‘We identify disruptors and invest in them.’

South Africa, along with the rest of Africa, is on the cusp of the Fourth Industrial Revolution. It’s vastly different from the preceding three industrial revolutions – steam and water power, electricity and assembly lines, and computerisation.

Underpinning the Fourth Industrial Revolution is smart technology and how it changes the way humans work, live and interact with the world.

This revolution, which is somewhat related to computerisation, is impacting all disciplines, industries and economies. Think of the proliferation of mobile banking versus the need to visit a bank branch, shopping online instead of visiting brick-and-mortar stores, and artificial intelligence innovations that facilitate earlier diagnosis and treatment in the healthcare industry.

While the rapid pace of technological development might be stopping many companies from moving with the times, some are embracing the Fourth Industrial Revolution with aplomb.

One of these is financial services group Ecsponent. The company is already investing in businesses that are underpinned by fundamentals of the Fourth Industrial Revolution. It does so through its Equity Holdings business unit, which involves taking direct, minority equity stakes in businesses in high-growth segments such as fintech, healthcare and digital media.

Frankfurt-listed fintech

For instance, Ecsponent holds a 38.5% stake in Frankfurt-listed fintech firm MyBucks, which provides financial products and services in 11 different countries. Beyond financial services and fintech, Ecsponent has a shareholding in JSE-listed Go Life International, which operates in the frail care, nutraceutical, and cosmeceutical sectors.

Ecsponent has exposure in the renewable energy industry too, providing extensive support for the supply of goods and equipment to the sector and direct investment in companies such as Invest Solar Africa in Botswana, which focuses on the development and financing of renewable energy projects. It also owns a 49% stake in Truth Digital Group, a digital marketing business.

Ecsponent CEO Terence Gregory says the diverse nature of equity investments reflects the group’s mandate of being sector-agnostic.

“We might be sector-agnostic, but we are actively looking for businesses that are showing high growth, with strong management teams, and resilience to the current economic environment. We also want businesses that are in niche sectors.”

Mauritius-based Go Life

On the latter, he cites Go Life International as an example.

“Although we are in the healthcare sector the focus is on niche markets such as frail care, stem cells, and nutraceuticals industries – we are in specific healthcare areas because the primary healthcare sector in South Africa is struggling and saturated, with many players.”

Investing in companies that are underpinned by technology, are considered early disruptors, and which focus on improved quality of life is how Ecsponent has embraced the Fourth Industrial Revolution, says Gregory.

“Our nutraceuticals investment is a disruptor example. The team was investing in cannabis-related health products two years ago. But now cannabis is becoming a disruptor in many markets and the world is looking at its use beyond recreational purposes. We identify disruptors before they become disruptors and invest in them.”

Ecsponent is on the prowl for investment opportunities to build scale in its equity business. During its latest financial year (15 months to the end of June 2018), the company concluded a series of deals exceeding R1 billion. Gregory says more deals of substantial scale are in the pipeline.

Ecsponent has identified the stem cell and nutraceuticals industry as its growth vector. Both industries are at the forefront of researching and commissioning medical innovations to reduce the risk of chronic diseases.

“If you look at the number of ongoing clinical trials on stem cells, we believe the industry is booming and is a long-term play. There is nothing that can replace it. It is a good bet and has the potential to generate double-digit returns.”

Ecsponent – which has existing investments in rest-of-Africa markets including Zambia, Swaziland, and Botswana – plans to expand further into the continent through equity investments. It is hoping to cash in on the continent’s more than one billion population, rapid urbanisation, growing consumerism, and penetration of smartphones.


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