Mr. Biniam Yohannes is the Managing Director at Catalyst Principal Partners and a member of the firm’s investment committee. He has a diverse wealth of experience in the sector with over 16 years of experience in investment banking, private equity and emerging markets. Biniam worked at Goldman Sachs for 9 years and was most recently a Vice President in the Infrastructure Group where he was responsible for sourcing, structuring and executing investments across developed and emerging markets. Biniam previously worked in the firm’s Technology, Media and Telecom as well as Public and Project Finance Groups.
He holds a Bachelor of Engineering degree and a Masters of Engineering Management from Dartmouth College.
Congratulations on the exit from Goodlife, which was voted I&M Burbidge Capital’s Corporate Finance Deal of the year last year. How difficult was it to achieve?
Thank you for the kind compliments. When we made the initial investment in what was then known as Mimosa Pharmacy in 2014, we had anticipated that it would take us 4-5 years to scale up the company before we would entertain an exit process. Alongside with our partners and the management team, we managed to put in place all the right ingredients even before we made the investment to allow us to accelerate the implementation of a new Goodlife brand and scale up the company’s operations across the region within a short period of time. Given the brand’s success as the largest pharmaceutical retail chain across the region, coupled with the still untapped potential in the health and personal care segments, Goodlife was well- positioned for an exit.
Are you pleased with the result?
We are delighted by the success of the Goodlife brand and its unique service offering in the market. We are also pleased with the returns we were able to generate for our investors and the social impact we have made in the pharmacy sector. Beyond our exit, we are optimistic about what lies ahead for the company in the future.
Was it similar to the exit you had in mind when you invested?
When we invested, we envisioned repositioning the brand to cater to a wider consumer base and for the brand to be available across the whole region. During the period of Catalyst’s investment, Goodlife grew its footprint from 4 locations primarily located in Nairobi and the coast, to 20+ convenient locations that extend into emerging urban centres in Kenya and Uganda. It grew to be what we had in mind – the largest pharmaceutical retail chain across eastern Africa consolidating health, personal care and beauty care in its products and service offering – although the exit came earlier than anticipated.
How do you plan to exit the other investee companies in your fund? Will it be primarily via secondary buyout, trade sale, IPO or other route?
Each investee company is unique depending on its sector, positioning and market dynamics. Therefore, each exit will be different and we will consider the full suite of options, including sale to strategic investors, other financial investors, or IPOs.
We have only seen one or two PE exits via IPO in East Africa so far. Why do you think there are so few, and do you think this will change?
Private equity managers have a fiduciary responsibility to their investors to maximize the value of their investments and to achieve efficient exits. A full exit via an IPO in some cases does not maximise the value of investors’ capital and can be a lengthy process compared to a sale to strategic or financial investors. Additionally, valuation expectations can also have an impact on which alternative is pursued.
You recently announced first close of your second fund. Congratulations. Can you talk us through some of the challenges and triumphs of capital raising for a PE fund?
The process of fund raising can be a time-consuming process. We are gratified that we have the continued support of our existing investors (a number of whom increased their commitment to this successor fund compared to the first fund). That, coupled with our track record, has allowed us to have an efficient fund raising process this time around.
Do you think there will be more and more local institutional investment into PE?
We have seen a material improvement over the past few years in the appetite of local institutional investors who seem to appreciate the role of private equity in offering attractive risk adjusted returns, providing a diversification to their portfolio and presenting them a platform through which they can invest in private/unlisted companies they know already. Institutional investors also appreciate the industry’s role in providing risk capital to local businesses, assisting in creating employment, and helping improve governance standards. With the improved regulatory framework, the current status of public markets and delivery of attractive returns by PE firms, we expect increased investment into PE in the future.
Why should people invest in Catalyst?
We are investing in a region that has demonstrated its growth potential especially in sectors with attractive underlying fundamentals, driven by compelling demographic trends, urbanization, rising consumer demand, deepening middle class, under-served mass market as well as integration of the regional economies. We target to generate attractive returns driven by these themes, guided by our investment strategy focused on mid-market growth capital investments and managed by an experienced investment team that has a track record of investing and growing businesses. Of course, the past performance of the investments we manage is an indicator of what we have accomplished but isn’t necessarily a guide to future performance.
What’s your favourite thing about Nairobi?
Nairobi seems to strike the right balance of being a friendly thriving regional hub, right next door to some amazing natural spectacles. It has a unique vibe which is contagious to anyone who visits the city!