In an interview with Daily Maverick, Sipho Nkosi and CEO Wayne Fitzjohn discussed the new ventures for investment holding company Talent10 which is chaired by Nkosi. The company is focusing on a mixed bag of businesses; promoting the global movie business while leveraging South Africa in the process, industrial air conditioning and investing in innovative technologies as part of the Internet of Things (IoT).
Nkosi, better known for his dealings in the energy industry since stepping down as CEO of the JSE-listed coal conglomerate Exarro in 2016, acknowledges that he has now stepped a tad outside his comfort zone to realise another passion of his – to do good – for good – and for the long haul.
His dream of making a significant broader societal impact is being realised by growing this local investment outfit with a diversified and integrated portfolio of companies to attract foreign investment and create jobs locally.
Established in October 2012 Talent10 is the brainchild of Nkosi, Fitzjohn and a small group of like-minded investors who crossed paths when Fitzjohn co-founded private equity and advisory initiative at wealth manager Citadel.
“I was a senior partner at a prominent wealth manager at the time and was tasked with building an entrepreneurial client base. I chose to focus on helping SA’s new black industrialists that were rich on paper but in most instances because of the nature of most BBEEE transactions, realising real wealth was still some way off.
The proactive implementation of sound financial planning principles not only resulted in greater upside over time but also allowed for meaningful relationships to be formed long before opportunistic advisers came knocking,” says Fitzjohn.
“It was during this time that I contacted Sipho and his fellow founders of Eyesizwe Holdings and that was the beginning of a beautiful partnership. Not long thereafter the idea was born for leveraging our collective balance sheets to invest in enterprises that could positively contribute to the country’s economy as opposed to conventional philanthropic pursuits. It was this thinking that led to Talent10’s formation.”
Fitzjohn’s aim was a collaboration to explore disruptive opportunities within South Africa, while Nkosi’s goal was to give back to the community in a significant yet sustainable way, for the long term.
The greater meeting of minds came in focusing on taking two respective multipliers of ideas and establishing a business that would employ more people more of the time, thereby contributing to the economy as a whole.
“The SA film industry has experienced incredible growth in the last decade, has earned a global reputation for quality projects and incredible local talent – actors, directors and producers and exceptional technical crews,” says Fitzjohn. “It is a dynamic industry that we believe we can positively impact through our focused investment approach. We aim to make quality productions showcasing local talent that can hopefully follow in the footsteps of the many award-winning projects developed and produced in SA so far,” he says.
A study conducted by the National Film and Video Foundation (NFVF) showed that during the 2016/17 financial year, the film industry in SA made a R5.4-billion contribution to the GDP, compared to R3.5-billion in 2013. According to the study, the operations of the country’s film industry raised the level of production by approximately R12.2-billion.
Talent10 announced the formation of a film company, Nthibah Pictures, late last year with its first feature film currently in post-production. It is a crime thriller, directed by local director Donovan Marsh, whose last project, Hunter Killer, released worldwide late last year and stars Gerard Butler and Gary Oldman. The aim is to release the Nthibah Pictures film at the Toronto film festival in September this year.
“SA has made a ton of world-class movies, but there still isn’t any local distribution partner that can guarantee US theatrical release. With the US box office still the biggest determinant in a film’s success, addressing this represents a massive opportunity for the local film industry,” says Fitzjohn.
“It is no secret that content is the next big thing. People are consuming it way faster than what is being produced and the gap in the market is there for the taking. Our strategy is not just about making great films but a crystal-clear strategy to market. We want to help producers unlock the distribution value chain with a guaranteed theatrical release in the US,” he says.
“We appointed a seasoned studio executive as our CEO based in the US and we are on the cusp of unlocking significant funding for our projects,” he adds. “Further to that, if we could push for local production and global distribution it will create an avenue for South Africans to earn dollars and with rand overheads. And we make sure all the revenue is bound for SA as opposed to it ordinarily settling elsewhere. Most importantly, we don’t have any of the expensive legacy infrastructure issues faced by many production studios in the states.
“The industry in the US directly employs over 2.1-million people and pays wages of $139-billion. If we displace just 1% of this, a $1.4-billion or R20 billion wage bill can come our way. The money then stays here, in our economy and Sipho, the team and I can start changing lives big-time.”
Since its formation, Talent10 has been focused on their Internet of Things investment in successful local company IoT.nxt. The company is expanding fast, winning international contracts, particularly with its patented Raptor gateway solution. Most recently it won a use contract to roll out the product in a multimillion-dollar project designed to optimise energy usage at schools in Florida and Dallas.
Talent10’s investment in IoT.nxt has exceeded R100-million which has paved the way for IoT.nxt’s expansion to Europe with an office set up in The Hague, The Netherlands in 2017 and the establishment of a US operation in Dallas in September last year. IoT.nxt has also partnered with tech giant Dell to develop a so-called IoT-in-a-box solution using IoT.nxt’s Raptor Device.
“We love this industry,” says Fitzjohn. “It is a total leveller of playing fields. IoT.nxt CEO Nico Steyn sold this idea to me while I was trying to book Mumford and Sons tickets for my daughter, and when he tested whether I had been paying attention I responded with ‘it’s like Skynet from the Terminator movie but for doing good’,” he jokes.
“Two years later we were in Silicon Valley laughing about that moment over a beer, and no joke the Mumford and Sons concert recorded at the Voortrekker monument starts playing on the bar radio.”
The company has also invested in Two Oceans Air Conditioning (TOAC), at the time one of the oldest, HVAC family-held businesses in Cape Town.
“We didn’t have the balance sheet to afford large tracts of land. We did, however, see a direct correlation in big heating and cooling systems to property upliftment,” says Fitzjohn.
“Despite some teething problems, a slowdown in property development and some big players going bankrupt, we have managed to build up a significant pipeline of opportunities for the future.”
Amazon, for example, is planning to build three data centres in the country that will need cooling systems to function and TOAC has been successfully appointed on two of these.
Traditional sectors like mining do not form part of Talent10’s mantra. Mining houses are closing shop in SA, and the unions are resistant to change. It is at a stalemate and will not be the way to take SA forward, says Nkosi.
“We have an abundance mentality and we collaborate widely with partners that help to ensure success. We challenge set paradigms and tackle ‘holy cows’ with courage and speed, without arrogance but confident that we can make a difference. We are patient and craft best solutions avoiding short cuts that only have short-term impact,” Nkosi concludes. DM