OUR INVESTMENT CRITERIA
The Fund will evaluate each potential investment according to the following criteria:
Geographic Focus
Being a dedicated investment platform for investing in West African based small and medium enterprise opportunities, the fund shall invest in companies that have their headquarters, or that conduct a material part of their business in the West African sub-region. Opportunities outside the boundaries of the WAMZ zone will be considered on an exceptional basis and based on the ability of these opportunities to enhance the growth and expansion potential of the WAMZ-based Portfolio Companies.
Investment Structure
The Fund will invest in the Portfolio Companies through equity participation, whereby a majority equity stake in the Portfolio Companies will typically be sought. In circumstances where majority ownership is not possible, the Fund will seek other means of positive control over the affairs of the Portfolio Companies through contractual arrangements. Alternatively, the Fund may elect to use convertible financing instruments to provide funding to a Portfolio Company, where the use of such instruments is in the best interest of the Portfolio Company and the Fund.
Sustainable Business Model
The Fund will select companies that have a strong and sustainable competitive advantage and can compete not only locally, but regionally and even on a global basis. Portfolio Companies must be revenue-generating and have proven economic models that allow for an attractive return on invested capital. The fund will select companies with proprietary and/or differentiated products or service offerings, which should enable the Portfolio Companies to enjoy a sustainable competitive advantage and a significant market share.
Industry Focus
The fund will be focused on the six targeted services sub-sector within the service industry; each opportunity will however be considered on its own merits. Investment opportunities that fulfill the fund’s investment strategy and meet its investment criteria and guidelines will be further pursued. However, the fund will strive to diversify its portfolio of companies to avoid industry or sectoral concentration.
Growth Potential
The Fund will seek companies that have the potential for high profitability and fast growth in relation to their respective industry segments. Growth potential may be the result of an expanding market or a consolidating one; in both cases the Portfolio Company should be well-positioned to grow its business organically and through mergers and acquisitions.
Investment Size
The potential size of investment by the Fund in each Portfolio Company shall be between USD 100,000 and USD 2 million per round of investment for companies in the start-up stage; and between USD 2million and USD 5million for growth and distressed stages. The size of investment shall be determined based on the Portfolio Company’s life stage and subsequent need for capital.
Stage
The Bridge Private Equity Fund I will only invest in revenue-generating going concerns; early stage companies that may or may not be profitable at the time of investment, but exhibit a clear path to profitability. The fund will not seed-invest in business plans nor pre-commercialization concepts.
Size of Follow on Investment
In some circumstances where further rounds of capital injections are required, the Fund can follow on its investments up to a maximum of 25% of the fund Size in a single Portfolio Company.
Reasonable Valuations
The Fund will seek opportunities at reasonable valuations relative to public equity markets and/or similar private equity transactions.
Quality Management Team
An integral part of the Fund’s philosophy is the emphasis placed on the management team and key personnel of the Portfolio Companies as being the most critical determinant of success thereof. Each management team will be assessed based on industry/sector expertise, leadership skills, long term commitment, and integrity. Additionally, retention of key management is crucial for pursuing any investment.
Industry Impact
The Fund will seek to identify companies that have the potential for effecting change in their respective industries by introducing more sustainable business models, new technologies, or more efficient processes. As such, the Fund may seek innovative concepts globally that can be transplanted successfully into Ghana and the WAMZ region.
Exit Opportunities
The Fund Manager shall target opportunities with the potential for rewarding exits. The Portfolio Companies shall have the capacity to generate significant returns on investment for all investors across a wide range of potential exit values. The unique circumstances of each Portfolio Company, general market conditions, and specifics of the relevant industry will impact the investment duration of each Portfolio Company and the choice of an appropriate exit route.
Investment Term
The Fund is expected to retain its ownership interest in the Portfolio Companies for four to seven years, after which a profitable exit shall be sought. Earlier full or partial exit opportunities shall be assessed in light of the Fund’s overall objectives and the interest of its stakeholders.
Post Investment Monitoring
The Fund Manager shall put in place a post-investment monitoring mechanism that will track the performance of each Portfolio Company to ensure that investment guidelines continue to be adhered to and performance targets are achieved as initially envisaged.
Employment Creation Capacity
The Fund aims to create employment opportunities across multiple sectors in the Republic of Ghana and the WAMZ region, and as such each Portfolio Company should exhibit a high potential for creating quality and sustainable employment opportunities.
Board Representation
The Fund Manager will seek situations where there is a mutual interest in entering into a constructive and long-term partnership with the owners and the management teams of the Portfolio Companies to jointly build successful and sustainable businesses. This necessitates that the Fund Manager is represented on the Board of directors of each Portfolio Company, in order to assist the management teams of the Portfolio Companies in devising growth strategies and measures, business development, refining business models, financial restructuring where required, and preparing divestment and exit strategies. The Fund manager shall not intervene in the day-to-day operations of Portfolio Companies, such as recruitment, sales, and matters of administrative nature, unless such intervention is necessary to successfully see the Portfolio Company through a period of transition or distress.
Unquoted Companies
The Fund shall target companies that are not quoted on any form of exchange.