Top South African Investor Niall Carroll on the Best Bets To Place In 2021
For most businesses, 2021 will be a year of continued transition and will afford many the opportunity to forever reshape the way in which their markets and industries operate. Those that are successful will have a clear and focused investment strategy, as well as a fine grip on future technologies. As we look ahead, the pertinent question for most multinational companies and investors around the globe will be what businesses or industries are worth betting on in 2021.
Thanks in large part to the COVID-19 pandemic, the global economy has shrunk by an estimated 4.4% last year, according to the International Monetary Fund’s World Economic Outlook published in October 2020, marking the worst economic decline since the Great Depression. As we enter the New Year, the outlook is generally more positive, with many analysts forecasting growth in 2021. In December 2020, well-known hedge fund manager Paul Tudor Jones told Yahoo Finance he believes the COVID-19 vaccine will be the catalyst to jumpstarting the world’s economy, going so far as to predict a “supersonic boom” in 2021.
“The vaccine’s going to bring us back. We’re going to have an incredible growth rebound,” said Jones. Adding, “And you’re going to have this just massive boom.”
The CEO of Pershing Square Capital Management Bill Ackman shares a similar view. Believing as more people are vaccinated against the disease, businesses and consumers will be eager to travel and spend as we get into the second half of the year.
“People haven’t spent, haven’t gone out to eat, they haven’t gone out to the theatre, they haven’t gone to a movie, they haven’t gotten on a plane. And I would say animal spirits are building up,” Ackman recently said in an interview with the interactive investor website. “I think you’re going to see a fairly rapid recovery beginning sometime late Q2, Q3, Q4, low interest rate environment, a tonne of savings to be deployed. It could be pretty favourable.”
In order to capitalise on these “animal spirits” we need to start thinking about where growth potential exists. The obvious answers are things we have all come to rely on over the course of the pandemic like Software as a Service platforms, cloud-based technologies, superior products powered by AI and remote working solutions. But how do you pick the right technology or industry or business to invest in? To help us navigate 2021 investment opportunities we sat down with Niall Carroll, an industry veteran with extensive experience on both sides of the equation.
Carroll has enjoyed a successful career as an investment banker, a serial entrepreneur and is now chairman of the CG Tech Group, an investment holding company active across Africa, the Middle East, Europe and South East Asia. Early in his career, Carroll was a senior executive in Deutsche Bank’s South African business. The South African businessman was then instrumental in forming and building Royal Bafokeng Holdings, diversifying the Royal Bafokeng Nation’s asset base beyond platinum and growing it to over US $4 billion, with an investor rate of return at the time which was higher than that of Berkshire Hathaway.
Today, as chairman of CG Tech, Carroll and his team thrive on building companies within the thesis of revolutionising traditional industries through disruptive technologies. When deciding what to bet on next, we drew on Carroll’s knowledge and experience to gauge industry sectors as opposed to individual businesses. Carroll believes there are three key questions that should be integral to any investor’s decision process.
What traditional industries are being left largely ignored?
Too often people ignore traditional industries they believe are boring or have nothing new or exciting to offer. But Carroll points out this is where some of the greatest opportunities lie. For better context, think about the Ubers and Fiverrs of the world, businesses that were able to infiltrate established sectors and disrupt the status quo with great success. CG Tech has done similar in the oil and gas industry with their virtual reality and augmented reality technology, Virtuworx, drastically altering the way engineers train and prepare for extremely challenging environments.
“At CG Tech we get excited when we recognise an opportunity to disrupt a traditional industry with innovative means. Our portfolio represents a sector agnostic approach, seeking diversified investments across multiple industries. Identifying problems within these sectors and utilising technology to solve challenges has proven to be a successful formula for the entire group,” says Carroll.
Who is focusing on strong corporate culture?
Another area that is often overlooked by investors but nevertheless vital when seeking a good bet, is a solid company culture. Carroll believes this is crucial, especially during times like we’re experiencing now. Pre-COVID, culture was easier to build and maintain with the majority of staff and leaders in the same office. Team building exercises and impromptu activities like after-work drinks helped to forge bonds within a company. Increasing employee satisfaction and driving up their productivity.
With the sharp rise of work-from-home orders, companies are now faced with the challenge of sustaining this culture. Those that are able to navigate the task of doing this remotely will certainly be more prosperous than their counterparts who fail to capture this key component.
Company culture has been an area of great interest for Carroll for all of his career. Adopting an ecosystem thinking approach within its group of companies, CG Tech also has its own Chief Ecosystem Officer, Jason English, whose expertise in building effective teams is proving to be game-changing.
“In recent times we have driven ourselves to establish a strong set of values and culture that guide the group’s decision making,” Carroll says, adding, “Jason has been integral in ensuring each of the subsidiaries we work with understand this ethos and are able to work together in pushing forward with innovative and disruptive ideas for the entire group, not just their own company. We still have plenty of work to do in this area, but progress has been solid.”
Who is solving the real problems of today and tomorrow?
Over the course of his career Carroll has looked at thousands of investment opportunities around the globe. For him, a company that’s meeting a real need in the market is definitely one to take a closer look at. In terms of the last 12 months, we have seen companies like Zoom and Monday.com explode as more people needed digital solutions to help them work from home. But businesses that are willing to look beyond what the established ones are already doing, and start investing in the technology needed for tomorrow, will be a better bet.
“Some problems require a sizable investment of capital, thinking and time. But if we’re solving a real problem, that’s okay with me,” explains Carroll.
A great example of this takes us back to Virtuworx. What originally began as an in-house remote learning solution, soon took on new meaning as the pandemic quickly forced lockdowns around the globe. Seeing the inevitable shift to remote work, Carroll and The Virtulab team quickly switched gears to launch the platform to solve this emergent, global trend. The fully customisable environment provides a unique blend of the physical and virtual world, giving in-person industries such as live events, trade shows, conferences and training a compelling new possibility. Companies such as The Virtulab, who are able to employ lateral thinking that seek to solve the fundamental problems of tomorrow, are definitely worth taking notice of in 2021.
As more businesses explore the best way to bounce back from COVID, tough decisions will need to be made. While early predictions look positive for the year ahead, if the past 12 months have taught us anything, it’s that the market is fickle, and predictions can be futile. Success will be defined by those who are able to identify trends and quickly pivot to meet new and challenging demands, whatever the future might hold.
The collection of business within the CG Tech group allows us to share learnings and ideas with each other, sparking collective investments into research and development of new products and services which would not normally have been created.
The technology arm of the CG Tech group, The Virtulab, has allowed me to grow the reputation of Prommac as a digital business in a traditional industry, and we have been able to transform at a fraction of the cost of outsourcing these services.
As the youngest leader in the group, the collective knowledge of leadership has helped me grow personally by engaging with great business leaders who have been there, done that and have shared their experiences with me.
The CG Tech team has helped us raise capital and fund growth using the know how and experience of the collective group. The spread of skill sets between Accountants, M&A Experts, Operational Specialists, Metallurgy Specialists has helped me shape my business for the future.