SA. 
  • Despite the longest recession in nearly three decades, it says pessimism in SA is "overdone". 
  • Its founder says SA has "lots of excellent companies". 


Helios Investment Partners, an Africa-focused private-equity firm, is looking to do more deals in South Africa even as the country grapples with the longest recession since 1992 and the worst power cuts on record.

"It really does seem that the pessimism in South Africa is becoming overdone," Tope Lawani, co-founder and managing partner at Helios, said in an interview. “South Africa, notwithstanding the challenges that it’s having both from the human toll of Covid-19, but also attendant economic challenges, paradoxically is becoming more interesting for us.”

South Africa is facing the deepest economic contraction in almost 90 years, which is being compounded by surging debt levels, a depreciating currency and the coronavirus pandemic. Business leaders have warned that South Africa faces a choice between loosening the grip of vested interests to embrace radical — and likely painful — reform or risking a sovereign debt crisis and more permanent scars.

Excellent companies, weak currency

"South Africa is a place that has a lot of excellent companies, a lot of excellent entrepreneurs and we are now seeing for the first time, that in rand terms, assets are starting to get fairly valued and may be inexpensive," Lawani said. "At the same time the currency is weak."

The investment firm is on the hunt for opportunities in sectors such as financial technology, non-bank financial services, insurance, asset management and energy. The company is hoping to conclude some transactions by the first quarter of next year depending on how its due diligence goes, he said, without identifying specific deals.

In the energy space, Helios Investment Partners is particularly interested in mid-stream gas infrastructure because of the country’s power crisis, Lawani said.

Helios Investment Partners is mulling the possibility of imitating a Ghanaian liquefied natural gas project in South Africa. The terminal, which is almost complete, will receive, store and regasify the LNG before piping it out to customers, said Lawani.

South Africa has had the most power cuts this year since at least 2007, according to a report by the Council for Scientific and Industrial Research due to its poorly maintained generation fleet that is prone to breakdowns.

ZAR/USD
16.33
(-0.06)
ZAR/GBP
21.08
(-0.04)
ZAR/EUR
19.33
(-0.03)
ZAR/AUD
11.90
(-0.03)
ZAR/JPY
0.16
(-1.15)
Gold
1949.72
(+0.03)
Silver
26.74
(+0.09)
Platinum
928.80
(+0.44)
Brent Crude
43.52
(-0.32)
Palladium
2356.01
(+0.63)
All Share
54673.65
(-0.66)
Top 40
50399.16
(-0.59)
Financial 15
9841.32
(-2.14)
Industrial 25
72558.00
(-1.08)
Resource 10
55438.10
(+0.58)
All JSE data delayed by at least 15 minutes morningstar logo
Company Snapshot
Voting Booth
Do you think it was a good idea for the government to approach the IMF for a $4.3 billion loan to fight Covid-19?
Please select an option Oops! Something went wrong, please try again later.
Results
Yes. We need the money.
11% - 1301 votes
It depends on how the funds are used.
73% - 8626 votes
No. We should have gotten the loan elsewhere.
16% - 1899 votes
Vote