FLASHBACK: I fell into a debt of $5 million at age 26 – Real estate entrepreneur

In November last year, Ghanaian entrepreneur, Dr. Sangu Delle recounted his experience of falling into a debt of $5 million at the age of 26.

He explained that, “I first came up with the most creative structuring around it where I was able to get the land owner to give me the land for a piece of equity in the project. The land was valued at $2 million and the balance was $10 million... I then raised $5 million from equity investors while the other $5 million was from debt investors in Japan.”

Read the full story originally published on November 29, 2023 by www.ghanaweb.com.

For most entrepreneurs in Africa, having to carry on debts associated with start-ups or project funding could often become a make-or-break situation for them.

While some economic experts believe debts are not necessarily bad when doing business, huge amounts of debts accrued, coupled with bad financial decisions and unconducive economic conditions could instantly cripple the dreams of most entrepreneurs seeking to spark change.

Most recently, a Ghanaian entrepreneur and author, Dr. Sangu Delle, recounted one of his biggest failures as an entrepreneur when he ventured into the real estate space in Ghana.

He shared that he undertook a massive signature project at the age of 26, which was estimated at $12 million, adding that by the time the project had kickstarted, he was already saddled in debt of about $5 million – a situation which he described as one of his darkest and depressing moments in life.

“I first came up with the most creative structuring around it where I was able to get the land owner to give me the land for a piece of equity in the project. The land was valued at $2 million and the balance was $10 million... I then raised $5 million from equity investors while the other $5 million was from debt investors in Japan,” Dr Delle shared, while speaking during a panel discussion organised by Absa Bank.

Explaining the rationale behind the choice of Japan for the debt investment, Dr Sangu Delle said the Asian country, at the time, had interest rates in the negative territory.

“I had off takers for the project so it was virtually risk free. I also calculated how much the company would make in profit and it was about $4 million. I was very confident that we had struck gold until the two equity investors suddenly died in the same month,” he shared to the gathering.

Despite this major setback, Dr. Delle was optimistic that the off takers for the real estate project would raise another equity investment.

“What I actually realised was that it was easy to raise equity before debt but raising equity after debt was a different situation altogether. As that was happening, Ghana’s economy took a nosedive and long story short, I was not able to get the project up and I was so confident in the deal as I personally guaranteed the loans.

“… I was 26 years old with $5 million of debt around my neck and how I got past that period, it had to take the intervention of God because I sunk into deep and dark depression where I used to wake up at night with panic attacks. It was hands down the absolute worst time of my life,” Dr Sangu Delle shared.