MJennings

Slide1: 

Increasing Capital Flows to Africa Conference “Strategic Partnerships and Alliances in Private Equity in Africa” Mark Jennings Managing Principal Zephyr Management Africa, and Chairman African Venture Capital Association 30 September 2004

TABLE OF CONTENTS: 

TABLE OF CONTENTS I. Overview: Zephyr Management African Venture Capital Association II. Strategic Partnerships and Alliances: Framework Fund Management Level Investee Company Level Observations III.Contact Details

I. Zephyr Management: 

I. Zephyr Management Zephyr Management founded 1994 By Thomas C. Barry Focus on emerging markets and niche investment opportunities – private equity/investment funds “Invest where Reality is better than Perception” Involvement to date in 13 private equity/investment funds; around US$800 million; nearly 50% of business in Africa

African Venture Capital Association (AVCA): 

African Venture Capital Association (AVCA) Representative body of the private equity and venture capital profession in Africa. Current membership of around 50 institutions. Fourth Annual Conference, held in April 2004 in Morocco, attracted 250 delegates. Next conference in Nairobi in 2005. Initiatives include: quarterly newsletter, training, guidelines on valuation and reporting, annual directory of members, research publications, lobbying to “create an enabling environment”, enhancement of website.

II. Framework for Partnerships/Alliances in Private Equity: 

II. Framework for Partnerships/Alliances in Private Equity

Fund Manager Level : Examples of Partnerships/Alliances: 

Fund Manager Level : Examples of Partnerships/Alliances Zephyr examples: South African Capital Growth Fund (Brait) Capital Alliance Private Equity (Capital Alliance Nigeria) Pan African Investment Partners & Pan Commonwealth African Partners (Kingdom Holding) Other fund-manager examples: AfricInvest Fund (Tuninvest – Tunisia, Morocco, Algeria; IBTC-Nigeria; Fidelity Partners – Ghana; Cauris – Togo; Cenainvest – Cameroon) South Africa Infrastructure Fund (Old Mutual Asset Managers – South Africa, Macquarie Bank - Australia) Other examples: Relationships with specific institutions e.g. accounting firms, financial institutions Relationships with specialists e.g. sector specialists (energy, banking, mining)

Benefits of partnerships/alliances: 

Benefits of partnerships/alliances Complementary skills and resources Extended network; deal sourcing Local presence and local knowledge Product specialisation Combined track record Innovation

New Pan-African Private Equity Fund: 

New Pan-African Private Equity Fund Pan African Investment Partners (PAIP) and Pan Commonwealth African Partners (PCAP) - US$100 million in commitments - Expansion funding to create multi-country African businesses Strategic Partnerships - Variety of roles: funding, co-investment, network - IFC, FMO, DBSA, Kingdom Holding - Joint management company : Kingdom Zephyr Management Company - Exploring co-investment, and other, opportunities to work with other fund managers across Africa.

Slide9: 

Kingdom Holding Company Kingdom Holding Company (KHC) is an investment vehicle headed by HRH Prince Alwaleed Bin Talal Bin Abdulaziz Al Saud, member of the Saudi Royal family, private entrepreneur and international investor Kingdom Holding is estimated to have assets of US $24.6 billion and a capital base of US $19.7 billion Kingdom Holding has a wide range of investments in banking, telecommunications, broadcasting & media, entertainment, hospitality, computers and electronics, agriculture, restaurants, upscale fashion, retailing, supermarkets, tourism, travel, and automotive manufacturing. Selected current holdings include: CitiCorp 4.9% Time Warner, approximately 1% Apple Computers Inc., 5% Canary Wharf, London, approximately 2% Cal Merchant Bank, Ghana, 14% Disneyland Resort and Theme Park, Paris, 17.3% EcoBank, 10% George V Hotel, Paris, 100% Hewlett-Packard (HP), approximately 1% Kodak Corporation, 1% Senegalese Telecom. Co. (SONATEL), 10%

Convergence of Favorable Macro Factors in Africa are Facilitating Private Equity Investment: 

Improvements in Telecommunications & Transportation Infrastructure Globalization & Market Liberalization Privatizations in Critical Industry Sectors (Financial Services, Telecom, Transportation, Energy, Media, etc) Political & Economic Africa Integration Initiatives (NEPAD, etc.) Improved Economic & Business Environment for Capital Investments Convergence of Favorable Macro Factors in Africa are Facilitating Private Equity Investment

Slide11: 

Aided by Improved Investment Climate, Many Firms are Expanding into Regional/Pan-African Businesses

Slide12: 

Investee Company Level Examples of: Strategic partnering: Freeplay with Coleman (Branding and Distribution) MTN Nigeria/ MTN (Operating and Equity partner) Strategic exits: Grey Security Services to Securicor Coinvestment: Celtel (Zephyr/ZMAIF, CDC, EMP/AAIF, IFC, FMO, DEG, Citigroup, Bessemer, Capital International)

Benefits of Partnerships/Alliances at Investee Company level: 

Benefits of Partnerships/Alliances at Investee Company level Strategic and operational skills that partner brings to investee company Market access (for both partner and investee company) Financial capacity of partner Local presence and local knowledge of investee company Exit options for investee company shareholders – e.g. private equity fund (but perhaps also constraints) Coinvestors can bring - financing capacity - complimentary skills - geographic spread: local knowledge and expertise - network – to recruit managers, raise additional funding, etc

Conclusion: 

Conclusion Making partnerships/alliances work can be challenging: Need to establish clear goals and objectives Communication a priority Culture fit and chemistry is critical Flexibility required – needs can change and needs can differ However Real benefits achievable through partnerships/alliances with others Need to look not only internationally but also within Africa for such partners

Contacts: 

Contacts Kingdom Zephyr Africa Management Company Mark Jennings; Johannesburg, South Africa Phone: +27 (11) 268-9402 Fax: +27 (11) 268-6917 Email: mcj@zmlp.co.za Runa Alam; Washington, DC, USA Phone: +1 (202) 342-7095 Fax: +1 (202) 342-7098 Email: rna@zmlp.com Kofi Bucknor; Accra, Ghana Phone: +233 (21) 769-725 Fax: +233 (21) 769-727 Email: jkb@jkb-associates.com African Venture Capital Association Mark Jennings (Chairman – as above) Sanda Oumarou (Secretary General, Cameroon) Phone: +237 223 1898 Fax: +237 223 1911 Email: avcasecgen@avcanet.com Website: www.avcanet.com