By Ian Armitage
Richmark is one of South Africa's leading angel investors. It is in the business of finding the BIG businesses of tomorrow, nurturing them, supporting them and pushing them forward.
The business was founded in 2000 with the goal of helping talented South African entrepreneurs build companies from scratch, focusing on very early stage businesses.
Formed by Gavin Varejes, a leading entrepreneur, businessman and philanthropist, Richmark started out investing in very early stage businesses. The focus was on telecoms, as Mr Varejes saw that as the "next great investment sector". His vision was prophetic. Vocall Cellular (Pty) Ltd was one of the first investments Richmark made and today it is listed as one of Vodacom's largest Super Dealers. Another successful Richmark investment was a company called Cellfind (Pty) Ltd. Richmark invested in it at a very early stage, exited through the sale to Blue Label Telecoms Limited on its listing in November 2007 and today it is regarded as the leader in location based services.
Richmark has certainly earned its stripes and has developed a keen instinct for identifying pearls to invest in.
Africa Outlook caught up with chief operating officer Geoff Whyte for an update on the company's performance…
Geoff thanks for your time. How is the business performing?
Despite the tough economic environment, Richmark has performed well over the last year and we are on track to deliver our stretching five-year business plan. We have been insulated to a degree from what have undoubtedly been tough trading conditions by the strength of our customer relationships and excellent reputation in the sectors in which we operate. There are some significant challenges however – most notably the conservative approach the banks are taking to lending currently. This has meant that we have to manage cash flows carefully across the group. We have also spent a great deal of time working on appropriate financial models to accommodate the fast pace of change in our technology businesses.
Is there anything that stands out as a highlight?
We are particularly excited about our successful rollout of interactive touch screens to the South African cellular market through our BluChip subsidiary. Evolution Cycling Group has also acquired national distribution rights for Raleigh and Huffy – two leading global brands. This was a major coup for the company.
How would you sum up the current business environment?
The economic environment is very tough. This puts every one of our businesses under the microscope and reduces our margin for error.
Are there lots of opportunities for Richmark/investors like you?
The tightening of bank lending and our standing in the market means that we are being brought more opportunities than ever before. Our challenge is to focus on those ideas with the greatest potential and those that fit with our core strengths as an organisation.
What are some of the recent trends you've witnessed?
As the cellular market reaches saturation, we've seen a slowdown in the rate of growth in this sector. At the same time, we've observed that the rate of technological advance is accelerating. Market demand has also been impacted negatively by the reduced availability of personal credit. This has affected most areas of the economy.
A big driver for you is making cellphones more readily available in rural SA. How is that going?
We responded to a call from Nelson Mandela to focus on making cellphones, accessories and airtime available in the rural areas of South Africa. As an added bonus, this venture has also been commercially very successful. Our ability to tackle complex challenges of this nature lies in the diversity of companies across the Richmark Group. This allows us to put together customer solutions based on a combination of capabilities that no-one else in the market can offer. That's given us an edge over the competition on many occasions.
To learn more visit www.richmark.co.za.