Singing Africa's praises
SPORTING what he joked was his "Gordon Gekko"
shirt, Irish rock star Bob Geldof cut an unlikely private equity figure on
Wednesday as he exalted the industry's virtues and urged top financiers in
their annual gathering to invest in Africa.
Speaking for an hour without notes at the SuperReturn
International conference in Berlin, Geldof made an impassioned address peppered
with expletives designed to tug on heartstrings but also appeal to private
equity's profit-making instincts.
"You must go and kick the tyres. You are the guys who
go where capital needs to go. Capital will only go where it is sent,"
Geldof said, stretching out his arms as if to reach his audience of private
"Do we leave this vast continent, with all the
resources we will ever need, do we leave it to China? Eight miles from Europe,
do we just leave it to them?" he asked, referring to the distance across
the Strait of Gibraltar separating Spain and Morocco.
Geldof first became famous as the frontman of Irish punk
rock group The Boomtown Rats, but his work on Africa has overshadowed his early
rock career, with his name forever tied to the Band Aid single and Live Aid
concerts that raised millions of dollars for African aid.
He is now the chairperson of an Africa-focused private
equity fund which said earlier this month it had raised $200m from investors,
close to half its targeted size of $450m.
Dubbed 8 Miles, the fund plans to invest in companies that
can develop into "African champions" in sectors such as agribusiness,
telecoms and consumer goods.
"We put together our little thing - a goldilocks thing,
not too small, not too big, just right. And we will make a lot of money, a lot.
For me I want to leave behind me firms, farms, factories. F*** the money,
that's me," Geldof said.
Rate of return
The fund is promising investors an internal rate of return
of over 25% after a year in which the S&P 500 US stock index was flat and
investors were hungry for yields they cannot find in listed equities and bonds.
"He is so right, Africa has great potential, and he was
really good in his presentation," said Wael O Bayazid, a managing director
with private equity firm Carlyle Group, which is raising a sub-Saharan African
Private equity is often criticised for saddling companies
with debt only to sell assets, shed jobs and take out profits - an image which
has not helped the US presidential candidacy of Mitt Romney, a former private
"I have learned that private equity, contrary to the
Romney-esque debate in the United States at the moment, can be a major vehicle
for positive change in this world," Geldof said.
Geldoff referenced the big payday of some of private
equity's titans, including Henry Kravis and George Roberts, who got $94m each
in 2011 from buyout firm KKR & Co, in also making a wider case for
"You have got the four houses, the three jets, the 10
cars, the 65th f****** Picasso. What's the point? So it's stuff, and right now
it's the stuff that will get us out of that mess," Geldof said.