We spoke with Afolabi Adetola, Managing Partner of investment banking firm, Cedar Advisory Partners, based in Lagos, Nigeria.
Can you provide a bit of context about Cedar Advisory Partners and the services that you offer?
Cedar Advisory Partners Limited is a diversified investment banking firm established to provide innovative value-adding financial advisory & investment solutions to clients.
We develop a bespoke financial solution for our clients in terms of services and product delivery thereby endearing Cedar to the heart of its clients. Our vast experience in financial service delivery and customer-focused approach to business helps us to work through the needs of our customers and to provide value-adding financial solution.
We provide a wide range of services including corporate finance and advisory, Independent Corporate Valuation, Private Equity Advisory, Venture Capital, Principal Investments, and Investment Management.
How can company owners and CEOs better prepare themselves before starting the investment process?
Before starting an investment process, owners and decision-makers of potential investee companies must make a deliberate attempt to assess the scalability their business model, the firm’s internal capacity to drive growth and the firm’s position in the market, allowing the firm realign objectives, pivot or plot a new roadmap for growth
Decision-makers must also cultivate some knowledge of the capital raise market, identifying the owners of capital, their investment philosophy and time horizon in order to attract the right investment matching the company’s long-term strategic goals and stage in its business lifecycle. Often firms fail to attract significant interest or scale in the situation where they attract significant funding, due to a mismatch in securities raised and business lifecycle or the company’s culture and investors philosophy.
For private companies and family-owned businesses, it is important to put in place corporate governance structure in order to bolster investors confidence. Having a corporate governance structure assures investors that a company has checks and balances to protect shareholders value.
What do you see as the major challenges for intermediaries when raising capital for companies in Nigeria?
The domestic pool for investment capital has been significantly limited by the government crowding out private investment as a result of high-interest rate on risk-free securities like treasury bills and government bonds. With risk-free instruments offering high returns, liquidity in the market for financial instruments with greater risk is tighter, creating competition for creating challenges for intermediaries looking to go to the market to raise capital.
Previous financial crises where retail investors lost a significant amount of wealth has resulted in a distrust of the financial system a large population of people. Intermediaries are faced with a market for capital consisting of a small pool of retail investors requiring additional provision for guarantees to ensure the security of their investments.
- Regulatory impediments
- Weak distribution channel
- Slow transaction pace
There is no single approach to investing in Africa. What approaches have you seen work well in Nigeria over the past few years?
Patient capital and long-term oriented investments like private equity have generated substantial returns for investors in Nigeria. Private equity as an asset class provides investors with huge opportunities for high returns in the Nigerian market due to its medium to long term time horizon allowing investors to realize the value inherent in the economy. While more players are entering the private equity space which creates greater exit opportunities, assets remain undervalued with significant upsides. Also, efforts by the Federal Government of Nigeria towards increasing the ease of doing business and creating incentives for foreign investors with patient capital, looking to do business in Nigeria makes private equity an attractive approach to investment in Nigeria.
Investing industries like consumer goods and financial services has also allowed investors to get the most out of a large consumer economy with over 190 million people and household consumption accounting 79% of Gross Domestic Product in 2018.
How does Orbitt help improve your transaction process and business development efforts?
- Access to a larger pool of capital
- Access a wider distribution network
