By Larry Claasen
THE late Allan Gray’s commitment to transforming South Africa can still be felt almost five years after his passing.
Gray, the founder of the Allan Gray investment management firm, was known for his philanthropy. This can be seen in his founding of the non-profit Allan Gray Orbis Foundation, which invests in developing individuals with entrepreneurial potential across Southern Africa by offering them fellowships.
As a way to further foster the growth of its fellows, Allan Gray set up E Squared in 2007 as a way to invest in these fellows’ ventures.
E Squared’s mission is broader than just backing the fellows, said the group’s CEO, Gladwyn Leeuw, at the launch of its 2023 annual report.
“E Squared was founded by the Gray family not just for fellows but to create an economically inclusive South Africa and to improve the lives of people on the continent – and hopefully beyond.”
E Squared’s impact has been notable. It has invested R99,6-million into 106 businesses in 2023 and a total of R661-million since its inception.
Leeuw says the group does not just disperse money, rather, it tries to “co-create” with the fellows’ transactions that make sense for them.
This means E Squared is involved in mergers, buying and selling of secondary businesses. “It’s really complex structures.”
To facilitate these deals through its various funds, like its Innovation and Response Fund and E Squared Ventures.
One of its funds includes its pre-seed investment programme, Pathways, which is for fellows and people who are candidates to become fellows who need funding for the “concept stages of their businesses.” The idea of Pathways was to create a pipeline for E Squared Ventures, its seed growth fund.
E Squared has invested in a total of 41 Pathways businesses, of which 31 are still active.
Leeuw pointed out that though these were high-risk investments, and if they failed, it would not be held against participants.
“We provide funding for fellows to fail fast so they can go again.”
Success stories
An example of the types of investments the group backs is Sum1 Investments, a firm that uses stokvels to support economic development.
Sum1 is creating a digital platform to enable group saving by allowing them to invest in income-generating assets based predominantly in township and rural markets across South Africa through the Sum1 Stokvel Fund.
Sum1 founder Kurhula Baloyi says her goal is to increase economic inclusion in the country.
“People were asking for advice, but they didn’t know where to start. There was this misconception that investing was only for the wealthy or the well-connected. But the truth is, everyone should have access to opportunities that can help them build wealth.”
So far. So good
So far, E Squared has not only lived up to the mission the Gray family envisioned for it but has also proven to be a solid investment. It has created a total of 20 865 jobs but also recovered R66,5-million of the R661-million it has invested.
