Ghana and Rwanda are both possible initial destinations in a programme of investments that may go farther afield, Eleoramo says in Abuja. Mining of precious and industrial metals and fintech are sectors where the firm could commit capital, and due diligence on more than one possible investment is already taking place, he adds.
Foreign-exchange risk in Nigeria is one reason for the strategy, with Kohath wanting to hedge against the danger of the naira dropping further against the dollar, Eleoramo says. Overvaluation of Nigerian startups is another factor. Startup capital has flooded into Africa, with $4b being raised in 2021. Nigeria was the biggest single destination.
- The result is that “valuations in Nigeria are on the high side,” Eleoramo says. It’s time to “explore value in other countries. We are shopping on a value basis.”
- Uncertainty over the future political direction of Nigeria after 2023 elections is another factor favouring diversification outside the country, he says.
Set up in 2004, Kohath is a family-owned business which commits its own money and that of other investors. It started out as a commodities trading firm which also offered oil and gas consulting services.
Backing companies as a financial investor rather than building them itself will be a new departure. The company, which is led by CEO Teniola Eleoramo, has subsidiaries in mining, real estate, energy, trading and rice.
- Going forward, it may invest between $1m and $10m per stake, with a mixture of debt and equity exposure, Eleoramo says.
- In time, the firm wants to expand its presence across Africa. Investments in francophone Africa are also possible, but are “not on the front-burner,” Eleoramo adds.
The balance of opportunities is shifting away from Nigeria for venture-capital investors on the ground.
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