NakagawaSawa Nakagawa

Sawa Nakagawa’09 was a Summer Associate for South Africa’s Glenhove Fund Management, which manages the Women’s Private Equity Fund, the first private equity fund to focus on increasing entrepreneurship amongst black South-African women. Sawa evaluated and structured investment opportunities for the fund and developed a strategy and metrics for reporting on the social impact to investors and stakeholders.

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Empowering Women in Business Through Glenhove Fund Managers

On May 23 2008, I arrived at Johannesburg’s OR Tambo Airport, named after a South African anti-apartheid politician. South Africa has had an impressive economic growth since the end of apartheid, and the airport gives an impression of the first world. On the drive from the airport, there are many construction works in preparation for the 2010 World Cup, including Gautrain, Johannesburg’s first subway system. Johannesburg is located in Gauteng Province. Step back from the construction, however, and you’ll see that unemployment is high and inflation is on the rise, with poverty and HIV/AIDS remaining as major concerns for the country.

I am working as Summer Associate for Glenhove Fund Managers,a Johannesburg-based private equity fund manager. Glenhove manages South Africa’s first ever Women Private Equity Fund (WPEF) which focuses on the empowerment of women in business. The R128 million (about US$18 million) WPEF was launched in 2001 with funding from South African government-related banks and pension funds to provide female entrepreneurs with expansion capital. WPEF is also working to redress the inequalities of Apartheid by giving previously disadvantaged groups economic opportunities previously not available to them.

Glenhove’s office is located in Athol Ridge Office Park in Sandton, a town in the northern part of the Greater Johannesburg Metropolitan Area. Sandon has become the new financial center of South Africa, and many of the businesses have relocated to this neighborhood, including the Johannesburg Stock Exchange. Sandton’s commercial district is new and shiny, built mainly during South Africa’s recent economic boom. Sandton is one of the most opulent areas in Johannesburg, or even in South Africa and Africa as a whole. But it’s not far from Alexandra - one of the poorest townships.  Glenhove is a small shop led by CEO Leonard Fine - it currently has 5 people working in a cozy office, including my supervisor Alun Frost. The concept of hiring an intern is something new to most companies in South Africa, and I am the first intern at Glenhove.

Two weeks into my internship on June 11, I participated in WPEF’s Trustee’s meeting where I had the opportunity to meet some of the most inspiring female business leaders in South Africa. The meeting was chaired by Wendy Luhabe, one of South Africa’s prominent social entrepreneurs and a co-founder of Women Investment Portfolio Holdings (WIPHOLD), an investment and operating company owned and managed by black women. Other trustees included: Veronica Devine, founder of Justine, a cosmetics company which was acquired by Avon; Jessica Knight, former McKinsey partner who currently heads the Business Solutions division at UCS Solutions; Katinka Schumann-Bester, EVP of the Industrial Development Corporation; Clara Priester, Branch Chairperson of Business Women’s Association; and Gloria Mamba, Senior Investment Officer at the Development Bank of Southern Africa. It was a privilege to sit next to such exceptional business women and listen to their discussion on the Fund for two hours.

It has been four weeks since I started my internship, and I have been involved in a wide array of tasks at Glenhove: analyzing the performance of existing investments; evaluating several new investment opportunities across various sectors; preparing reporting data for the Trustees of the Fund; and reviewing the investment memorandum for the new Pan-African Fund. I am very excited about the prospect of meeting with more entrepreneurs, understanding the mechanics of private equity, and balancing the financial return with a social mission.

Journal 2:

One of the unique aspects of working for a private equity fund in South Africa is Broad-Based Black Economic Empowerment (commonly known as “BEE”), a program launched by the South African government to redress the inequalities of apartheid by giving previously disadvantaged groups economic opportunities. BEE includes measures regarding employment equity, skills development, reverse racism, ownership, management, socio-economic development and preferential procurement. Companies are granted “points” based on their level of compliance with the BEE Codes. BEE compliant or “empowered” companies are eligible for doing business with the government.

Many of the private equity deals in South Africa have been influenced by BEE. At Glenhove, WPEF has been able to address certain BEE issues through increasing ownership by black South African women, empowering management by providing exposure to its national and international business and financial networks, assisting with shaping strategic and marketing focus, and improving management and reporting processes. In addition, Glenhove itself is considered an empowered company as it is partly owned by Vunani, a black-owned financial institution.

Although I believe in the importance of BEE to address the historical inequality that still divides the country to date, the strategy also has the risk of benefiting a few rich black people without empowering the low income population. I also find it strange that the race category in South Africa is only black and white – something I struggle with, as I am neither. Interestingly, in June this year the Pretoria High Court accepted the Chinese as a “previously disadvantaged” group in South Africa, making them eligible to take advantage of BEE.

Another interesting aspect of the internship has been meeting with entrepreneurs at portfolio companies. I was invited to attend a few Board meetings, and it has been a wonderful experience to understand the challenges and opportunities each entrepreneur faces in South Africa. One of the portfolio companies I visited is I-Slices, which developed a range of products that alleviates stress around the eyes. The company is founded and headed by Kerryne Kraus-Neufeldt, whose title is “Chief Excitement Officer.” She is a very energetic business woman who is extremely passionate about her business. I-Slices has won numerous awards including innovationTOWN’s iEntrepreneur Award 2007, Business Women Association’s Regional Business Achiever Award 2007 (Johannesburg Start-Up Category), and Technium International. I have tried the sample at home and enjoyed the soothing feel on my eyes – I hope the product makes it to New York City!

Journal 3:

Looking back at my internship at Glenhove over the past 9 weeks, I was fortunate to have had the opportunity to work on a wide range of tasks:

“When we approached private-sector investors, the usual response was that women are a risk. ‘Why do we need a women’s fund?’” said Wendy Luhabe, the chairperson of WPEF, of the initial reaction of potential investors. Now the fund is almost fully invested, with a reasonable financial performance record despite the recent market downturn, contrary to such concerns. Of course, balancing both the financial and social returns is not easy. However, I believe that Glenhove has been able to add value to the woman-owned/managed businesses through its national and international networks and by strengthening governance, management, and reporting practices. My experience this summer reconfirmed my belief that private equity is one of the most meaningful ways to make a positive difference to Africa. I was glad to have been able to contribute my financial and business knowledge, and skills I learned at Columbia, to the team at Glenhove.

It was very sad to leave the office on my last day, as I was feeling comfortable and accustomed to being part of the small but intelligent and friendly team. My colleagues kindly hosted a small farewell party for me at a local bar on my last day in the office.

On the side note…after my internship I took the opportunity to travel to St. Lucia Wetlands, a UNESCO heritage site in South Africa. The park is situated in the northeast coast of KwaZulu-Natal in the kingdom of the Zulu. With a surface of 328,000 hectare and an impressive 280km long coastline the park is considered the third-largest in South Africa. The St Lucia Estuary and Lake St Lucia are the home of the biggest population of crocodiles and hippos in South Africa...the last count of 2,500 crocodiles larger than 1.5 meters and 1,500 hippos!

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