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COVER STORY: The thrill of dealing


Tshego Sefolo CA(SA), CEO of Zico Capital, runs and manages a private equity firm, one of the most exciting and rewarding careers around, he says. Eamonn Ryan spoke to him

Tshego Sefolo distinctly remembers the day in the early 1990s that he recognised his goal in life – the moment he read of the then-biggest M&A of all time, a US$25 billion acquisition by private equity firm KKR. ‘It seemed so exciting. I decided that I wanted to be making the tough choices, real-life business decisions with the power to improve people’s lives, to create real jobs, and that I wanted involvement in the full cradle–to-death cycle of businesses rather than momentarily consulting to a firm and moving on to the next assignment with no real sense of responsibility. Looking at that deal also showed me how one could use third party capital to buy an equity stake in a company and combine in one function all the tools I’d acquired throughout my business studies.’

Today he manages a R1 billion captive private equity fund called Zico Capital that is into its seventh year of investing, with Tshego at the helm throughout. After completing his degree and training with EY, his KKR epiphany led him to seek a job with Ethos, the leading private equity fund manager of the time, a business into which he was immediately plunged as one of the few black professionals in the industry at that time.

‘Ethos was an incredible experience that enabled me to gain deep experience in an industry which was still in its infancy in South Africa – some of the transactions I got exposed to were quite revolutionary for the time.’ In fact, it was touch and go that he was working in South Africa at all. He’d been seconded by EY to London and was subsequently offered a full-time UK position by KPMG. Literally on his way to start his first day, Tshego looked at the pallid faces of sun-starved commuters on the train and instantly had a change of heart. ‘I made a very painful telephone call from the next station,’ he says.


Tshego advises young trainees never to take any aspect of their training for granted. He quips that even stock takes have management lessons. He’s since come to appreciate many aspects he didn’t at the time, and worries that current trainees are probably also taking the experience for granted. As a fund manager visiting ordinary factories and businesses as potential investments, he recalls how much he learned doing stock-takes on Saturday mornings, when at the time he wished he was anywhere else but in some highveld mining town.

‘You know, the benefits of CA(SA) training are sometimes the subtle ones which graduates seldom appreciate at the time, such as the networking one is exposed to and which one really only appreciates much later. Those years are invaluable for gaining contacts and getting advice, something which cannot be quantified. Knowing what I know today, I wished I’d networked more – because many of my peers from those days today hold senior positions throughout business. They are your future support and infrastructure, and you limit yourself by not fully utilising it,’ explains Tshego.


Tshego had a lot of friends in investment banking, and with his own by now considerable experience in private equity he joined Zico, which had recently established a private equity fund. With the backing of RMB Corvest the fund kicked off with R500 million of capital available to be invested.

Having fully invested that first tranche of capital into businesses like Provantage, Autovest, Henkel SA, Innovation Group and Aquatico, Zico Capital recently raised an additional R500 million.

Tshego’s role involves keeping investors happy, deal origination, and execution and post-deal value management, as well as managing the day-to-day running of the business, including the management team.

While that covers just about everything in private equity, Tshego isn’t at all a micro-manager. ‘I’m empowering in my style of management, lead from the back in order to enable the business to embrace and develop talent. I allow people to claim the spotlight and be leaders in their own right and get on with their jobs, but do put my foot down that they deliver the required outcome.’ The business cannot be allowed to get out of control, so the flip side of his understated management technique is that he’ll take decisive action whenever necessary.

The fund has a mandate which targets a set minimum return for investors. ‘The fact our investors entrusted us with a further R500 million points to our disciplined approach to investing – but in doing so, mediocrity cannot be tolerated.’


‘As a CA(SA), one has a reputation to uphold. I don’t listen to excuses. Usually, by the time we realise an intervention is necessary in some of our investments, it is really too late. An intervention therefore has to be decisive. Of course, we aim to avoid interventions by studying numbers and statistics rather than excuses,’ he says. Early warning signals of the need for intervention can be addressed by constant monitoring, training and succession planning.

Private equity, like investment banking, is a glamorous industry that attracts its share of self-seeking opportunists. For this reason, Tshego strictly emphasises measurable and tangible numbers when evaluating staff and new hires and their performance. He has learned to do so the hard way, he says, from having employed some individuals based on false promises only to later discover they ‘lacked commitment’.

The dividing line between excuse-making and delivering the required return lies in ‘commitment’, says Tshego. When hiring someone, commitment is what he is most sensitive to – a passion for the job and having a shared work ethic with the rest of the team.


‘Shared commitment’ is another way of saying shared values, and Tshego believes that underlying all other values is honesty and guarding against arrogance. He believes that simply being honest relieves a lot of management pressure as he never has to ‘spin a story’. The same principle applies to dealing with the firm’s stakeholders. Tshego says his own core values of honesty and integrity permeate the business and have in course inspired trust among external stakeholders.

This is the root of much of the firm’s success: ‘I think I live these values and am sensitive that the firm similarly display them. It is not always an easy path to follow, but personally it makes me more comfortable with decision-making. It is also largely for this reason that we receive so unsolicited offers wanting to work with us, because people hear of how we operate and feel they would be more comfortable dealing with us,’ he explains.

What gets Tshego up every morning is what first attracted him to private equity – the thrill of deal-making. He believes there are deals to be made in unusual places – uncovering the potential value creation that has not already been spotted by anyone else, and executing it. ‘From this comes the potential for unlocking that value through all sorts of innovations and strategic guidance. It requires both discipline and a creative, agile mind to spot the opportunity, as well as a nimble structure to seize the moment and bring it to fruition.

‘But the fun doesn’t stop there. I get a big thrill from sitting on portfolio company boards, from which ideas originate and which in turn informs our investment thesis.’

Another key value of the firm lies in its ability to create long-term relationships. Once a deal is struck, it becomes a matter of partnership. ‘It doesn’t matter how compelling an investment case is initially, the success of a transaction is predicated on the quality of the partnership we can forge with the management of the portfolio business. Over time, there is a realisation that we bring more than just capital – we’re long-term partners that have strengths in accessing capital, strategic input from our own skills sets and experience with a wide range of businesses, market savvy from exposure to a wider landscape, and finally from simply bringing an independent viewpoint which the businesses we invest in often appreciates more than any other benefit from the partnership,’ says Tshego.


He has definite views on the undesirability of job-hopping among young – and especially black – CA(SA)s and aspiring accountants. For this reason he spends a lot of time mentoring young people both within Zico Capital and outside the firm. ‘I find the experience of mentoring someone a refreshing one. Mentoring is a highly important activity, as I have travelled the same route in my years of working life that others are only now embarking on. People of every generation ask the same questions, but the answers change from generation to generation and we can learn from each other. What I try inculcate in youngsters is the need to stay the course. Many young people find themselves thrust for the first time into a business environment where they can earn more money than their families ever had before. They can be easily tempted to deviate from their dream in favour of immediate financial gratification,’ he says.

‘It is something they may regret when they look back at 20 years’ experience, because the most important factor in crafting a career is to become good at something – to have a core competency. That is the major difference between having 20 years’ deep experience as opposed to 20 years of repeating the same thing.

‘Your career is a reflection of how you will deal with any specific project. Challenges are there, but they should not be seen as something meant to break you but to help you gain experience. It will give you conviction and belief in yourself, but above all will give you the character to persevere – and in a professional, perseverance is fundamental. The difficulty is that it is not until you have persevered to the end that you recognise that it was worth persevering,’ says Tshego.

There are many points at which an aspiring CA(SA) will feel discouraged and demotivated. Tshego says that in his own career, university lecturers seemingly did all they could to let students know they had little chance of graduating. Even when he did qualify as a relatively young CA(SA), Tshego still had to endure patronising talking-down to him by more senior people. He developed a trick to manage this: he learned to ask them one of life’s typically ‘stupid’ questions only to see them flounder to answer.


To balance the high-risk world of decision-making that affects dozens or hundreds of livelihoods, Tshego relaxes with equally high-risk pastimes such as advanced scuba diving in some of the most exotic diving locations in the world, which he describes as ‘a humbling experience being 100 feet underwater’ and distance running, ‘which gives time for reflection on decisions which have to be made and may incur significant downside, and puts them into perspective’.

Tshego sees a bright future for the business. The Zico capital fund manager has recently been restructured following the buy-out of the majority shareholder, enabling management and staff to become significant shareholders, thereby aligning their interests with those of investors. Tshego says he’s particularly proud that women have now become substantial shareholders.

Author:  Eamonn Ryan