A Brief Look At Stewarding Investment Capital

The following is a summary of a panel discussion hosted by Mergon’s Almero Strauss at the Ziwani launch on 25 June 2021. His panellists are Ike Cha (CEO, Lionshare Venture Holdings) and Pieter Faure (CEO, Mergon). You can watch the full interview here or listen to the podcast here.

BUSINESS JOURNEY

Ike Cha, now the CEO of Lionshare Venture Holdings,  initially thought that God had called him to serve as a priest. However, at the age of 19, he came to the realisation that his calling was actually to business. Pieter Faure started off as a Chartered Accountant, but after embracing a challenge from God to trust him for the unexpected and to serve another man’s vision rather than start his own business, he ended up joining forces with Francois van Niekerk – eventually becoming the CEO of Mergon.

REDEMPTIVE STEWARDSHIP

Ike recalled how in starting his business, he leveraged what he calls, “friends and family” money from people who believed in his mission and shared his values. This instilled in him a great sense of responsibility and stewardship from the outset. Because of the relational nature of his model, most of his investors were (and still are) on-boarded on a handshake. Pieter said that at Mergon, they view God as their shareholder and even though technically they’re looking after other people’s money, it’s all God’s money ultimately. This is worked out practically by setting aside time to seek out God’s direction on significant investment decisions – and being prepared to wait for an answer from him and a sense of unity and peace in the team.

GOD VERSUS MONEY

Matthew 6:24 says that we cannot serve both God and Money, which creates an interesting tension for Christian investors. Ike said that he’s never had any grand ambitions to become, “the next Bill Gates,” but has always seen money as an “enabler; a tool to make things happen.” This approach allows Christian investors to boldly pursue profitable business enterprises without being enslaved by the money.

AGENDA OF DEPLOYED CAPITAL

According to Pieter, Mergon is clear about the agenda of the capital they deploy, which is to extend God’s kingdom. His view is that as Christians we ought to be more transparent with our beliefs and the fact that we want to invest in businesses whose products and services contribute to the wellbeing of society. Furthermore, Christian investors have the opportunity to influence and shape the cultures of the businesses in which they invest.

INVESTMENT RETURNS

While investors will always look for good financial returns, Ike pointed out that returns can also be defined by the impact of those investments on society. For example, some projects may have good financial returns, but negative societal impacts – or at the very least, no benefit for anyone outside of the immediate business ecosystem.

LOCKDOWN LESSONS

Pieter shared how one of the big things that Mergon had to grapple with when the COVID-19 Level 5 Lockdown hit was how to decide between building the balance sheet and distributing funds to the 100+ Christian ministries they support, because at one point their cashflow dried up literally overnight. This was one of those ‘shareholder moments’ where they prayed together as the respective boards and asked God what to do. They decided to communicate honestly with their ministry partners and to continue with the distribution of funds on a month-by-month basis, and by God’s grace were able to make good on their commitments. It was a real lesson in humility and faith in the God who is always in control.

INVESTING IN AFRICA

Ike pointed out that it took the United States 400 years to get to where they are today and yet in Africa, we walk in and expect a 40% return in 18 months. In his view, Christian investors need to look at investment through the lens of ‘patient capital.’ Pieter says his optimism for the continent is based on the incredible potential that technology is creating for scalable solutions that can move Africa forward at a rapid pace. He stressed the importance of long-term relationships between capital, people with local knowledge, and those with the technology and platforms that can take us forward.

Q&A SESSION

AS: In the world of investment, should we only work with fellow believers?

IC: Always stick with your belief and value framework to try and find the right partners, rather than starting with the partners and trying to make it work the other way.

PF: At Mergon we value relationships, whether the partner is a Christian or not. Where we’ve invested with non-Christians, we’ve seen it as a God-given opportunity to live out what we believe in the lives of these people.

AS: Ike, “family and friends” and handshake contracts. That’s risky. Is it for everyone?

IC: Handshakes definitely have their drawbacks, but they are a great foundation – particularly in the hardest of times, because you’re focussed on what brought you together in the first place.

AS: How do we balance the need to return profit versus the ‘other returns’ of a business or investment?

PF: In the parable of the talents, the master did not say, “Well done, good and successful servant.” He said, “Well done, good and faithful servant.” And so at Mergon we decided that we would be faithful and entrust everything to God’s hands. We focus on praying and doing the best due diligence we can, but then leave the rest in his hands. We’re still on a journey to figure out how to measure kingdom/social impact.