Empowering Growth and Sustainability
Over its two decades of experience in scaling up businesses in emerging markets, Aureos developed a unique approach that combined private equity best practices with a deep understanding of the complexities and opportunities at the Bottom of the Pyramid. Through its local presence and industry expertise, Aureos consistently achieved remarkable results, delivering positive impacts on its investments while successfully navigating the inherent challenges of emerging markets.
Aureos recognised the distinct potential and characteristics of small and medium-sized businesses (SMEs) in these markets, adopting a local, personal approach that focused on maximising long-term benefits. As part of its philosophy, Aureos referred to its portfolio companies as ‘Partner Companies,’ reflecting their role as co-shareholders and their active participation in driving responsible development. With a combination of quiet determination, modesty, and unwavering professional standards, Aureos set a high bar with its “hands-on” and highly personalised investment style. This commitment to empowering businesses while fostering sustainability came to be known as The Aureos Way or Aureos PE+, a set of principles that guided its investments and interactions with Partner Companies..
Fulfilling Potential: Key Principles of The Aureos Way
Leveraging Strong Corporate Cultures
Aureos understood the importance of strong corporate cultures in many emerging market businesses, which often held a deep sense of responsibility toward their employees and local communities. Aureos focused on safeguarding and enhancing these cultures as businesses expanded. By building on leadership values and leveraging responsible business practices, Aureos ensured that its Partner Companies created value beyond financial returns, fostering long-lasting relationships and ethical growth. Aureos’s typical Partner Companies were family-owned concerns and taking them on a journey from historical practices to an institution takes time and behavioural changes, which at times can be hard. Experience had taught us that the process of behavioural change starts at the very inception of discussions with the owners of the business and continues until exit.
Cash Management with a Growth Focus
While cash management is a cornerstone of private equity, Aureos adopted a different approach, emphasising the reinvestment of cash flows to scale up operations rather than simply using cash to service debt. This focus on cash generation and operational liquidity empowered businesses to grow rapidly and sustainably. By accelerating decision-making processes, Aureos enabled faster value creation, benefiting both the companies and their investors. Aureos adopted innovative internally geared equity risk capital that matched closely the businesses cash generative nature, whist ensuring growth is maintained. These structures also mitigated forex risk but not entirely removing the forex risk and minimised exit risk.
Growth Capital and Active Partnership
Aureos provided growth capital to fuel expansion, but its involvement went far beyond being a passive investor. The firm acted as a true growth partner, offering strategic expertise, extensive networks, and hands-on guidance. Aureos worked closely with leadership teams, identifying new commercial opportunities and helping businesses expand both regionally and globally. This active partnership approach fostered long-term value creation and sustained growth for its Partner Companies.
Aligned Interests: Supporting Sustainable and Responsible Growth
Empowerment through Strategic Support
Aureos believed that business owners who had successfully built their companies had the potential to scale even further with the right support. Acting as a catalyst for growth, Aureos focused on delivering tailored empowerment to each Partner Company. The firm’s approach allowed businesses to leverage their existing strengths while taking bold steps toward expansion, giving leadership teams the confidence and resources needed to achieve their growth ambitions including other than risk capital. The local banks would look at favourably to lend if Aureos capital was on the table.
Minority Investing with a Major Impact
Aureos actively sought out established companies, typically 5 to 7 years old, that were poised for the next stage of growth. The firm’s preference for taking significant minority stakes (30-40%) allowed existing management teams to retain control, while Aureos provided governance, strategic guidance, and operational support. This approach fostered a collaborative partnership that emphasised management autonomy, encouraging leaders to navigate changes and drive the company forward.
Sustainable Impact through ESG Integration
Aureos firmly believed that strong Environmental, Social, and Governance (ESG) practices were essential to building great businesses. Its investments went beyond financial returns, emphasising governance, employee engagement, customer satisfaction, community benefit, and environmental responsibility. Aureos implemented modern managerial disciplines, focusing on ESG metrics that not only reduced risks but also enhanced business performance and exit outcomes. This commitment to sustainability became a hallmark of The Aureos Way, ensuring businesses were well-positioned for long-term success.
Local and Regional Expertise: Collaboration and Entrepreneurship
Global Collaboration with Local Expertise
Aureos fostered a culture of collaboration, connecting its global professionals with Partner Companies CEOs and their management teams. Uniquely, Aureos professionals were collectively accountable for all investments, regardless of location or sector, encouraging cross-border support and shared insights. This collaborative approach extended to Partner Companies CEOs, who were encouraged to exchange knowledge and support each other’s growth efforts, creating a cohesive network of businesses united by shared goals.
Implementing Modern Managerial Disciplines
Recognising that businesses in the scale-up phase needed robust infrastructure and governance, Aureos provided guidance in areas such as business strategy, financing, HR, legal, and investor relations. With regional offices in Nairobi, San Jose, and Singapore, supported by a handful of experienced people based in London to bring the international network and lens across the group, Aureos delivered hands-on, on-the-ground support to enhance shareholder value and attract future investors. By implementing sound managerial practices, Aureos helped businesses institutionalise their operations, improving efficiency and preparing them for sustained growth.
Nurturing Entrepreneurialism and Local Autonomy
Aureos empowered its local offices with autonomy, fostering entrepreneurialism within its teams. This decentralised approach allowed investment professionals to make decisions that were closely aligned with the needs of their respective markets. The result was a culture of hands-on support, where entrepreneurial professionals brought commercial savvy and a commitment to building significant, impactful companies. This focus on nurturing local talent and encouraging entrepreneurialism ensured that each Partner Company received the personalised attention needed for growth.