Acorn provides several defining and differentiating qualities to our investors and our targeted investee companies:
Alignment of interest
Acorn is and will be a significant investor into each of its funds and will therefore have the same interests at heart as our fellow investors. The Partnership agreement has been structured to provide the investors (limited partners) with maximum protection. As General Partner, Acorn General Manager (Pty) Ltd does not have the benefit of limited liability.
Acorn has identified the opportunity to invest in very promising Small and Medium Enterprises (SMEs) that fall outside the mandates of the larger institutional private equity investors. This relatively untapped market has arisen due to the targeted deal sizes of most private equity houses in South Africa that are currently focusing on larger transactions (in excess of R100m). Acorn will focus on deals below R100 million and, as a result, have limited competitors and be more likely to negotiate favourable prices with target companies. This also bodes well for deal flow. Acorn will, however, also look at larger deals if the opportunity is attractive. In such cases, alternative options such as co-investment or investment through an SPV shall be considered.
Acorn has endeavoured to align itself with several key players in the targeted investment markets to ensure on-going deal flow and maintain a competitive advantage. These strategic alliances further provide invaluable insight into a wide spectrum of promising industries.
Investment track record
The Acorn managers have proven track records of delivery and performance in the industry. It is worth mentioning that the principal of Acorn has shown historic annualised returns in excess of 62% for the 7 years ending February 2009 whilst at PSG. Although Acorn will not attempt to match these exceptional returns, it is an indication of the ability of the key individuals to achieve superior returns over a long-term period.
Positioning and timing
“History shows that the best private equity funds are born after the ends of recessions.” David Snow.
Acorn has positioned itself to take advantage of the current pricing in the markets and is able to enter into transactions on very favourable terms. The current economic situation has created opportunities to build a very profitable portfolio at substantially discounted prices. Acorn will also apply appropriate exit strategies to take advantage of the market cycles and maximise partners’ returns once the markets and economies have stabilised.
The key individuals of Acorn Equity have in-depth private equity experience and a strong understanding of Southern African markets.
Acorn has chosen to be a FSB registered investment manager. This is not a requirement for Acorn, but serves as a strong governance process to provide comfort and security to all investors. Acorn is absolutely committed to doing business in an ethical way, and will act honestly and ethically in all of its dealings and negotiations with business partners. In addition, Acorn has also opted to outsource its compliance function to Moonstone Compliance (Pty) Ltd – an independent provider.
Selective deal making
Acorn will be very selective in the transactions that it enters into. Acorn’s strong deal flow potential will allow us the luxury of being selective about the investments we make. Up to two seats on our investment committee will be made available to Partners invited at the discretion of Acorn. This will allow those partners to contribute and partake in the management and decision making processes at a strategic level. Acorn will also appoint independent non-executive members to the investment committee.
Strict risk management
Acorn will endeavour to achieve returns superior to the industry standard without assuming additional or unnecessary risk through its investments. Acorn will not enter into potential high-return transactions if the risk is deemed to outweigh the potential returns of the transaction. All partners need to accept that a higher degree of risk is inherent in the industry, but that Acorn will strictly manage and limit that risk, within reason.
Creative approach to acquisitions and operational expertise
The Acorn team has proven its ability and experience in being creative and innovative when it comes to the structuring of acquisitions, the disposals of investments and the closing of transactions.