ACA: Mobilizing Funds to Create a Modern African Economy

When the African Capital Alliance (ACA) was formed in 1997, it had continental goals but had to start somewhere. Its first foothold as a pioneering private equity firm trying to make its mark in raising investable funds was in Nigeria’s commercial capital, Lagos.

It was a most inopportune time, in the final days of General Sani Abacha’s military dictatorship, when Nigeria was an international pariah shunned by the West. However, within a year of its inception in 1998, the African Capital Alliance was able to raise its first tranche of US$35 million, proving its resilience in a difficult environment from the start.

Thriving in such circumstances for more than two decades, ACA seems to have actually come of age. With more than $1.2 billion since inception and offices in Nigeria, Ghana and Mauritius, the company finally seems poised to fulfill its original dreams. She currently manages five funds investing in 51 portfolio companies, covering seven businesses across 10 African countries.

“Yes, Africa has always been the focus of ACA,” says Co-Founder and Chairman Okey Enelamah African business in an interview from Lagos. “The decision to start with West Africa was influenced in part by the size and potential of some of the region’s economies, such as Nigeria, Ghana and Ivory Coast. The goal has always been to invest across Africa.”

Early investments pay off

With ACA’s first round of funding, ACA became an early investor in the Nigerian unit of South Africa’s mobile communications company MTN, which was licensed in 2001 to operate in Africa’s most populous country.

This became the most successful investment from the first round of fundraising, with MTN Nigeria increasing in value from US$400 million at the time of the deposit to US$13 billion when the ACA exited this initial investment in 2012, according to company records.

A portion of the funds subsequently raised by ACA also went to MTN Nigeria. Aside from its own stake, ACA also contributed to the success of the wireless company by creating the financial structure and the “special purpose vehicles” that allowed other Nigerian investors to participate.

Beyond telecommunications, ACA’s investments have included financial services, media and technology, consumer discretionary, agribusiness, energy, education and healthcare. Beneficiary companies ranged from the business day newspaper, Continental Reinsurance and the online travel agency Wakanow.

intersection of ideas

ACA is the product of the crossroads of ideas between an American businessman, Richard Kramer, and a young Nigerian doctor, Enelamah, more than three decades ago. Kramer came to Nigeria in 1978 to set up a department at the Arthur Andersen accounting firm.

Enelamah had taken a different path, graduating from high school at 16 and gaining admission to study pharmacy at the University of Nigeria at Nsukka in 1979 before switching to medicine a year later. After graduating from medical school in the mid-1980s, he wondered if he really wanted to be a practicing doctor.

While he was in this state, Enelamah recalls, an opportunity arose to join Arthur Andersen as a trainee.

“They had tried engineers, but never a doctor,” he says. Both sides were willing to take the risk, and Enelamah began his business education, which included studying to be an accountant and attending Harvard Business School in the United States. The rest, as they say, is history.

After ACA successfully raised its first $35 million, ACA’s next round in 2005 raised $100 million. Three years later, it raised $165 million for its first real estate fund. Other rounds that followed showed growing investor confidence with nearly $400 million in 2009 and $567 million in 2015. During this expansion phase, the company also formed wealth management and real estate subsidiaries.

Creating an enabling environment for business

While Kramer was Chairman, Enelamah served as CEO from inception until his appointment as Nigeria’s Minister of Trade and Investment in President Muhammadu Buhari’s first term. He saw his role primarily as removing the various bureaucratic bottlenecks that acted as hurdles that slowed or deterred investors.

“One of our top priorities was to create an enabling environment for business,” says Enelamah.

The reforms he initiated as minister resulted in policies such as offering business travelers visas upon their arrival in Nigeria and simplifying the registration process for companies. A new company law, which came into force in 2021, offers more flexibility to set up companies, including the introduction of limited partnerships and allowing sole ownership of limited liability companies.

Invest across Africa

Kramer resigned as chairman in 2018 and passed away in April at the age of 88. Enelamah, who has returned from his tenure as minister to take the helm as chairman, has further advanced the founders’ goals. This includes mobilizing “capital, managerial skills and technology to create a modern African economy,” he says.

Enelamah sees the creation of the African Continental Free Trade Area as a boost to the company’s goals and an indicator of emerging new opportunities that require further expansion of its footprint across the continent, with additional offices in East and North Africa being considered.

“In fact, over the past decade, the company has made a conscious effort to partner and invest in companies spread across the continent,” Enelamah said. “Funds currently raised will reflect a much broader geographic spread in both number and size of transactions.”

Aside from the great returns on investment, Enelamah points to the impact the company has had on society that isn’t typically apparent due to the private equity business’ reticence. In addition to the investments that create jobs, according to the ACA, standards of corporate governance, business integrity and regulatory compliance tend to rub off on companies that receive their investments.

Some of the investments have also resulted in significant positive social and economic impacts. For example, by enabling Continental Reinsurance to work with organizations and governments in Nigeria, Kenya, Zambia, Uganda, Malawi, Tanzania and Zimbabwe to provide crop failure insurance to 10 million farmers.

Another beneficiary of its funds, Global Accelerex, provides electronic payment services in Nigeria and Ghana and supports banking services from agencies that have encouraged the inclusion of more citizens in the financial system. There are plans to expand to Côte d’Ivoire, Tanzania, Kenya and South Africa.

Enelamah expresses its belief that “the combination of capital, technology and managerial expertise will be a catalyst” for Africa’s development.

“The private equity model is therefore much more than just a profit model for us,” he says.

“It is also a vehicle to create lasting impact by fueling economic growth through partnerships and investments in well-managed, high-impact companies that would help transform the African continent.”