The Letsema Group, and its constituent parts were all founded and registered at the same time in 1996. Over the last few years, Letsema Investments has expanded its portfolio to include Cirebelle, Normandien Farms and ServWorx, three companies operating in three different industries, but all connected by a common thread.
Our founder and Chairman, Isaac Shongwe, talks about business being a catalyst for social change. Our purpose through all of our activities in Investments is how we can build sustainable businesses that are a force for good in society. A big part of that is investing our money into industries that we feel have an outsized impact on the economy and society through employment. We love investing in businesses that make things. This naturally leads us to industrial and manufacturing type businesses, which tend to be labour absorptive.
Businesses in the manufacturing and industrial space tend not attract too many suitors, who wear a cynical capitalist hat, because of the risks they associate with labour intensive sectors: unions and industrial action.
We’re aware of those risks but run towards them because we believe in the impact Letsema and those industries can make socially and economically.
Letsema Investment’s current portfolio spans chemicals manufacturing (Cirebelle), structural timber, forestry, water and dairy (Normandien Farms) and niche textiles and industrial services (ServWorx). This diverse spread reflects Letsema’s industry agnostic approach.
What Letsema is not agnostic about is the criteria we use to assess potential investments and business partners. These are always consistent and rigorously applied.
It must be commercially interesting because if it isn’t, it cannot grow. We need great operating partners who are excellent at what they do, otherwise you cannot scale. Scale is key because if you’re not growing, you’re not using that platform to make an impact on the economy.
There needs to be a growth story and part of that growth story is a great team and a great team that we are deeply aligned with from a values perspective. We’re investing our own balance sheet and are fundamentally long term so things like values matter.
The emphasis on long term is borne out in Normandien and ServWorx both being family-owned and run businesses that think generationally, not quarterly. This inter-generational outlook and these family values, as do Cirebelle’s, resonate with us at Letsema. All three are capable of exponential growth, operate in complex sectors and are highly labour absorptive.
Our approach is based on these fundamentals: great operating partners who are excellent at what they do and whom we are aligned with from a values perspective, the ability to scale to affect real change and business as a catalyst for social change. It always returns to the Figure of 8. That is the lens through which we evaluate every single possible investment.
We’re looking to get married. We want partners who understand who we are, are aligned to the way that we think and only want to partner with us for these reasons. They understand we want to get involved and add value. In, fact the right partner will demand this from us.
We are unapologetically active shareholders who get involved in the companies we invest in. Letsema wants to be part of a business’s growth story and add value wherever possible. If there is no opportunity to do so, we will put our time, money and curiosity elsewhere.
Letsema fundamentally believes it has value to add. This is the bedrock of any functional partnership and as a business, we want to roll up its sleeves. This is what gets us out of bed.
In order to add value, you can’t spread yourself too thin. You can only divide yourself into so many pieces. To keep our promise of wanting to get involved and add value, Letsema focuses only on a few opportunities so we can do them really well.
We want to work with platform businesses, by which I mean businesses that we are aligned with from a values perspective but have a team that are capable of scaling and running a business far bigger than the one they presently have.
Once Letsema Investments finds the right partner, all our energy is directed wholeheartedly into these businesses, no questions asked. In 10 years, the Investments team envisages Letsema having three or four enormous businesses, instead of having minority stakes in 15 businesses where it would be difficult for us to add value.
It’s not a transaction to Letsema but a long-term partnership. Private equity really is marriage with an inbuilt divorce in five years, which is completely at odds with the way we think.