Pontus Engström featured in Nyemissioner.se
MTI’s CEO Pontus Engström in an exclusive interview by Nyemission.se about MTI’s IPO process and why East Africa is an interesting region to invest in
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The text below is an unofficial translation from the original article.
MTI Investment – Investment company with a focus on East Africa will soon be listed
MTI is an investment company focusing on East Africa. The company is now making a listing on Nasqad First North Growth Market. We have therefore asked some questions to CEO Pontus Engström.
Can you tell us what MTI Investment does?
MTI is an investment company with a focus on East Africa, with a base in Tanzania, where we both make investments but also build the companies we already own. We see inspiration from Swedish investment companies and through MTI we want to be a strong force for building sustainable, growing, and profitable companies in East Africa.
What makes East Africa interesting to invest in?
East Africa has a huge population growth and a growing middle class. Dar es Salaam in Tanzania is e.g. the world’s second-fastest-growing city, and of course, this creates many opportunities. Major infrastructure investments are being made throughout the region. From previous experiences from developments in other parts of the world, we know that East Africa will also be a strong economic region, strategically positioned to be able to benefit from the large African free trade agreement that currently affects 1.3 billion people.
How long have you been active in the area and what investments have you made?
We registered MTI as a company in 2014, but the first investment did not take place until 2015. But the basic trio has long been in Tanzania, and our co-founder Dr. Neema Mori is from Tanzania. We have made four investments, all in Tanzania. The investments are Atsoko (beauty and cosmetics), Zanrec (waste management on Zanzibar), Shambani Milk (dairy), and Ecohomes (house building). Another investment was made as a convertible loan in another company, but unfortunately, that company did not fulfill its obligations to MTI, so that investment is today written down to zero. We have invested most of our time and capital in making existing companies work, becoming profitable and growing, which we have generally achieved.
You are now making a listing issue of SEK 22.1 million, what will the capital be used for?
The exciting thing about our listing is not only the capital we are about to raise, but even more, a listing creates further opportunities in the form of acquisitions and engagement in the region for a listed investment company. In other words, we not only need to use the capital we have raised to make investments, but we may also make acquisitions where the investment is made with our own shares. Basically, the capital we raise is intended to be used in three areas. 1) Existing investments, 2) New investments and 3) Working capital. Zanrec (waste management) has e.g. won a procurement on Zanzibar and there we already have bridge financing on-site and have purchased some trucks. For Atsoko (cosmetics), we want to invest in more digitalization of the business (beauty and make-up artists) but also investments to enable faster franchise growth. When it comes to new investments, we have several different projects in real estate related to our construction company Ecohomes. Among other things, we have the opportunity to finance and own bank branches, which gives us a stronger cash flow in the group. We believe this is important in the phase we are in now. We also have plans to invest in broadband, in collaboration with a Swedish company.
In conclusion, what do you want to say to those who are considering investing in MTI Investment?
For those of you who are considering owning a share in MTI Investment, this is about us wanting to create good momentum in existing holdings, where we see profits and stronger growth, but our goal is also to make the company significantly larger through smart and value-creating acquisitions so that we also achieve profitability on a consolidated basis. One of the great challenges of investing in a developing country is that institutions and politics are not as stable and established as in a more developed country, but if we go back to 1850s Sweden and Per Anders Fogelström’s book “The city of my dreams” then we can see similar challenges as in East Africa, and today we know in retrospect that it still went quite well in the end.