Our Focus

SaltLight focuses on long-term opportunity sets within the South African and African public equity markets. It goes without saying that South Africa’s, and Africa’s, development is still in its infancy.

Our colleagues managing developed market capital lean towards opportunity sets that underpin technological disruption or global expansion. We tend to focus on opportunity sets that have considerable demographic demand from consumers and the businesses that serve them. We think of them as laying the ‘pipes’ of a developing nation: housing, transport, consumer brands, education and financial inclusion.

Within these opportunity sets we seek to invest in businesses that have (1) potential for high returns on capital, (2) management with integrity, (3) the ability to appropriately reinvest capital into further opportunities and, lastly, (4) a discount to intrinsic value.

Our portfolio is, oddly, highly skewed to entrepreneurial founders that have sufficient track record and are adept at tackling the challenges of emerging economies.

Solving Customer Needs

Emerging markets are generally volatile with bouts of extreme euphoria and pessimism. Our investment thesis usually rests on the management team’s ability to solve their customer’s needs; allocating shareholder capital to opportunities that will yield long-term benefits to our partners.

• It is forecasted that African cities will grow 3% per annum over the next ten years (equal to 27m people per annum).
• Only 10% of all retail in Africa is formal
• In South Africa, there is a supply shortage of 2m affordable houses.
• Only 34% of South Africa’s population drives to work. 21% still walk to work.
• Only 3% of South Africa’s students attend a private institution (vs. a global average of 16%)

Our Research Process

We are a research-based firm that rarely utilises sell-side research. Even if we desired to use sell-side research, very few of our investees are well-covered by research houses. Fortunately, key industry information is often not easily available on the typical investment data services which provides us with a ‘informational edge’ in some cases.

Our fund size allows us to take advantage of regularly occurring market inefficiencies that exist in South African public equities. Diligent work and a thorough process allows us to have a deep conviction when other market participants have shorter-term perspectives.

The pace of portfolio turnover may appear to outsiders that our style is rather ‘passive’ and ‘unexciting’. We try to be humble and honest about what we don’t know. We also tend to spend time in pockets of industry knowledge that many would say are unnecessary to understanding a particular company. This means that we only manage to execute on one or two ideas a year.

Despite bouts of negative quotation losses from a particular investment, we tend to hold onto investees beyond what many would bare – unless our investment thesis is no longer applicable.

Investment Partner Base

Our strongest ‘edge’ is our investment partner base that matches our long-term orientated nature. Without whom, we would not have an ability to take advantage of the time horizon perspectives between many market participants and our long-term focus.