Outsourcing Services Limited (OSL) was one of the many successful investments of African Capital Alliance’s (ACA) first private equity fund. African Capital Alliance acquired a 40% stake in OSL in 1999, the other 60% being held by an international partner, Gray Security Services of South Africa. Gray Security Services was subsequently acquired by Securicor, which then merged with Group 4 to become G4S.

OSL is a security outsourcing company that supplies security guards. It was a high risk investment, especially given the difficult security situation in Nigeria. The minimum wage is strictly enforced and OSL’s security guards are better trained and better paid than guards at competitor firms. The percentage of company revenues spent on salaries at OSL is 51%, as compared with an industry average of around 41%.

Guards are provided with free medical insurance and their families receive life insurance. OSL’s high standards have enabled the company to charge its corporate clients a premium for its security services. The better training, higher wages and strong employee benefits packages have helped to lift standards across the Nigerian security industry as a whole.

OSL has been a great commercial success. The company has grown from a start-up to become the leading firm in the outsourced security industry in Nigeria. G4S bought African Capital Alliance’s stake in OSL for $10m in 2009. This is one of the most successful exits to date from CDC’s fund-of-fund’s portfolio, following an initial investment by the fund manager of only US$235,000.

1 From year-end 2008, except for when stated otherwise.
2 US$235,000 invested by African Capital Alliance’s first fund, Capital Alliance Private Equity 1. CDC’s investment in Capital Alliance Private Equity 1 is US$5m; total fund size is US$35m.
3 2002-2008