Essentials

Company: Tourvest

Sector: Travel & Leisure

Business Focus: Tourism

Size: +6 000 Employees

Investors:

• Old Mutual Private Equity
• Guma Tourism Holdings
• Industrial Development Corporation
• Management

Investment: OMPE Fund II acquired a 30% stake in 2008

Impact highlights

• Tourvest has created a lasting partnership over the last 17 years with the Siyazisiza Trust, an organisation that is committed to enterprise development in rural areas, and has contributed over R130m to the Trust’s causes
• A new Social and Ethics committee was introduced with a wider set of responsibilities, including a group-wide Code of Ethics and an enhanced set of controls around anti-bribery risks
• Transformation is a key goal of management with both female employees and black staff making up over 60% of the employee base respectively

The Tourvest story

Headquarted in Johannesburg, it is a global business, operating approximately 60 of the best-known brands in Southern Africa’s tourism sector.

The company was founded in 1997 to consolidate several established tourism businesses into a single, focused brand. In 2008, after a decade of steady growth, Tourvest was acquired by a black economic empowerment (BEE) consortium that included Old Mutual Private Equity (OMPE).

Tourvest comprises five autonomous, entrepreneurial business units that range from travel management to craft and curio stores:

• Travel Retail specialises in destination retail at airports and tourist hubs as well as in-flight retail services
• Destination Management focuses on touring, inbound travel, incentive travel, sports tourism and tourism event management
• The Accommodation and Activities division owns and manages hotels and lodges as well as recreational activity options
• Financial Services owns and operates foreign exchange outlets under the Travelex brand
• Travel Services manages corporate and leisure travel with a focus on online travel management using sophisticated proprietary online tools

There are strong synergies between these divisions and collectively they link each piece of the tourism value chain, providing a robust service experience.

The role played by Private Equity

OMPE is one of South Africa’s most established private equity managers, with one of the most transformed teams in the country and around R9bn in assets under management.

As a significant minority investor in Tourvest, we were attracted by its market-leading position, its strong management team and its highly cash-generative nature. We were also interested in the tourism sector as a growth market driven by several tailwinds, in particular the then upcoming 2010 FIFA World Cup and the positive knock-on effects it would have for SA as a sought-after destination.

Tourvest’s capable management team was strongly aligned with OMPE’s own corporate ethos, but we felt our investment expertise could assist in growing the business under a more focused capital allocation model that would harness its cash-generating abilities.

Tourvest was previously a listed business with solid governance structures and in partnership with our co-shareholders, we enhanced these structures through the implementation of a Social and Ethics committee. There was also a new focus on employment equity, driven through the correct remuneration structures as well as more focused staff development programmes.

The firm’s commitment to positive social outcomes also fits well with our own. We strongly favour well-trained, diverse workforces as this leads to sustainable commercial performances. Through the strategy of growth through acquisition, we have managed to increase the number of people employed by Tourvest by nearly 50% in 10 years.

In 2016, as part of the aforementioned efforts by the shareholders, Tourvest introduced the Siyakhupuka (We are Rising Up) Leadership Programme, which takes young, talented individuals within the company from previously disadvantaged backgrounds and helps advance their careers towards leadership roles. The proactive advocacy of ‘transformation’ for employees at all levels is a core expectation of management and has been actively driven by OMPE and its co-shareholders.

These measures have allowed the company to increase diversity across all employee levels with over 60% of employees being female and about 50% in senior management positions. There has also been a significant increase in the proportion of black staff in the company, with representation in senior roles shifting from 13% in 2012 to 40% in 2018.

By investing in a market leader at an attractive valuation, strong investment expertise, financial and strategic stewardship and in partnership with an exceptional management team, we were able to grow the business both positively and profitably.

A force for good

At OMPE, we place emphasis on responsible investing because we believe this leads to inclusive, sustainable returns. South Africa’s tourism industry is of great economic and social importance, contributing nearly 9% to GDP and creating over 1.5 million much needed jobs across the country.

Tourvest falls at the heart of this industry and makes a vital contribution to SA’s economic and social development. With its commitment to entrepreneurship, the firm is empowering budding entrepreneurs to harness their creative talents in both rural and urban areas.

Tourvest has formed a successful long-lasting partnership with the Siyazisiza Trust over the last 17 years, working to promote enterprise development in rural communities across South Africa. The beneficiaries of the Trust are mainly older black women in remote locations who are the backbone of their households.

The crafts and curios they make are sold in the stores of Tourvest’s subsidiaries. This provides individuals living in rural areas with the tools to enhance their standard of living, educate their children and reignite hope in their communities.

The Group pursues a proactive approach to corporate social responsibility in the wider community and they have created a platform for real, sustainable social and economic development through the provision of access to education and skills, empowerment through job creation and the protection and conservation of the natural environment in which people live.

The company view

Mr Luvhengo Neswiswi, CFO of Tourvest, comments:

“I have worked with the team at OMPE for over 10 years and one thing that stood out was that they always had the best interests of the company at heart. Their passion and commitment to the business was displayed through their relationships with our team and their deep understanding of the industry.

"We established a relationship that was built on trust, integrity and respect. Disagreements were never contentious, but rather constructive. They were always prepared, which made it that much easier to engage with them on projects we were working on as a management team. Their strong interest in transformation aligned well with our values, thus allowing us to make a real impact on the lives of all our stakeholders.”

Mr Sean Joubert, CEO of Tourvest, comments:

“Since I joined the Group, it has been a pleasure working with Old Mutual Private Equity. We, as a management team were quite fortunate to have built such a good relationship with them.

"Not only are they proficient, logical and consistent but they are also comfortable and interesting to work with. I worked quite closely with Farhad, who provided valuable input and was always just a call away. The nature and frequency of our interactions worked well. I find it important to work with people you trust, respect and who have a similar set of values. It will be a bittersweet moment when they eventually exit but I’m glad we got to work with a team as professional and dedicated as this one and the relationships we built will probably continue long after.”