The impact of Covid-19 on Eos Capital Namibia

Posted on: 31 July, 2020 at 3:48 PM

This article is a shortened version of an interview published in the SAVCA 2020 Private Equity Industry Survey. See the original here.

Eos Capital is a Namibian private equity fund manager that manages the Allegrow Fund. SAVCA talks to Connie-Marlene Theyse, senior associate at Eos Capital Namibia, on the impact of Covid-19 on the firm, its porfolio companies as well as the lessons learnt over this period.

What impact has Covid-19 and the lockdown measures had on your portfolio?

Our Allegrow Fund investments delivered mixed results as the portfolio is representative of companies in various sectors across the economy. Two of our companies that performed very well were Elso Holdings (Pty) Ltd, a manufacturer of cleaning products and toilet paper products and Fabupharm (Pty) Ltd, a manufacturer of medicines and vitamins. Apart from Panel to Panel (Pty) Ltd, which plays in the construction sector, and Nambob Funeral Solutions (Pty) Ltd, which experienced a decline in demand due to no Covid-19 related deaths recorded in Namibia, the remainder of our portfolio companies were indirectly affected due to an overall decline in the economy as a result of the enforced lockdowns.

How did the fund and/or your portfolio companies overcome some of these challenges? Any interesting/innovative approaches you are proud of?

Both Elso Holdings and Fabupharm were quick to react to seize opportunities. The right leadership and simple decisionmaking matrixes are testament to the success in any business during challenging times.

For Fabupharm, the win was getting the right multivitamin on the market without any delays once the first Covid-19 case was detected in Namibia. Suplimax CDZ 60’s was formulated to provide the immune system with the necessary Vitamin C, D and Zinc as a boost against Covid-19. Marketing of the product took care of itself due to the popularity of the product, especially among large corporates that found this the ideal product for their staff.

Elso Holdings identified sales opportunities before Covid-19 became a reality in South Africa or Namibia and pre-emptively secured bulk supplies of hand sanitisers and medical masks from their South African suppliers. This enabled them to be one of the first companies to have a consistent supply of hand sanitisers and medical masks in the country and they could seize bulk- supply opportunities. In addition, a new surface disinfectant was formulated.

For one of our portfolio companies in the education sector, the response to Covid-19 has meant completely rethinking the way of doing business. For Rosewood Academy (Pty) Ltd, this meant switching to e-learning. Within a space of two weeks, the school successfully transitioned to online learning, and classes had resumed.

Going forward, is there anything you will do differently as a result of the lessons learnt?

As a fund we were quick to react to understand the implications of Covid-19 and the lockdown on our portfolio companies.

We need to ensure continued focus on risk management within our portfolio companies and we need to plan for more business disruptions taking place in future. We need to build up a war chest – diversified revenue streams, diversified supplier networks, cash reserves, strong leadership supported by the right team etc. to sure up our portfolio companies for more business disruptions as they are here to stay.

When making investment decisions, we need to model the absolute worse-case scenarios such as what we are currently experiencing. And we need to look for investments in defensive industries such as healthcare, staples and cleaning products, rather than luxury goods.

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