Andrew Dewar, managing partner of Barclays Africa spin-out Rockwood Private Equity, talks us through the spin-out process.
How did Rockwood achieve its independence?
We were employed by Absa-Barclays, part of the Barclays group in South Africa. We got going in about 2006, and we bought a private equity portfolio with a view to following the Barclays UK model (where they ran a semi-captive fund under a management company and got a lot of external funding; Barclays made profits back off management fees and from capital involved with that fund).
So we embarked on that pathway, the team was built, the portfolio was built, and then in 2008 we started the process of the carve-out and then got caught in the financial crisis. So that was then put on ice for a while, and then we continued in this new fold in Absa and continued to manage the portfolio, but it’s been an imperative for Absa-Barclays to get out of private equity.
In 2011 they sold their [UK private equity] business which they’d created, Equistone. We’d come quite close to carving out around 2011, but then the exchange rate on the rand strengthened considerably and it just put the possibility of drawing foreign investment into South Africa out of our reach.
What did you do?
Last year we basically re-embarked on the process we left in 2011; conditions were a lot more favourable. It took the best part of last year to consummate and to close up the process, with HarbourVest in the lead and Coller in the consortium. So the net outcome is that portfolio that we built, consisting of the five assets you will have picked up in the press – Bravo, Safripol, Tsebo, EnviroServ, Kwikspace – have effectively remained in our fund.
As a team we acquired the management company we’d been employed with, previously called Absa Capital Private Equity. In the process [we] brought into the shareholding Anthony Ball.
And so we now continue with the portfolio, we manage it; we’re into exit mode so we’re looking at disposing of the portfolio, probably over the next 3 to 5 years. Hopefully we’ll make a successful exit. We’d like to be raising our next fund, Rockwood Private Equity Fund II; with Anthony as a partner, with Harbourvest and Coller as partners, we can go forward and build a private equity business.
Why bring in a new senior executive?
Anthony was the founder, chairman and CEO at various stages of his life of Brait Private Equity, which for a long time was the biggest private equity fund in its own right in South Africa.
[Ball] had essentially moved out of private equity and he was looking for a new private equity opportunity so he joined us as independent chairman. He’s been a wonderful boost to our business and opportunities to have somebody with that experience join us.
What sort of back-office issues are you encountering?
Right now … we’re sort of two months into it, and it is hard work so far. Our primary focus is logistical carve-out, so moving to new offices, establishing the whole IT infrastructure, contact database, all that type of thing. It’s very mundane stuff, but it’s taking a lot of time and effort, and it’s important to get right.
It’s also about creating, branding, brand awareness, market position. We’ve had to do a bit of branding and we hope you like the name: Rockwood is the name of an indigenous South African tree.