Private equity pioneer! Helios CEO Tope Lawani on his career journey, the future of fintech, impactful investing, and so much more


On this week's Walker Webcast, we’re joined by Willy’s Harvard Business School classmate, private equity pioneer, Tope Lawani. Tope’s firm, Helios Investment Partners, is the largest private equity firm in Africa, focusing on technology, infrastructure, and sustainability. Tope and Willy discuss his upbringing, education, and career journey as well as investment opportunities in Africa, the future of fintech, and so much more.

Tope begins by telling his origin story, which seems to be a perfect preparation for his immense contributions today. Surrounding his childhood home were neighbors from Taiwan, Israel, Korea, Jamaica, and Sierra Leone – learning and interacting with people from different parts of the world. Tope shares, "I grew up in an extremely multicultural environment. From the get-go, I was always comfortable with everyone coming from different backgrounds. I went to school with the kids from all strata of society. They were children of the president, the vice president, all the heads of the armed forces. But equally, a decent percentage of my school kids were probably the first kids in their entire family history ever to go to school. They turn up to school with all their belongings in a sack of rice." Tope adds that his unusual childhood can be difficult to replicate in this just the way the world is these days. 

Working for TPG Capital from 1996 to 2004 taught Tope to be creative, entrepreneurial, hard-working, and empowered. He later moved on and started his own firm, Helios. Raising that first fund exclusively focused on Africa was no walk in the park. "There was some benefit of just naivete, which helped to be honest, because I think a first-time fund in a pretty niche market is either impossible or it's easy. There's no such thing as it's in the middle. It's either just it won't happen, or you might stumble into some blind luck, and then it happens."

From telecom towers, undersea cables, oil and gas, fintech, and more — there's so many to start for Tope where everything he touches seems to turn to gold. Helios is a 6-time award winner for Firm of the Year for Africa by Private Equity International. It's amazing how substantial the capital they've raised for infrastructure investments is. "There are many great things, and I think better about investing in Africa. We've pioneered and have been first in discovering many things. The economic infrastructure needs to exist at some point, and we have to build it now as opposed to buying it."

Key ideas: 

[00:49] Willy introduces today’s guest, Tope Lawani
[03:20] Tope Lawani talks about growing up in a multicultural environment
[05:29] Tope attending university in the U.S. because of his father
[08:07] Tope’s reasons behind getting a JD/MBA
[11:07] Tope’s deep connection with law school as an institution
[16:26] The three values Tope has applied in building Helios
[19:41] How Tope appeared in a J.Crew catalog
[22:10] The novelty of the strategy and the interest in Africa brought Tope to his first fund
[27:35] Africa’s need for more infrastructure which inspired Tope in his towers business
[31:00] The challenges of creating a tower business in Africa
[32:32] The Kenyan government’s involvement in the Telecom Kenya investment and the disaggregation of the mobile and tower businesses
[37:28] The future of telecommunications and the internet in Africa
[40:15] The differences of operating upstream and downstream gas companies in Africa vs. Western nations
[45:53] Choosing more socially conscious investments
[48:51] The limitations of a nuclear energy business in Africa
[50:18] Africa’s higher reliance on Tpay vs traditional banking
[53:03] Bayport’s model and the underdevelopment of capital markets
[59:32] Tope’s aspirations in owning Chelsea F.C.
[1:01:40] Thank you to Tope for joining us today! 


Learn more about Tope Lawani and Helios.

Webcast Transcript:

Willy Walker: Good evening to those people in Tope’s time zone over in Europe and good morning to those in my time zone on the West Coast of the United States. I'm actually in Mexico today. It's a real pleasure to have my old friend Tope Lawani with me today.

Tope Lawani is a co-founder and Managing Partner of Helios Investment Partners and co-CEO and a director of Helios Fairfax Partners. Prior to forming Helios, he was a Principal in the San Francisco and London offices of TPG Capital, a leading global investment firm managing private equity, venture capital, credit, and real estate investment funds. At TPG Mr. Lawani had a lead role in the execution of several significant leveraged buyout and venture capital investments, including the acquisitions of Burger King Corp., Debenhams plc., J. Crew Group, and Scottish & Newcastle Retail. He began his career as a Mergers & Acquisitions and Corporate Development Analyst at the Walt Disney Company.

Mr. Lawani serves on the Boards of Directors of Helios Towers, Vivo Energy, Axxela, ZOLA Electric, OVH Energy and Mall for Africa. He also serves on the Boards of Directors of the Emerging Markets Private Equity Association (EMPEA) and The END Fund, a leader in the global health movement to tackle neglected tropical diseases. Mr. Lawani is a member of the MIT Corporation (Massachusetts Institute of Technology’s board of trustees), the MIT School of Engineering Dean’s Advisory Council and the Harvard Law School Dean’s Advisory Board and has previously served on the Overseers’ Visiting Committee of the Harvard Business School. Mr. Lawani received a B.S. in Chemical Engineering (with a Minor in Economics) from the Massachusetts Institute of Technology, a Juris Doctorate (cum laude) from Harvard Law School and an MBA from Harvard Business School. He is fluent in Yoruba, a widely spoken West African language.

So, Tope let's back up for a second here, my friend. Let's go back to Ibadan, the town where you grew up in Nigeria. What was your childhood like growing up there?

Tope Lawani: First, thanks for inviting me Willy it's great to see you (not on a bike) and thanks especially to your guests for joining. So, it's really good to be here. So yeah, I have had a fantastic childhood. I mean, I grew up in Ibadan, I went to a local Nigerian primary school, 100 percent Nigerians, pretty much. But, you know, my dad worked for an international research institute and so I lived essentially on a campus, if you will, and on that campus were probably close to 100 nationalities. So, in the five houses surrounding my home, my neighbors next door were people from Taiwan, Israel, Korea, Jamaica, Sierra Leone and so I grew up in an extremely multicultural environment and I was always from the get-go always comfortable with people from basically anywhere. And then actually I went to boarding school also in Nigeria, in the middle of the country. So, suffice it to say, it was not plush, you know, but what was interesting about the school is it was academically extremely strong, government funded and heavily subsidized, so it cost almost nothing to go there.

As a result, you had in that school basically all strata of society. I went to school with the kids of the president, the vice president, and all the heads of the armed forces. But equally, a decent percentage of the kids of my school were probably the first kids in their entire family histories ever to go to school. They turn up to school with all their belongings in a sack of rice, if you know what those things look like. So, this kind of childhood that I think was a little bit unusual and probably very difficult to replicate in the way the world is these days. It was extremely multicultural, extremely sort of socio economically kind of fluid. And I think that kind of just made me, you know, I've always been fairly comfortable, to be honest around people of any stripe, frankly. And I think that was, you know, a result of that.

Willy Walker: Was the plan always to go to the States or to Europe for college? Or was there a path that would have kept you in Nigeria for your entire career?

Tope Lawani: Statistically it was not uncommon if your parents were fortunate enough to be able to afford it for you, you could get an excellent primary school, secondary school education in Nigeria. And depending on what you were studying, maybe university as well. But clearly, as time went by, it became harder and harder to get a world class school of education. So, it wasn't unusual if your parents were able to afford it to send you off to school, to university in America or in the UK. So, for me, my family had always had more of a leaning towards the U.S. versus the UK. I mean, family sort of breaks that way. My dad went to get his master's in Columbia. So, I think going to the university in the states was kind of always on the cards. There was a moment when I thought I'd go to university to come here to the UK for university. That's a story for another day, but it was actually pretty interesting insight into the nature of this society and the American one. But anyway, we'll save that for another day. But yes, I ended up going to university in the US.

Willy Walker: And so, you get to MIT, you're studying to be a chemical engineer. How's that transition from going from a boarding school in Nigeria to Boston, Massachusetts, Cambridge and being a freshman at MIT?

Tope Lawani: Yeah, I think because of the way I grew up, to be honest, I don't really remember feeling too much of a culture shock. I mean, the workload was a bit of a culture shock. But day-to-day life, I think, was not. Yeah, there are lots of things that are different, but you sort of adapt to them, just different flavors. But you know, MIT actually happens to be a fairly international place and also happens to have among those sorts of large kinds of research and institutions among the highest sort of rates of kids who are first in their family to go to college, it's an unusually high percentage. It's a pretty diverse place as well. And so, I think, other than the workload, which is extraordinary. I think it was actually OK.

Willy Walker: Did all of your brothers also go to college in the states?

Tope Lawani: No, we sort of split, and you rightly pointed out I've got three brothers. I'm number two of four. So, brother #1 went to UC San Diego. #3 went to Edinburgh in Scotland and then #4 to Virginia Tech and went to grad school at Stanford. So, we all sort of scattered all over. But then, of course, all of them, with the exception of me, returned to Nigeria after college and jobs, et cetera, everyone sort of basically reconverged in Nigeria whereas I sort of stayed in the US. We've always been in and out, but Nigeria has always been a pretty strong gathering point. Nigeria has always been a very strong force of gravity for us.

Willy Walker: And why the desire to get a JD/MBA, because you couldn’t make up your mind on which degree was more important or useful, or because you really wanted to be the most overeducated person in the room?

Tope Lawani: I was young, and I had energy, man. (Laughs) That was then. I wouldn't do it now, that's for sure. The background to that actually was I started university in September of 1987. In October 1987, there was a big sort of market crash. I think everyone knows. And before that, I had no interest, knowledge or exposure, nothing about sort of financial markets or anything like that. But then after that market crash then followed the insider trading scandals with Ivan Boesky, Dennis Levine and Drexel collapsed and we had Wall Street the movie, so on and so forth. It was the first time, at least I think, where financial markets made it into kind of the general interest media. Right? And so, I just sort of read a lot about this stuff and kind of got interested in understanding it a little bit better – who did what to whom in the industry and so on and so forth. And it was then that I decided, you know, probably because I read Barbarians at the Gate. But anyway, you look at superficial things, but they all add up, right.

But so, I decided then that private equity was something as it was then for me was the thing that I really wanted to do. And law school I thought was interesting. My mom's actually a lawyer, but she went to law school quite late, so I was sort of aware of her going through it as she was going through it. So, law school was interesting to me and actually at the time, lawyers were pretty prominent dealmakers, people like Joe Flamm at Skadden and Marty Lipton of Wachtell. And so, they were in all of those sorts of stories. So, I applied to law school because frankly, I was quite young when I was doing this. I didn't think I'd get into business school, but I felt business school was what I needed for the vocation as it were. But probably I'd go to law school because I was probably too young and too inexperienced to be accepted at business school. I wasn't surprised that I was accepted into law school (but grateful though), yet I was quite surprised to have been accepted into the business school. In retrospect, I think what I learned about that is a bit different. But at the time, I felt like law school would be just because I found it interesting for some intellectual stimulation, but business school would be to give me the tools of the trade. And I think as it transpired, I have to say that I think law school for me at least has been every bit as helpful in what I do. You know, as business school has been, things like corporations, tax, and bankruptcy and all that kind of stuff.

Willy Walker: Do you have any relationships with your law school classmates? Because I certainly know you've maintained great relationships with your business school classmates. Are they still part of your life and do you check on what they’re up to as supreme court justices?

Tope Lawani: It's a really interesting question, actually Willy, because as you know, I have very close relationships with friends from business school. And I know so many more than I do from friends from law school. But I do have some very close relationships with a handful of friends from law school. But oddly, I'm much closer, more engaged with the law school as an institution than I am with the business school. I'm really quite involved with the law school. I feel it was quite transformational for me. A legal education especially in the U.S. and especially an institution like Harvard Law School is hugely empowering. And I do feel in a lot of respects that it was an institution it spoke to me a little bit more than business school did. Whereas business school, as a community of friends and colleagues, et cetera, you know, I have much more affinity for if that makes sense.

Willy Walker: So, you got out of HBS, and you went to work for TPG. Today we think about TPG, and its name is synonymous with the very biggest and most established private equity firms. But back in the 1990s when you joined TPG, it was not KKR, Blackstone or Apollo at that time, it was an emerging firm that had done well, but had none of the brand recognition that we have with TPG today. Talk a little bit Tope about when you joined TPG, did you think that you might stay there for your entire career? Was there always something in the back of your mind thinking “I'm here to learn a lot and then I might take that when I go back to Africa or Europe to do my own thing.” Or when you got to TPG was your thought like, “This is a great job, and I might end up being a partner at TPG and spending my entire career here.”

Tope Lawani: Super question, Willy. When I joined TPG, I think I was the 11th person there. It was a very small place, but I would say that it was to my mind, at least, it seemed to be a relatively short bet because, you know, Bonderman, Coulter and Price, in my humble opinion, I think from a pure investment capability standpoint, I think they're as good as they are out there. They had an incredible track record, at least, David Bonderman and Jim Coulter did from Robert Bass Group. And so, it was a bit like a big brand in a small company. So, from that standpoint, I had the most extraordinary time. They let me do things that no 25-26-year-old had any business doing. So, it was a phenomenal experience. I have to say that when I sort of settled into it, I loved my job. And for a number of years, I felt, this works just fine. I love living in San Francisco. I love the people I work with. It's great work and I'm well compensated for it. What's not to love?

But then interestingly, in my application for the JD/MBA program, which I wrote when I was 20 years old – my essay subject was actually about wanting to be essentially private equity investor in Africa, where I actually stumbled across it when we were moving house a couple of years ago, and I'd actually forgotten that. But clearly, it's something from the moment I got interested in markets and investing, I sort of always overlaid it against doing the same in the part of the world know best and feel most comfortable in.

So, I think that there came a time at TPG when I started to feel a little bit dislocated, if that’s the right word, just feeling like this is great but then what, I’m going to be 75 years old and living in San Francisco and retired. Nothing wrong with that, but I just feel a bit distant from my roots. And I think that was the time when I realized, okay, l do need to reorient here. And so, and look again, I mean, Bonderman and Coulter they've been phenomenal, right? I decided I wanted to move to the London office of TPG because I wanted to be closer to Africa. And I was fairly transparent about that. I wouldn't say it was okay with them. But suffice it to say, they made it their idea and then they kicked me out. So, I moved to the London office.

Willy Walker: Was there anything at that time watching Bonderman, Coulter and Price building TPG Tope, that you saw, and thought was distinct from the other PE firms and that you took that to the establishment of Helios? Either the tone, the way they invest, the way they run the firm, the way they bring in operational expertise – was there some piece to the TPG magic beyond just great people that you said, if I end up doing my own thing and then ended up doing Helios that you would take from that TPG experience and implement on your own firm?

Tope Lawani: For sure and there's a BUT at the end of it. What they did really well was hire pretty creative people who were fairly entrepreneurial, had a lot of hustle and just empowered them to go and find things that seemed interesting because they themselves are pretty interesting people. So, they did that. And in the way that we evaluated investments and discussed investments, it was as pure a contest of ideas as you could get. So, you sit in that investment committee and really kind of tearing apart the idea, not the person. There's nothing personal about it, but just really sort of the back and forth on the idea of just getting to the truth. So, this highly creative, highly entrepreneurial, truth-seeking sort of approach to things I thought was great.

Now the BUT at the end of it is that there are limits to the scalability of that. And if you have a firm of 11, 15, 20, 30 people, of these sorts of this kind of characteristic, all mostly sort of sitting in one office in San Francisco, I think it works very well. But when you then try to preserve that and you've got lots of outposts in lots of places, there's an organization Willy that you're familiar with, on all continents in Latin America, Europe, and Asia and in Europe, it does start to fray. I think that there are limits to how you can grow a freewheeling investment organization. And so, I think that gets manifests in all kinds of stresses in the system. TPG clearly sort of grew out of it a long time ago and as far as I know, it's a well-oiled machine.

But I think the lesson that I took away from that was, yes, I think that's the kind of person that you want to have in your firm, but really think hard about physical separation of your deal team. So, we have an office in London, one in Lagos, one in Nairobi and a small one in Paris. And, you know, in Lagos and in Nairobi, we have members of our portfolio operations team and that works really well. We don't have any investment professionals in either Lagos or in Nairobi. And I'm not saying that will never change. But I think it's this sort of aversion that I think I've developed of having people scattered all over the place. In private equity, we might think it’s what’s in the PowerPoint, but before the PowerPoint gets printed, there are the numerous individual decisions and judgments that have been made along the way. And when you're blind to that and you're not in the hallway and chatting about the deal and getting the full contours of it, you know there's risk there. So anyway, so look in a nutshell I think that kind of creativity, especially in our market, you need that creativity, that flexibility and that adaptability but it imposes limits on the institution.

Willy Walker: So, before we move from TPG to Helios, I need you to tell our listeners about how you got into the J. Crew catalog.

Tope Lawani: You swore that this would not come up. (Both laughs) In fact, did I? I don't recall.

Willy Walker: I think what you told me before coming on and do this, you said the one thing we're not going to talk about is how you got into the J. Crew catalog, but I want to know the story about the buyout of J. Crew and then being asked by J. Crew to be in their catalog.

Tope Lawani: That was actually highly embarrassing. The history of TPG’s involvement with J. Crew is that a dear friend of mine, Cary Woods is a film producer who happened to be married to Emily Woods, who is the founder of J. Crew. I mean, her father funded her, but she really is the driving force behind it. When her father was sort of getting on and needed to sort of think about transition, she was interested in getting out from underneath his shadow, if you will. She was keen to sort of find a way to buy the business. Through Cary, Emily and I had a sort of chatted. I introduced these guys in San Francisco who might be just your people. And so, we went with Coulter and that's how we ended up J. Crew ended up. So that was actually the first deal that I worked on at TPG, and I was actually still at business school, in my fourth year of grad school at the time. And so, I was working on that deal part time through my last year, and then it closed in my first full year of full-time work at TPG. During the course of all of that, Emily decided that she needed to have me in the catalog, which was highly embarrassing. But I did get paid for it. I got paid $300 for it.

Willy Walker: I would have thought there'd be some conflict about being on the ownership team of the company and being paid to be in the catalog. I love that.

Tope Lawani: But if I'm going to be in the catalog, you're going to have to pay me.

Willy Walker: So, you're already in London working for TPG and you decide to go form Helios. Talk for a moment Tope, about raising that first fund. You clearly had a fantastic track record. But anybody, I don't care whether you have the pedigree, the background that you have – anybody who's out raising a first fund is probably one of the most challenging things in the business world, unless for whatever reason, there just happens to be a moment in time where you can jump out and just go, let's do it. So, talk about raising that first fund, particularly given that it was a first fund that was one of the first PE funds exclusively focused on Africa. It's one thing to say, “Hey, I'm going to go take everything I learned to TPG and have been doing it TPG in London, doing European buyouts and U.S. buyouts and say, I'm going to raise Tope Lawani Fund One to do what I was doing at TPG on my own.” But now all of a sudden you say, “We're going into Africa'', and up until that point, I think I'm correct in saying nobody else had a dedicated buyout fund focused on Africa. So, talk a little bit about raising that first fund.

Tope Lawani: Yeah. The thing about that was probably some benefit of naivete, I think probably helped to be honest, because a first-time fund in a pretty niche market is either impossible or it's easy. There's no such thing as it's in the middle. It's either just it won't happen, or you might just stumble into some blind luck and then it happens fairly easily. I have to say that we were in the second category and then for a simple reason that, fortunately, based on just the prior experience that I'd had at TPG primarily in the U.S., I'd only been at TPG London for a year. So primarily the network was in the U.S. and testament to, frankly to the U.S., which is a distinguishing feature of the U.S. versus any other country in the world. You know, people make bets on people, and they take risks on people in a way that might not immediately be justified by whatever else. The only group of institutions that were actually in the business of investing in Africa and maybe in funds that might do things in Africa, et cetera we’re development finance institutions. So, like the International Finance Corporation (IFC) OPIC at the time, which is now called DFC. CDC which is the UK's equivalent of Development Finance Institution. That was sort of it. And so, we approached that community and got fortunate with CDC OPIC as it was then, and the IFC, although it came later. But what happened was just the support of a number of ultra-high net worth individuals that we had done a lot of work. So, you know, Bonderman was an investor. Coulter, Marc Lasry of Avenue Capital Group. Soros, and they were hugely supportive. So that network then led to a few meetings with certain hedge funds that we knew a little bit in New York and of course, hedge funds are not really in the business of investing private equity funds. But, you know, because of the novelty of the strategy and the interest in perhaps getting some exposure to sub-Saharan Africa or Africa broadly and this being kind of the least bad way of doing it. You know, we were actually able to raise a fair bit of money from hedge funds, weirdly, you know, in that fund.

So, we really ended up in a place that was about a third development finance institutions, a third hedge funds and then a third, what I would call, you know, ultra-high net worth individuals, family offices, all of whom were in the investment business. So that was the first one. Again, we had nothing really to show for it. I made the argument at the time that we know Africa and we know investing. So of course, we know investing in Africa, which is actually not necessarily the case, but I think we were able to do it on that basis. And then the challenges sort of came after that, right, when you then need to sort of demonstrate that you've actually done something reasonable with that first fund.

Willy Walker: It's funny when you say that you had a number of hedge funds that invested early in your fund. We had a bunch of hedge funds get into our IPO and they weren't in it very long.

Tope Lawani: Yeah. Yeah. I've learned lessons about that, too.

Willy Walker: Exactly. When they said, “Hey, we're going to take a piece of the book,” that was not exactly what I should be listening or hoping to hear.

So, one of your earliest investments, Tope, was in HTN Towers in Nigeria in 2005. Talk a little bit about that investment, which you moved out of in 2016. It was a fantastically successful investment, and that's now part of IHS Tower a publicly traded company. But it led to other tower investments. The reason I want to focus on that as our launching point here is why private equity in Africa has such opportunity here in the sense of buying into. You could have been in American Tower back in the 1980s, just like you could have been in HTN Tower in Nigeria in 2005. And so, today there's so much capital behind the cellular industry that you really need to be able to write massive checks to be able to be in that billion and billions. Whereas here you are in 2004, relatively recently and you get the opportunity to invest in the Nigeria Tower Company, that becomes a huge success that then leads to another investment of a tower company across Africa. Talk about that for a moment.

Tope Lawani: I remember saying this to an investor some years ago that, if private equity existed in the U.S. in the mid-19th century, all of the Vanderbilts and the Carnegies and the Rockefellers, et cetera, wouldn't have existed. Private equity firms would have built the railways, they would have built the banks. They would have done all of these sorts of things, right? And to some extent, that's sort of where Africa is. Whether its infrastructure, the roads, and bridges, but just economic infrastructure that needs to exist, that we know it needs to exist. It will exist at some point, and someone's got to build it. Someone's got to build it right as opposed to buying it when it's already hugely mature. And I think Towers was a really good example. We actually sort of stumbled into the tower’s opportunity in a way because my partner and I were bidding on a mobile license, an actual operator license in Nigeria. And so, MTN had already won their license, Econet had won theirs, and there is a third one up for sale. And so, in doing all the analysis and trying to get the financing together and so on and so forth, it dawned on us that the vast majority of the capex was basically steel and concrete to build these towers, right? If that's what we're doing, MTN has to do it and Econet (now Airtel) has to do it. And coverage in the country at the time was 10 - 15 percent geographic coverage and population coverage, maybe even less. In an environment where capital is scarce, cost of capital is high, and the actual operational headache of running a telecom tower because, you know, if the power supply is unreliable, it's crying out for a shared infrastructure solution. So, we lost the bid on the mobile license and immediately decided what we needed to actually build is a towers business. And so that's how we got started.

We approached MTN and at the time, they had 800 towers in the country. Now, you know, they've got many thousands. And so, we approached them about buying their towers. They sort of hemmed and hawed and we said, “Well, forget buying existing towers”. 95% of the towers that need to exist don't exist, so just focus on building the ones that don't exist. And so, we copy pasted found on the internet sort of build to suit agreements, master lease agreement, site lease agreements from the Crown Castle, American Tower, etc. You know, cobbled together the contracts that we would use, got some engineering drawings that we paid for and we're able to negotiate sort of the first build to suit agreement with the Mobile One, the mobile operators in Nigeria. And then, which is essentially a framework agreement. And then we sort of built it from there.

Willy Walker: Well, I was going to say, is there anything that's fundamentally different about that business doing it in Africa versus doing it somewhere like in the states?

Tope Lawani: Yes, for sure.

Willy Walker: Is it something that the industry in the U.S. came up out of a landline business. Therefore, the location of the towers was distinct. And then when you're doing it kind of with a blank sheet of paper in Africa it presents the opportunity to do things in a different way?

Tope Lawani: There are two differences. One that you identified, this applies to a lot of the impact of innovation generally where landline penetration in Nigeria was about one percent, before the first mobile operator licenses were issued in around 2003. Less than 1 percent. So, what that meant was you could build a telephony system from scratch. So, it means that there are no limitations. There's no place where there's coverage or where they're already being served have got to find pockets. It's just everywhere. So that's one difference with the United States even when the towers business was just launching in the U.S. The other very significant difference is that in the U.S., it's an operationally simple business, right? You sort of build a tower, you plug it in, the power comes through, and you focus on selling space on the tower to your tenants and collecting the rents.

In Africa, it's not particularly operationally complex and so it's a financial deal. Financial engineering, you can think of it almost as its real estate, which is what it is. In our market, it's really an operating business because every single tower has maybe or maybe not a grid connection. It has a primary source of power, which is probably a diesel generator, it has as a backup for that diesel generator, which then means there's a whole industry around keeping the diesel supplied and monitored because of diesel and the tank is a valuable commodity. So, security and all sorts of ramifications of that means that the barriers to entry are much, much higher.

You know, you and I could decide tomorrow that we wanted to start a Towers business in Colorado. And I think we could probably build a few, maybe not that many, but we could build a few, make some money, you couldn't do that in Africa because the operational complexity is materially higher. And as a result, the trust that the operator has to have for the mobile operators to have for the tower code is that much higher. So, credibility is at a real premium. And that's why you're not going to see a massive proliferation of tower companies in Africa. You'll see a few which exist now, and they'll do well. But the barriers to entry are very high.

Willy Walker: So, after being so successful in the Towers business, both in Nigeria as well as in your broader Helios Tower Company, which I believe are in seven countries, you decided to invest in Telkom Kenya – a fully integrated landline cellular internet provider. Why go into vertical integration on the telecom side in Kenya rather than staying in the cellular side, as you had done, both in Nigeria as well as across the continent?

Tope Lawani: Candidly, Willy, to be honest, I think under normal circumstances we probably wouldn't have. So, I'll tell you a bit about the history of that investment. So, Telkom Kenya was acquired in majority, not 100 percent by France Télécom (now Orange S.A.) it used to be owned by the Kenyan government. So, they bought a 60 percent interest for $300-400 million. They ended up putting in an additional couple of hundred million dollars over the years. They probably invested about $700 million, all in France Télécom was into Telkom Kenya. Telkom Kenya was getting hammered by Safaricom, which is the dominant player in Kenya and to a lesser extent by Airtel, which is the number two player in that market. And so, France Télécom decided that they needed to get out and so they approached us about buying it, and we looked at it and said, Look, do I really want to be in the landline and the mobile on this and all of that in a world where relative market share is so low etc.? And so, we actually said no. Then about a year later, they approached us again and again and we said no, and then we got a call from the Kenyan government because we'd invested in Equity Bank which was a great success in Kenya. We've done a couple of things and I think the government basically came to embrace us as a force for good and a solver of thorny problems. And so, the Kenyan government called and said, Boy, it'd be great if you could figure something out because these guys are threatening to just literally pull the plug and go home. And so, we thought, look, well, let's just tell them what it would take for us to do the deal and we basically said, look, you know, we'll take it for free and you will pay us, you know, or you pay less guarantee. You know, ring fence something like $150 million of cost. And then we could see value with that right. We could see value in some of the core assets like towers and telecom assets, but non-core like the towers. And we felt that if we could achieve the primary thesis on the mobile side was to see if we could achieve consolidation with Airtel, the distant number two, we were distant number three. So, if we could buy that company for zero, and consolidate our mobile operations with Airtel's, then all of a sudden, you get rid of a lot of redundant costs. Your relative market share goes up, interconnect is a big source of revenue shift between one carrier and the other. You know it starts to improve and then you can make money on the mobile side, you can release cash on the tower side. And then there's some strategic assets like landing stations for undersea cables and so on and so forth. And so, the thinking was you wouldn't quite disaggregate the business what you'd essentially disaggregate the business. A key part of that thesis hasn't transpired. We haven't been able to do the consolidation with Airtel for reasons that are the usual – regulatory, all kinds of things. But in the end, it'll be a good investment for us simply because of the terms of the deal that we did.

Willy Walker: Talk about those landing stations for under submarine cables because I saw that your partner Orange S.A. is working with PCCW Global and Peace Cable. When I was reading about it, I was trying to figure out how you do this, but they're laying 12,000 kilometers of undersea cable from France to Kenya and up to Pakistan to basically connect Europe and the Middle East via this cable. And then that same cable kind of comes out of Kenya and goes all the way down to South Africa. Do you all invest in those types of ventures? And I guess more importantly, what's it tells you about the future of telecommunications and the internet in the continent?

Tope Lawani: Hugely, hugely important Willy. Not only is that one you've just described happening but two other projects, one that's being funded by Google, and another being funded by Facebook that are coming down the other coast or the West Africa coast as well. And so, in short order, you're going to have a I don't know how many falls, but probably orders of magnitude increase in capacity of undersea cable capacity, which basically means, how do you connect? Let me give you some anecdotes, right? The top 50 websites in Nigeria, all of them are hosted in either Europe or in the US. So, when I go to the website of the Daily News or Business Day, which is a Nigerian newspaper and I'm sitting in Lagos and I'm on their websites, the request goes to Chicago and the data comes back. So, you've got latency. You've got costs. You've got all of it. So, Africa has the highest data costs, highest rates of latency and just lowest performance in the world. And so, what it means is that you can optimize as much as you want on the terrestrial side. But if the uplink to the rest of the world is not there, then that's the rate determining step, right? What these undersea cables will do, it will be to completely transform the rate at which sort of data consumption, data rates in Africa.

If you think about what the implications of that are: mobile operators need more space in order to host increasing data content, they'll probably rent more space on your towers. So that's probably good. Data centers, the force of increasing consumption of data domestically plus, of course, the desire that you see everywhere in the world for data sovereignty and people wanting sort of sensitive data to be hosted in their own country creates openings in data centers, terrestrial fiber, et cetera. All of that enabled by these giant undersea cables that are emerging. So, in theory, we might invest in the undersea cables. We happen not to be looking at any of those three. But you know, all the effort that we're doing in the whole digital infrastructure space, data centers, fiber towers, et cetera, we think will be… we'll have that as a tailwind.

Willy Walker: So, let's switch from telecom to energy and oil. You're an investor in Africa oil, which is upstream oil exploration, and then you also own Vivo Energy, which I believe is the largest downstream gas station operator in all of Africa. Talk about, if you will, upstream and why that's attractive to you, particularly given oil being at over 100 bucks a barrel and then downstream. I'd always thought that the downstream business of owning service stations was a pretty thin margin business, and that nobody really liked that end of it. Is there something that's unique about being in that part of the business in Africa that provides the opportunity for ancillary revenues that just don't exist in more mature, established markets like Western Europe and the US?

Tope Lawani: Yeah. Look, I'll give you a quick answer on the upstream so I could spend a bit more time with the downstream. I think this story is a bit more interesting. So, on the upstream side, you know, it is true that historically we've made a few investments only in upstream oil and gas, but we haven't done one now in maybe seven to eight years. The reasons actually that we felt despite the dependence on the commodity price that you can't predict, you can't really, truly hedge in any real way. There's still a reason why we felt that we were going to be able to sort of sustainably make money in that sector. And actually, overall, we haven't lost money, we made a bit of money in totality of our oil and gas investments. But, you know, for reasons that have to do with just economics and the private equity kind of model. And then, of course, more in recent years, by just the climate imperative and our view that all roads kind of led to Rome in this regard. We're not making investments in the upstream sector anymore.

Downstream is pretty interesting. So Vivo, as you rightly point out, was a carve out we did. Probably the most complex deal I've ever worked on. And that's that saying a lot. It was a carve out we did of all of Shell's petrol stations across Africa, excluding South Africa. There were 16 countries, but there was no company there. There were probably 24 companies that held these assets in them we had to buy all 24 and create an actual independent standing company out of it. But what's interesting and which we did, and we've since added we bought some sites or some businesses from Engen as well, so now Vivo operates in 23 countries, sixteen or seventeen of those are Shell branded stations, and in the balance are Engen branded stations. But what's interesting about the downstream business in Africa versus in the U.S., is that in the U.S by and large petrol stations don't make money on petrol, they make money on the food, beer, cigarettes, and chocolates and whatever else the people are buying from the shop. And that's because the downstream business it's just been competed away, so they're not going to make money on commodities. In Africa that's quite different. We make very, very good margins on the fuel.

Africa is a net importer of refined petroleum products, right? And in many markets, because of the import of Shell for our business, Vivo has a fair bit of market power. The governments in many places have actually decided to regulate the business. When we first saw it and said, gosh, we have regulated pump prices as a disaster, we're not going to get involved. But actually, when you think about it, what gets regulated is the margin. So, in a liter of gasoline, probably eight cents is the margin that we get, the rest is the price of crude, transport, refining, taxes, et cetera. So, if the government really wants to adjust the price at the pump, they don't get a lot of mileage by shrinking the regulated margin, they could sort of say, Look, our margin is no longer eight, it's now seven. And so, they don't get a lot of mileage. But on the other hand, if they shrink the margin to seven and we decide, actually, you know what, we're just going to sell at that price, right? Then the country grinds to a halt. And so, there's actually a pretty good at times, a sort of mutual understanding on both sides, so it leads to a fair result. So, the way the market operates in most African countries is you basically have a fixed margin, the dollar quantum of that margin inflates over time. So, we're going to make five dollars or five cents in this market. It'll inflate to five point zero something cents and then five point zero something else cents. So, it's actually quite a protected margin. And then the challenge becomes making money on the ancillaries in a market that is not a rich continent, right? People aren't buying that much. They don't spend that much money on chocolates, beer, and cigarettes, as they do in the US. But it's a fantastic business, actually, and it's publicly disclosed that we've actually agreed a deal to sell that business to our partner. Actually, we did it with Vitolo, the world's largest energy trader. They've been great partners and it's been announced that there's a deal for them to buy it. So, it's going to be taken private soon.

Willy Walker: So as I think about you not having done an upstream oil deal in quite some time, it makes me think about the fact that your funds and being focused on Africa and sustainability and all of the things that are attracting so much capital these days, if you will, the Helios funds are sort of in position 1-A as it relates to where sustainable capital, socially conscious capital would like to go. Is that limiting some of the investments you make down in Africa? Because you can't be in dirty fuels, if you will, or anything else that sort of says, if we want to continue to raise this type of capital from the large institutions that we have a great track record with, we must be very conscious of what types of investments we're making?

Tope Lawani: Super question. The short answer is no, actually, because we're quite fortunate in that most of the things that are likely to make money, and to make money sustainably and in a private equity kind of cadence, and to do them in Africa are things that are going to be pretty highly impactful, positively impactful from a social and economic development standpoint. There's one exception to that which is slightly uncomfortable and it's a very interesting one, and it's in this energy space. So, we're talking about upstream, we talk about downstream, where there's a bit in the middle which you guys in the US all refer to as midstream. And what we saw, in the push to zero carbon endgame, which I think we're pretty aligned with is a risk that Africa runs of being essentially disenfranchised because, if you're in Germany, there's just not enough power to go around more or less. And so, the debate is about swapping, more polluting sources for less polluting sources. And you know, that's a reasonable debate and certainly that's an easy one. In Africa, there's not nearly enough to power to go around and you’re not going to power an aluminum smelter or a glass factory with wind power, right? You need much more high energy content and fuels to power that. So, we're quite interested, and we have made investments, recent investments. We believe strongly in natural gas as a transition fuel. So, getting people off coal, getting people off diesel, getting people off heavy fuel oils, which is sort of what people use in industrial settings now, replacing those with gas and then ultimately through the same pipes you could probably deliver, whether it's hydrogen or biomethane or whatever it ends up being. And so, that's an area where we do have certain investors who are long standing partners of ours that are ambivalent about that. They take the view that, well, if it's gas, I'm not interested. Right? And so, we need to think a little bit about that because we think actually from a development standpoint, for Africa's sake, we think it's imperative. And so, what we will not do is say, OK, well, we're just not going to do that because look, you know, the job that I’m in will help a continent to develop and I think if that's an important element of it, then we'll find a way to do it. But that's the place where I would say the shoe doesn't quite fit.

Willy Walker: Anything on nuclear?

Tope Lawani: No, not yet, although I do a lot of work at MIT. There's a lot of innovation that's going on in the small nuclear space. It wouldn't be surprising to me if in the next ten years there are a workable sort of relatively portable, low-cost nuclear generation, that can be relevant for our market. But so far, nothing. I think the costs are just prohibitive. The scale is prohibitive, and we don't have the economic density in these individual markets to be able to warrant it. And you know, look, and we also have the value chain issues, right? There's a generation side where transmission links aren’t great, distribution grids aren't great. And so, I think distributed power, at least for residential, is going to be the way to get good distributed solar, wind. You know, I think that rebuilding a whole grid and all of that, I think, is tough. Same reason we don't have to have landlines.

Willy Walker: Talk for a moment Tope, about TPAY because I find it to be fascinating with a population across the continent that is “so underbanked yet over phoned”. I never thought about calling it an over phoned population. But where you've got cell phones are ubiquitous. They're everywhere. You have such a huge percentage of the economy that is not in the banking system. And therefore, something like TPAY is the perfect payments platform to be able to allow people who have their cell phones to be able to actually transact with one another. Talk about that.

Tope Lawani: Yeah, banks are in big, big, big, big trouble. I'll give you just another anecdote. So, there was a study done in Malawi and Uganda, it just happened to be in those two countries, but the point applies pretty much everywhere else where they went through a number of banks and sort of figured out what is the cost of a basic savings account. So, you just put your money in the bank account and it's just there, you earn a bit of interest. And this is the sort of cost of maintaining it. And what they basically found was that more than 83-85% of the population of Uganda. The adult population did not have enough in savings for it to be profitable for them to put their money into a basic savings account. They would lose more money in cost of them making interest, 83 percent of the population. So then forget the banks as they are, will never, ever be relevant to the vast majority of the population.

So, banking penetration across the whole continent right now is probably 30 odd percent. Mobile penetration is probably getting into the 90ish and more importantly, smartphone penetration rate is now over 50%. In some countries, it's actually quite a bit higher than that. But that's growing extremely rapidly as the cost of smartphones is coming down. And so, with that, it's pretty obvious, that it's really obvious that traditional banks will have a very significant problem because the ability to transact whether its TPAY, whether it's Interswitch, which is another one of our portfolio companies in Nigeria, floury, which is one of our companies, also in Egypt. People already have the banks in their hands and its lower cost. It's easier to deal with and you don't need to be, you know, when you walk into a bank, if you're not sort of well-dressed don't people look down on you? No one looks down on you when you're banking on your phone.

Willy Walker: So, you've also invested in something called Bayport, which is basically a consumer credit company. What fascinates me about Bayport Tope, is that it's consumer credit, but it is at a very low credit level. And so, when I read about it, I sat there and said to myself, man underwriting their customers, figuring out whether you're going to do a $20 credit card extension to somebody who is in the unbanked community who is using their cell phone and accessing Bayport’s credit. What is the algorithm that allows you to say, I'm going to give money there?

Tope Lawani: Yeah. Bayport is a special case. It provides credit, what we call a payroll lender, not a payday lender. And so, what they do is they basically go to employers, so mostly government employers, in some cases large multinationals, and they do a deal with the employer. So, they might come to you, and say, look, we're going to do a deal where you authorize us to basically provide loans to your team members which we can then deduct payment for at source. When the paycheck comes, the employer will essentially take the $20 or whatever is due that month, send it to our Bayport and send the balance to the team member, to the employee that has the paycheck. And so, credit losses in that model are extremely low. I mean, really low. It's like one or two percent because it only happens when people lose their jobs, some fraud or something like that, but it's extremely low.

Now, Bayport has its other challenges because as do all non-bank financial institutions. When you’re a non-bank lender, you've got to finance yourself somehow. And I think our experience in Bayport has been the underdevelopment of the debt capital markets in Africa, especially the local currency debt capital markets in Africa has actually been an inhibitor on the growth and profitability of that business. So that's a separate sort of lesson learned that is relevant to Bayport. But from a model standpoint, it's a fantastic model. But I think your point is still relevant, though, because there are a number of credit providers that do it exactly as you described by algorithm, they assess phone usage patterns, et cetera. And look, we've looked at a few of those, and I have to say that the jury's still out because in many cases, it's sort of in the olden days you were evergreening, right? How do I know that that last loan was paid back or just another one borrowed, right? And so, you see these companies showing, you know, rapid rates of asset growth, but I'm not so sure what the credit quality is, and I'm not sure when we'll really know whether these algorithms actually work.

Willy Walker: When I was doing research on Helios, you all were named the Firm of the Year for Africa by Private Equity International and that's really fantastic you won that award in 2021. I then realized that you won it in 2020, 2019, 2018, 2017, 2016. And it's really quite something what you have done. When you think about the amount of capital you've raised, Tope, the investments because you're doing big infrastructure investments, the checks that you're writing are probably typically larger than emerging firms would have been way back when when you were first starting Helios and now your last fund was a billion two and you're about to raise Fund IV right now.

Is there anything just that's very different as it relates to either the size of the checks that you need to write because you're doing more infrastructure plays than operating company plays? And then also the realization, I noticed that a number of the companies you've taken public rather than doing industry trade sales, whereas in the U.S. public private equity world, probably and maybe I'm wrong on this but my sense is yes, some do public exits, but often it's the company is sold off to some big operator in that space who's doing a strategic purchase from the private equity firm. Are the checks bigger to get into it? And then also is the realization through the capital markets rather than through operating companies buying it just because of the nature of the market and so few competitors?

Tope Lawani: Yeah. Look, let me start with the second one. There are many things that are great, and I think better about investing in Africa. I would say most things. So, if you have a great company that is doing something in an industry that matters in a part of the continent that matters at scale and is well run and well governed, ultimately there's an exit for it. So that's not the problem. I think the challenge is that we've pioneered so many things. You know, we sort of first in discovering many things. And I think among those discoveries are simple things. So, the reason you might take a company public might not be because at some point… You have a company that has maybe $20 million of EBITDA when you buy it right and then you could do great and it's sort of $80 million of EBITDA when you're ready to sell it. Now all of a sudden it's half a billion, $700 million business. And then you've got a real question to ask, well, not only there, because then no other private equity firms’ specialist who might be buyers, although increasingly firms like TPG, Blackstone, et cetera, depending on the kind of business you might be interested in, but by and large, not really. And what you might find if you're not careful is that even for strategics, you know, maybe they don't want to write a $700 million check into Kenya or Egypt or wherever it may be. So, I think that there's such a thing as sizing an investment for a market. Now, if you have a multinational business like Vivo, which is in many countries, someone might buy that because, OK, look, I'm getting the entire geographic spread. But I do think there is something to what you said. The combination of check size, country coverage, et cetera, is something one needs to optimize. I think I feel pretty strongly that we're getting there. But I think historically you've sort of seen some companies that we've invested in, that we've taken public that actually had they been a bit smaller or, you know, we would have just sold.

Willy Walker: So, my final question for you and you've been so generous with your time, and I've loved this conversation. I have sat in your seats at Chelsea which are incredible seats. My question is what happens to Chelsea and are we going to find that Tope Lawani is the next owner of Chelsea after Roman Abramovich ends up selling it?

Tope Lawani: Yeah, you might call that strategy drift, but you know, hey, if all that means is that they won’t invest with me again, I'll take the risk.

Willy Walker: Who ends up getting it?

Tope Lawani: I think I have a decent sense. I think so. But look, I tell you what it won’t be. I don't think it'll be any sort of fund backed entities. I think the government and the fans would really have it. I mean, the government will channel the fans because of the politicians. And so, I don't think it will be that, but I do think it'll be an American buyer, certainly. And I think because the American buyers understand the business of sports, I think better than most and they in particular understand the business of stadium redevelopment, which Stamford Bridge needs and has a great opportunity to seat 42,000 people. Old Trafford were Manchester United players, I think 74 so there's huge upside to that. And look, when you're the biggest team in the biggest city in the biggest sports in the world. The Chelsea brand is a pretty strong one. But we'll keep winning on the pitch. We won five in a row since all this drama began all on the road, by the way. So, it's business as usual.

Willy Walker: It's fantastic. I can't wait to come back and go to another game with you.

Tope Lawani: You’re always welcome.

Willy Walker: We did not get to talk about the NBA and your partnership with the NBA. That's going to be for another day. But Tope, congratulations on all you've done and thanks so much for spending the time with me today. And most importantly, thank you for the friendship. And I look forward to seeing you soon. And we have not done a shout out to our buddies, little Johnny, and friends.

Tope Lawani: All up and to the right.

Willy Walker: Exactly, you got it. All right, guys. Thanks, Tope. Great to see you, buddy.

Tope Lawani: Take it easy. Thanks very much for having me. All the best.

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