Affirma Capital looks to double asset basic to $7bn within five years

Affirma Capital, the past private equity organization of Standard Chartered Lender, expects to double the size of its $3.5 billion of assets under management next five years since it looks to get more in the centre East, Africa and Asia.

The company, which includes $400 million in cash to invest, is actively looking at 15 potential acquisitions within the Middle East and Africa region, Taimoor Labib, founding partner and head of the center East and Africa business, told The National.

“We ought to double the AUMs next three-to-five years,” he said. “The $3.5bn [in] assets in management includes dried out powder, so we've money to do new deals.”

Affirma Capital, which is owned and managed by past Regular Chartered executives, currently has 35 investments across China, India, the center East, South-East Asia, Sub-Saharan Africa and South Korea.

It keeps stakes in corporations such as for example Jordan’s Fine Hygienic Keeping and Al-Jazeera Agriculture in the centre East.

“In conditions of the center East, we are extremely actively seeking at transactions ... in the UAE, Egypt, Saudi Arabia and Jordan,” explained Mr Labib.

“We have a pretty big emphasis on the UAE and Egypt,” he said.

Mr Labib said the majority of the 15 discounts it is currently evaluating are actually in both of these markets.

Affirma, which typically invests between $25m and $100m in a deal, expects to close at least one transaction involving a healthcare-related business, he said, without disclosing the prospective company.

Historically, the center East and Africa place has accounted for approximately a fifth of Affirma's assets underneath management which is expected to remain consistent just as the business grows its asset base globally, he said.

Despite 2020 being truly a year of low asset valuations, Affirma was struggling to increase its assets as it was a “bit of the task to close discounts and ... exit deals”, he said.

The largest challenge in finalising bargains this year will be to become “comfortable” with the 2020 amounts of target companies, particularly those in the next half of the entire year.

“If you do that, offers will close, not only for me but also for others [private collateral companies] aswell,” he said

Affirma is looking to raise more money to expand its portfolio and has “considerable pockets of co-investors” that may be used, depending on the size and the type of a probable acquisition, said Mr Labib.

THE CENTER East is likely to experience strong momentum in fundraising this year and another, he said.

“People recognise that these will be ‘good vintage’ [years for trading] and we are cautiously optimistic that there will be a good opportunity to raise funds on the coming 1 . 5 years.”

Speciality healthcare, pharmaceutical corporations, quick-service cafe chains, retail operators and e-commerce and digital payment platforms are the type of corporations that Affirma expects to purchase.

It is already evaluating several healthcare and pharmaceutical discounts and is particularly thinking about restaurant chains that contain survived a tough time amid the pandemic.

With much of your competition eliminated because of Covid-19 constraints, the surviving outlets, “we think, could be the winners when in-house eating continues”, said Mr Labib.

Covid-19 offers changed investors’ perspective about the sort of companies they wish to buy, as technology and online capabilities, which were part of the investment thesis, have finally become the basis of investment decisions, he said.

“The brand new companies we seem at, in the event that you don’t possess that technology backbone and the online logistics, we won’t even appear at you. It requires to maintain their DNA,” he explained.

Affirma, whose concentrate is private equity deals, is considering adding new products such as a personal debt fund and entering secondary market transactions by investing in stakes from other individual equity organizations and investors.

“We think credit and mezzanine finance is a good well-known and understood sector here,” he said.

Mr Labib, who previously managed possessions worthwhile $1.5bn as Middle East and Africa brain of Standard Chartered Personal Equity, is also bringing “like-minded” professionals together to create the Mena Private Marketplaces Association, an industry body that is intended to improve the private collateral sector’s image following the inability of buyout companies such as Abraaj Capital recently.

The sector’s reputation took popular when Abraaj collapsed in 2018 after investors elevated concerns about the supervision of its $1bn healthcare fund.

After Abraaj’s collapse, “whenever we were speaking with international LPs [limited partners], I got sick of having to defend the Middle East also to defend my like-minded alternative investment companies [where] 99 % of the persons do the right thing”, Mr Labib said.

“Our organization is opaque, if you wish to make it opaque, but private marketplaces are actually quite simple. So, one aspect of this [Mena Private Market segments Association] was to attempt to fix the narrative.”

The Mena region has a population around 400 million persons and private equity businesses have made lots of money here, but foreign investors are not sure of many of its success stories, he said.

The proceed to establish the association was a “mix of factors ... however the reception provides been great and persons are really very happy that people are taking the lead on this”.

The charter of the Mena Private Marketplaces Association will be finalised next month or two and membership has been considered on a “selective” basis but could easily reach a few hundred this season, he said.