How Khudusela Pitje Has Built a R1,6 Billion Business From his first pay cheque of R1 250 per month to spearheading a R1,6 billion turnover business that in many ways is still just getting started, here's how Khudusela Pitje is laying the foundations of exponential growth.

Vital Stats:

• Name: Khudusela Pitje
• Company: New GX Capital
• Est: 2005
• Turnover: R1,6 billion
• Visit: www.newgx.co.za

Khudusela Pitje spearheads New GX Capital, a R1,6 billion turnover company that he still calls a family business. Having built a diversified utilities infrastructure-focused investment holding company structure, his ten year goal is to reach a market cap of R10 billion. He's focusing on utilities infrastructure projects and companies because of their social and economic impact across the African continent.

His strategy delivers on a clear market need as well as meaningful community upliftment. Infrastructure development boosts economic growth and in the process creates much needed jobs in South Africa and across the continent.

But that's all external success. What Khudu is achieving is much more personal. When his father passed away in 1997, he kept the newspaper article announcing the death of the former Mayor of Mamelodi and wrote five words across it: I will make you proud.

HM Pitje isn't here to see what his son has achieved, but that isn't stopping Khudu. He has a vision that is vast and long-term in what he sets out to achieve. There are no shortcuts to greatness. Just focus and dedication to the end goal.

Khudu has a life and business philosophy that he follows unwaveringly: Be a good person and the rest will take care of itself. He doesn't mean be a perfect person — no one is perfect — just be good. Have good intentions and be aligned with the universe.

Don't take shortcuts. Have a long-term view. And if you feel yourself drifting into areas that make you uncomfortable, pull yourself back before they start to become comfortable. Draw a line in the sand and stick to it.

Hand-in-hand with this is transparency, clear communication, and having a bigger vision and mission that leaves a lasting legacy. Some of these practices have been ingrained in Khudu his whole life. Others he learnt the hard way.

"Business takes its toll on family. You put everything into it, particularly in the early years. There's no off switch. This entrepreneurial journey has partly cost me one marriage and I'm determined it won't cost me two. I also always tell my team that mine will be the only divorce in this company. There is nothing more important than family. We need to remember why we're doing this in the first place."

After his divorce, Khudu spent over a hundred hours in personal development workshops that focused on wellbeing, brought him clarity on the Foundation he had launched and helped him to stop his endless procrastination in implementing township school programmes.

He discovered what he stood for and what his inner core was telling him. "I've become very honest and direct in the way that I deliver a message. I've been told I'm often too direct, but it's a lesson I learnt from my divorce process. You need to be tactful, but also direct.

"It's too easy to not communicate; to get drawn into daily "busyness' and not touch base. I approach my marriage today with absolute honesty and directness, but it's a critical element in my business as well. If there are no grey areas and everyone knows where they stand, then we can all move forward on a basis of trust.

"If one of my shareholders hears I'm having a meeting with a competitor for example, they know I'm not doing something behind their back, but something that's in the best interests of our business together. If I'm unhappy about anything, they're the first to know.

My team all know exactly what's expected of them. "I've done more deals post my self-understanding and it's because I'm more at peace with myself and clear in my direction, mission and vision."

This clarity has helped Khudu build up New GX, but it's also given him the mental and physical room to focus on the HM Pitje Foundation, which he founded in 2009 in memory of his late father. The Foundation is managed by his wife, Kgomotso Moloantoa, who grew up five houses from Khudu's home in Soshanguve and is as passionate about the same community.

"New GX is essential to the Foundation because you need a strong sponsor to make a difference, but I realised that I also hadn't fully understood that I was the custodian of my father's legacy. I needed to find something that would give me direction — I knew I wanted to give back to the communities from our upbringing and that I wanted to do it in the name of my father, but I was always too busy. Now I understand that you will always make time for something that's truly important.

"Khudu in Sepedi is a turtle. What I discovered during my personal development workshops was that I needed to articulate the vision. Turtles outlive humans. They have a shell that's hard and that you can't pierce. The turtle as a legacy-builder and protector of the HM Pitje vision is something we captured in the emblem of the Foundation.

We all need a vision that we can articulate. We need something to believe in. Once I could visualise what I was doing, I had a better direction that I could follow through with." Within six years, Khudu plans to spend 40% of his time on the Foundation. His focus is becoming clearer and clearer.

"You also need clarity to be able to share it. The first person to benefit from my first dividend was my mom — I bought her a house and a car. You need to start at home. But from there, it's become an ethos not just of the Foundation, but also New GX. The Foundation is part and parcel of the family business and my staff know it. A Foundation function is a company function."

For Khudu, life goals and business goals are interwoven — they each feed the other. And nothing has happened by accident. There is a degree of luck — right place at the right time deals — but on the whole it's been a carefully planned and constructed journey, always focused on the long term.

LAYING THE RIGHT FOUNDATIONS

In 2006, Khudusela Pitje was one of the shareholders of Community Investment Ventures Holdings (CIVH) listening to a pitch: A friend of one of the shareholders had seen a truck in France that could cut slits along the side of suburban roads for fibre lines. His pitch included the truck and the rehabilitation of roads after fibre was installed. All he needed was R7 million.

This was the launch of Dark Fibre Africa (DFA), an open-access fibre company that has invested in over 10 000 km of fibre infrastructure in South Africa, and has positively transformed the local telecommunications sector.

New GX has a direct and indirect stake of 35,3% in CIVH, DFA's holding company. It's not his only impact on this sector. At age 35, Khudu was part of the team that connected the first privately-owned undersea cable, SEACOM to mainland South Africa in Mntunzini, unlocking potential for research institutions in South Africa. In addition to DFA, three operating companies of New GX's businesses didn't exist pre-2007.

So, where did New GX begin? In 2004, Khudu and a friend invested in their first business, Shangoni Management Services, a South African-based environmental risk management business whose largest
contract was in the Nigerian delta region.

The business's annual turnover was R5 million and the founders wanted to strengthen their base in South Africa. The problem was that for them to secure additional mining clients in South Africa, they needed a BEE partner. Khudu needed a business that he could invest in, and he needed something relatively small that he could afford. It was a win-win.

They bought 51% of Shangoni for R500 000, paid for from the dividends of his shareholding because he didn't have upfront capital. It was Khudu's first deal. The second was AlanDick, a large multinational entering South Africa. By 2005, New GX was a start-up born from Khudu's vision to launch an operational BEE investment company that could execute larger deals, with the support of Absa Capital private equity.

Khudu is a dealmaker, but from the word go, his goal wasn't to just be another holding company. He was 30 years old and his aim was to become an African industrialist.

Why? Because if experience had taught him anything, it was that in developing countries, governments will always fail in delivering utilities services. New GX's 2028 goal to reach a market cap of R10 billion is based on a micro-utilities strategy that recognises an opportunity to implement private-public partnerships or outsource the running of utilities, from fibre to waste management, water and energy.

"The days of large-scale water plants are limited," says Khudu. "Instead, if someone is building a large commercial park or residential estate, they're going to look for water and waste solutions that can be funded and run by institutions with capital and skills — and that's where we come in. Everything we do is tied together by this golden thread.

"South Africa and Sub-Saharan African governments are drowning in debt. Our GDP growth is lagging behind the rest of the world and it's because there isn't enough power and infrastructure investment across the continent. You can't rely solely on parastatals, and so we have a business opportunity as well as an impact investment opportunity to grow economies and communities through access to infrastructure."

Khudu is currently raising R4,3 billion from local and international investors to build on the foundations he's already laid over the past 14 years. New GX recently concluded a R1,6 billion capital raising mandate with Nedbank and is working on raising R2,7 billion in infrastructure equity in 2019.

"All relationships are important and you need to treat them as such. Never burn bridges. Don't step on someone else to get where you're going. If you're always focused on the long-term, you won't take short-cuts that damage relationships."

BECOMING AN INDUSTRIALIST

Khudu didn't wake up at the age of 29 and decide he was going to become an industrialist. This level of growth and planning doesn't happen by accident. It takes time, practice, an extraordinary vision — and the right background.

"From an early age, I planned to do something that would take my family out of the circumstances we were in after my father lost everything when politicians in those days destroyed his businesses. I didn't know exactly what it would be — that would only come later — just that I needed to do something."

Khudu was a trader's son. His father, HM Pitje, was a township businessman in the 1970s and 1980s who poured everything he had into the communities of Soshanguve and Mamelodi. "When I was doing my articles, I'd meet colleagues in the profession who'd recognise my name and ask me if I was HM's son. Some of them were there because he'd helped them pay their fees when they couldn't afford to do so."

HM loved his community. Mamelodi Stadium is named after him because, as Mayor of Mamelodi, he built it, raising the funds himself and encouraging soccer teams to play there. He set up the first Post Office and was planning Mamelodi's first mall. "His politics didn't align with the local council.

When I was 14, they went after him. They either needed to kill him, or kill his businesses and so that's what they did — they went after him for R400 000 in rates and taxes. He had a bad lawyer and eventually he was sequestrated."

A commission of enquiry proved that HM was targeted, but by then it was too late. He had gone from prosperous businessman to bankrupt. "I grew up listening to my dad talk about community upliftment and business around the dinner table. By the time I was in my early teens I could read bookkeeping ledgers. I understood cash flow and trading. I'd watched my dad build everything we had from the ground up."

At the time, Khudu and his brothers were all in a private school. "My dad was uneducated, but he wanted more for us. He had to pay our school fees in cash when he had the money. He'd arrive at school with envelopes and pay for a few months, until he could get enough cash together again for the next payment.

It was this determination to make sure his sons got a good education that put Khudu on the path he's on today.

"When everything was taken away from us, my mom got a job at Netcare in Rosebank. She was able to cover our mortgage and keep us alive, but she couldn't afford our school fees."

Khudu left St Andrew's College (SAC), but two months later, SAC contacted him — the headmaster had reached out to Lindsay Saker, who had agreed to pay for Khudu's all-inclusive bursary. "If I hadn't already been there, that wouldn't have happened. My dad laid this foundation for me."

More than that, his dad's attitude and perseverance shaped Khudu's mindset as well. "My dad was 76 when he lost everything, and his response was, "I think if I save enough money, I can buy a bakkie and we can sell vegetables.' That was it. He just picked himself up and carried on. My mom and dad pulled us together and made sure we all believed it would work out."

As a result, Khudu didn't resent what had happened to his family. He focused on the future instead — on how he could make a difference. "I was in Standard 7 (Grade 9) when our family lost everything, and then my dad died seven years later. He had laid such an incredible foundation for me by then.

"What we do at New GX is a culmination of being a trader's son and the technical expertise that I got from being a chartered accountant and working at JP Morgan in London and South Africa. The trader's son loves risk. He sees an idea or a person and wants to back it. The technical person asks how they can raise enough money to execute the idea and grow it into a big organisation.

"I studied accounting — that was clearly my strength at school, I was always top of my class in high school — and from there I went into investment banking. Accounting and auditing is the opposite of risk, it's all about mitigating risks, and I needed that to balance the inherent appetite for risk that I got from my dad. After that, I needed to learn how to structure deals. That was my focus."

KNOW YOURSELF AND WHERE YOU'RE GOING

While studying to be a CA, Khudu convinced Lindsay Saker to let him go to follow his dream. "My bursary from Lindsay Saker had continued after matric. I was studying at Wits University and working full time through their traineeship programme, earning R1 250 a month. But I wanted to work in an accounting environment — I knew that was the foundation I needed if I was going to build something incredible."

Khudu still sees himself as a product of Lindsay Saker's support and recently organised a meeting with the CEO of Imperial Holdings to discuss what they can do together to help educate disadvantaged kids. "We need to better people's lives.

I'm doing what I do today, through the business and the Foundation, because SAC and Lindsay Saker took a chance on me and supported me. Imagine how many kids are out there with the ability to change the world. They just need support and a solid education."

Once Khudu was qualified as a CA, he started looking into investment banking. "I very purposefully went out to secure the skills and experience I needed. JP Morgan offered me a position and one of my conditions was that I be deployed to an international office. Nine months later I was on my way to London."

Khudu had been completely upfront in his interview — he only planned to be an investment banker for five years. After that, he would strike out on his own. It was hard but rewarding work. "We worked 18-hour days. If someone left the office before midnight we'd jokingly refer to it as a half-day."

By the time Khudu returned to South Africa, he'd saved enough money to support himself for 18 months and he understood the investment banking landscape. He'd also started building a network. He got off the plane, and the next day arrived back in the Joburg office with his letter of resignation.

"I'd always been upfront that I wouldn't leave JP Morgan for another bank, but that when the time came, I would leave to start my own business. When I resigned, I was clear that the time had come, and I didn't want to use their money to launch my company because I was still working there, earning a salary, but focused on my side business. I was going to sink or swim on my own.

"Every person, every entrepreneur, needs a code that they won't break. You have to have lines in the sand. The bigger we get, the more important this becomes."

I have an understanding with all of our CEOs and MDs: When you think your toe has touched that line, call me. Let's discuss it. I do the same. I call someone I trust or one of my mentors if anything makes me feel uncomfortable.

We can then openly and honestly discuss what we're comfortable with, whether we should walk away or if there's a way to restructure things in such a way that the toe is no longer on that line. We've walked away from many projects because things have entered grey areas that don't align with our code.

"Once you start straying over that line, it moves further away, and you don't stop. Eventually, you lose sight of it entirely. That's not how I want to operate. We're thinking long-term, large-scale infrastructure investment projects. Reputation is everything. It takes years to build and yet you can lose it in an instant if you don't have clear lines that you stick to."

That's not to say Khudu and his team haven't faced serious challenges and litigations. "We discovered that one of our businesses, which held a large contract with Eskom, was being lied to by the management team — a team I knew and trusted. We were missing R60 million and didn't know where to begin." It was devastating for Khudu and his team, not only because of the personal betrayal, but from a business perspective.

"It was value-destroying. This was not why I went into business. I always want to have fun while working hard, but our reputation is everything. We parted ways with the entire management team of this business to send that message home. I

t has a short-term material cost, making a decision like that, but long-term I believe it's the only way forward. "I had to take personal responsibility — I hired and trusted the CEO of the business — and part of that responsibility is acting decisively. All we have is our name and brand."

This attitude extends to everything New GX is involved in. "Always look at your exposure to any decision or deal holistically," says Khudu. "We're currently invested in a project that is facing some challenges as a result of the client not complying with its part of the contract.

Our exposure is R20 million, but I also used my name to convince another partner to invest R20 million in the deal — which means our exposure is actually R40 million. I need to take responsibility for decisions that were made because my brand and reputation are trusted in the market."

Building on success

It's a reputation that has taken over a decade to build, but it's been done slowly and consciously. It's the reason Khudu can climb onto a plane to the UK to raise R2,7 billion in funding.

"I'm able to explain to the investors I meet who has given me money in the past, what their returns have been, who we've supported as an owner-managed business, the returns they've received, and what our returns were — and I'm covering 14 years. I'm immediately lowering the risk of any investment we receive."

The journey started off slowly, but soon gathered momentum, thanks in large part to the networks and industry knowledge Khudu built up before he launched New GX. Khudu launched his business career with Shangoni, but it was his second investment that put him on the map. "My financial advisor, Michael Strauss, told me that AlanDick wanted to enter the South African market.

But they were facing two obstacles. First, they needed a BEE partner. Second, even though AlanDick is a global telecoms company and local telcos like MTN and Vodacom were asking them to enter the market, it would be a small local subsidiary — too small for the big players in this space to take any interest."

This made it the ideal play for Khudu and his partner. "In corporate finance I'd spent a lot of time structuring telecoms deals. I understood the telco space and it ticked the infrastructure box that interested me. I pitched for it."

Khudu's bid secured him a 30% stake in AlanDick's R2 million South African start-up, with the international holding company retaining a 70% stake. Khudu became the business's MD and got to work.

"In many ways, AlanDick was a launchpad for us. I started doing deals with Vodacom, MTN and other big local telcos — relationships that have been crucial to my growth. It was also a big factor in Absa's R97 million private equity investment in one of my later deals through New GX."

At the time, Absa's private equity arm was looking for BEE investment vehicles to invest in. "They'd only executed a meaningful BEE partnership deal with Mvelaphande and were looking for other models to back. I managed to get a meeting with the heads of wealth and private equity and pitched New GX to them.

Their key question was what I'd done so far, which at that stage was invest in the environmental risk business and launch AlanDick in South Africa, but what really piqued their interest was my plans for AlanDick — I had a strategy to buy AlanDick Africa operations, a $100 million business, off the back of the R2 million turnover entity I was involved in.

"They liked that idea. A few months later we were on a plane to the UK to pitch the deal to AlanDick's head office. They turned us down, but the Absa team had seen my potential and wanted to invest in New GX, provided I found a "grey-hair' to support me. At 30 they felt I was too young to be doing this on my own."

Once he found a "grey hair' partner, Absa pitched its offer: An equity stake in Pretoria-based holding company, CIVH, set up by ex-Dimension Data executives who were investing in other owner-managed businesses.

"It was my first experience in structuring an en commandite partnership, which is often used by private equity investors, and I needed to use some of my personal savings to come up with R100 000 to put some skin in the game. In return, I managed a 37% equity stake in CIVH as a general partner."

It was CIVH that developed DFA into South Africa's leading open access fibre network. "New GX Partnership II owns a significant stake in the asset, but the family, through New GX, has also invested a significant amount into CIVH. The platform is poised for growth and we see enormous potential."

To date, New GX has invested in multiple businesses across the infrastructure sector. As a business entity, it plays an active role as an advisor to all of the companies it invests in, for the benefit of all investors.

For the most part, New GX has funded its own growth through dividends and by gearing its balance sheet. To take the business to its next level of growth, it is now necessary to raise additional capital.

"Over and above the capital we are raising and the preference share facility we're secured, we've created a Joint Venture with RMB Ventures. The JV gives us R1,2 billion to invest in education, health tech, Fintech and general industries."

How did Khudu get here? "We promote our track record and our niche sector focus in micro-utilities, which together with proactive portfolio management has delivered superior historical growth.

Our future is in infrastructure within the continent and the Middle East. We are a socially conscious impact investor with a strong management team. We focus on both economic and social returns." It seems to be a magic formula.

LESSONS LEARNT

• As an entrepreneur, you're a storyteller. If you can tell it well and accurately and make sure everyone can understand the punchline, you will get buy-in.

• Understand which risks make sense and which don't. One of our powers as entrepreneurs is that we love risk — we embrace it. But be careful: Risk that you can control is good. Risk that is outside of your control and that relies too much on the integrity of others is a danger.

• Ask yourself this question when you make a decision: If I cut this, what drops? What will be affected down the line? There are always consequences to every action. Have you considered them all and mitigated against them?

• Always know where you came from. I am the product of my parents, St Andrews College, Lindsay Saker… don't forget who helped you get to where you are today. Give back to the people and organisations who have supported you, and then, when you have the time and finances to do so, give back to the community at large.

• Cash flow is king. Find an honest, good and dynamic Financial Director. New GX has that in Graham McGregor. Have a budget for everything and stay liquid.