Business Rescue does not necessarily signal that a business’s days are numbered, says Vincent Langlois, senior executive at Nimble Special Opportunities. In fact, it can be an important turning point for great businesses that require restructuring, fresh capital, or a reinvigorated business plan.
Nimble Special Opportunities was established in May 2021 by the Nimble Group with the specific purpose of providing capital solutions to distressed corporates across Sub-Saharan Africa. Over the last 24 months, during a time of unprecedented economic upheaval resulting from the Covid-19 pandemic, we have helped turnaround several successful South African companies.
Having joined Nimble Special Opportunities in May 2021, as the pandemic was finally showing signs of easing, I experienced two opposite emotions, one being optimism, and the other being despair.
I was excited about the opportunity. My optimism being fuelled in part by the challenge; Nimble Special Opportunities is one of the few businesses in South Africa established to actively create solutions for corporate distressed situations. I knew we could be pioneers in this space and I was excited to bring together a team of former colleagues to join our mission.
On the other hand, it was hard not to feel a sense of despair as it became increasingly apparent that so many, once-were-successful South African businesses were struggling to survive the fallout of the Covid-19 pandemic and the onslaught of rolling blackouts. South Africa is a country that often finds itself at the edge, and this was pretty much the precipice.
However, there was only one option facing us, and that was to roll-up our sleeves and get involved. We haven’t looked back.
In 2022, according to the Companies and Intellectual Property Commission (CIPC), approximately 4,370 South African companies entered into Business Rescue. Yet, while there is an increasing need for targeted solutions in the underserviced corporate distressed debt market, South African lenders do not typically service this market. In comparison, Europe has various distressed debt funds; according to a special report of Private Debt Investor, distressed funds raised more than $44 billion in 2021 (up 21% since 2020).
Nimble Special Opportunities was established to create solutions for corporate distressed situations. It is part of the Nimble Group, a well matured, highly successful consumer business, with a successful track record in asset management and extensive experience in corporate debt and restructuring.
To date, Nimble Special Opportunities has raised R2.1 billion through two funds raised and supported by on-balance sheet capital. The capital was sourced from Nimble Group, the International Finance Corporation (a member of the World Bank Group) and other local financial institutions.
Our mandate includes the provision of structured capital solutions to distressed corporates from debt through to equity. As a distressed debt investor, we look for good companies with weak balance sheets. Companies that, although they are in financial distress, have a good business model and an in-demand product or service. Our deal team has a proven track record in restructurings and turnarounds.
When it comes to Business Rescue proceedings, the first goal is to rescue a company from financial distress and avoid liquidation. Business Rescue practitioners do this by enabling the distressed company to reorganise and restructure its affairs, assets, equity, debts, and liabilities. Access to capital to finance operations and execute on a balance sheet restructuring plan is therefore critical. This is where we step in.
Our investing philosophy is built on three principles. Firstly, understanding the liquidation scenario, to ensure a fundamental understanding of the asset base and capital structure of the business. Secondly, we structure the deal to benefit from upside, and lastly, but no less important, we are active managers. Holding a board position in the business is non-negotiable. We look to drive strategy, re-build and grow businesses alongside our management team. One thing we do not do, unlike some corporate funders, is asset strip the business for profit.
Nimble Special Opportunities’ investment mandate allows for broad capital participation across the full spectrum of debt and equity instruments, providing us with the ability to craft an appropriate solution for the businesses we invest in. Our mandate enables us to participate across the full spectrum of distressed corporate situations, including non-performing corporate loans and exposures related to distressed equity positions.
At the core of our investment purpose is our commitment to providing sustainable solutions, which contribute positively to the societies and environments in which we operate. As a team, we are cognisant of the positive impact we can have in the capital we deploy to turnaround businesses.
In South Africa, the creation and preservation of jobs during difficult economic times remains our greatest challenge. As a country with one of the highest unemployment rates in the world (32.9% as of June 2023), every single job we can protect is critical.
We have successfully invested in six companies, across several sectors, since 2021. By helping to turnaround these businesses, we have directly impacted the employment stability of over 650 people in the South African economy. This is something I believe we can celebrate and continues to motivate our deal team.
When reflecting on the impact our investments have had over a relatively short timeframe, I am excited about the opportunity that lies ahead. There are many distressed companies in South Africa that would benefit from restructuring capital to turnaround successfully, however it remains a challenge to access restructuring capital. We are proud that Nimble Special Opportunities is able to contribute during this critical time for our country.
