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Happy Columbus Day!
*ducks thrown shoe*
Ok! In honor of history’s most famous (and infamous!) explorer, this week we head to the frontier.
The gold rush drew hundreds of thousands from around the globe to a sparsely populated, former Mexican territory called California. Overland travel was almost impossible. The majority of travelers took months to travel around the tip of South America; some even trekked through the jungles of Panama to reach the Pacific Ocean.
Unchartered territories on Earth are hard to find today. Now frontier’s are created by catalysts: changing politics, post-war reconstruction, booming populations, and the internet to name a few. These catalysts can make a territory unrecognizable within a few years.
Living outside the US gives me a unique perspective on markets, risks, and opportunities. When you are in the US everything seems so much bigger and faster that investors think there is no need to look beyond the boarder.
After last week’s post I received several emails asking me, “Ok, so where should we invest if US PE is sky high??” I come bearing a few outside the box sponsors for you.
This is not investment advice, just some deals we found interesting.
As always, if you are interested send me an email and I will put you in touch with the sponsors:
Emerging market fund of search funds
The first group this week is a Fund of Funds based in South Africa. They see emerging markets as fertile grounds for search funds, and after a few calls I tend to agree. Their thesis has two pillars:
Find searchers with unique positioning in non-competitive markets. I.e Strong network, family connections, academic network, key past roles (in PE fund for example).
PE funds in Emerging markets are desperate for well polished deals right now. They have the capital, but there aren’t enough quality projects to deploy capital into.
The fund will invest in searchers across emerging markets, focusing mainly on Africa.
The fund is run by HBS graduates with extensive Private Equity experience. They will work with searchers to professionalize, and prepare the acquired businesses for a PE exit. What are PE firms in Africa looking for? Clean financials, systems in place, a professional owner willing to put skin in the game.
The searchers are willing to stay on, and continue working with PE firms post close. Most African SMB owners are not familiar with this operation.
Why I like this deal? The sponsors have extensive experience in emerging markets, a great network of searchers, and a flexible mindset.
They have already completed first close of $20 million, with a $40 million cap. One tiny note, there is a $500K minimum investment in the fund.
Indian fund acquiring office/warehouse supply distributor
Alright I know including office in the title probably didn’t excite you too much. Believe me, nobody is more bearish on office space than me, but hear me out!
This a 30 Billion (!) dollar sector growing at 17% over the next five years. There are no dominant players and most of the market is full of unorganized fulfillment companies.
I had a call with these two Cornell graduates a few months ago during their search phase. They are motivated to be one of the first Indian ETA success stories. After 18 months they found this target and feel this is the perfect market to begin creating an organized marketplace.
The sponsors say WFH trends should not hit them as their products adapt to warehouses, home offices, and essential services.
They have built in some downside protection in the LOI based on any major changes in the business.
The sponsors are looking to raise $860,000 for a partial buyout of current ownership. Let me know if you want an intro.
Are you a sponsor and want to share your deals with almost 800 potential investors? Shoot me an email:
Andrew@blinkholdings.com
Feel free to share this week’s opportunities with your friends.