Zephyr Management, L.P.Private Equity for Pan African BusinessesCeltel – One Success Story: Zephyr Management, L.P. Private Equity for Pan African Businesses Celtel – One Success Story 23 June 2005 Thomas C. Barry Chief Executive Officer


Slide2: Zephyr Management has sponsored sixteen specialized investment funds with $1 billion in capital (website: www.zephyrmanagement.com) USA – distressed municipal debt Mexico – private equity Korea – private equity Marketable securities funds investing in: All developing countries Latin America Japan High income equity securities 1


Slide3: Zephyr’s Private Equity Funds in Africa 2


What Is Private Equity / Venture Capital?: What Is Private Equity / Venture Capital? Private Equity: Making equity (or equity-like) investments in (usually) privately owned businesses “Private Equity” often used as an umbrella term for different stages/types of equity investments in businesses – e.g., venture capital, expansion funding, MBO/LBO, etc. Venture Capital (subset of Private Equity): Funding of start-up businesses of small, early stage, businesses with very high growth potential Private Equity Funds – typical: Ten-year life Holding period of 3-7 years before exiting 3


Private Equity in Africa: Private Equity in Africa South Africa Over 40 fund managers and over US$6 billion of capital under management Rest of Africa Small, but increasing number of fund managers; >US$2 billion of capital under management (however, no reliable statistics available) Economies generally small; transaction opportunities often cross-border in nature Development Finance Institutions (DFI’s) (e.g., IFC, DBSA, Dutch FMO, DEG, Proparco, CDC) important investors Explosive growth opportunities in some sectors; e.g., cellular communications 4


Slide6: Celtel An African Success Story 5


Celtel Summary: Celtel Summary Celtel was formed and built by African people and raised over $400m equity to invest over $800m in bringing communications to more than 6 million Africans Celtel has been acquired by MTC Kuwait for $3.4 billion in one of the biggest corporate deals ever involving a company operating in Sub-Saharan Africa This deal brings Gulf oil money to Africa and puts over $2 billion back to the Development and private equity funds who were major Celtel shareholders 6


Celtel Growth and Transformation: Celtel Growth and Transformation From licence hunting entrepreneurial team to a $1 billion revenue company ready for IPO in 7 years 1998 1999 2000 2001 2002 2003 2004 Award of licences in Zambia, Republic of the Congo, Sierra Leone Sale of Indian interest Vodafone Egypt founding shareholder Award of licences in Malawi, Gabon, Tchad and DRC Award of licences in Burkina Faso and Niger Increase of stake in Uganda Acquisition of 35% stake and management control of TTCL, Tanzanian fixed-line operator followed by launch of mobile operations Acquisition of 39% of Mobitel, the first mobile operator in Sudan Acquisition of Link Africa IPO preparation Relaunched brand MSICIH renamed Celtel International Acquisition of 60% of Kencell, Kenya 7


Celtel Today – Market Leader in 10 of 13 Markets: 250m Population Under Licence (a) 6m Managed Mobile Customers 4m Proportionate Mobile Customers US$748m 2004PF (c) Proportionate Revenue US$264m 2004PF(c) Proportionate EBITDA Chad Burkina Faso Republic of the Congo DRC Gabon Kenya Malawi Niger Sierra Leone Sudan Tanzania Uganda Zambia Celtel Today – Market Leader in 10 of 13 Markets As of end of 2003 (World Bank) As of end of 2004 2004 Pro-Forma for the acquisition of Kencell 8


World Class Supportive Shareholders: World Class Supportive Shareholders Company has gained trust of world-class investors including significant stakes owned by Africa-focused investment funds Major development finance institutions Leading commercial private equity groups Founder, Management and Employees African Investors: WordTel Africa, Zephyr Management Standard Bank Private equity: Bessemer, Alba, Citigroup, Capital International etc. Intl Emerging Mkts Invt Funds: Actis / CDC, DEG, FMO AIG Infrastructure Fund, IFC Key Shareholders 9


Celtel Achievements: Celtel Achievements 13 mobile operations Largest footprint of any operator across Africa Over 250 million people in licensed countries (30% of all Africans) Over 6 million customers Revenue run rate of over $1 billion a year Ebitda $250m in 2004; target $400m+ in 2005 Half the top management and over 98% of staff are Africans Created Celtel as a major new brand built on the positive side of African culture 10


Zephyr Management’s Role in Celtel: Zephyr Management’s Role in Celtel Invested $24 million from two different Zephyr Funds. Acquisition proceeds from MTC Kuwait totaled $142 million Board of Directors, Chair of Compensation Committee Active in helping secure increased capital in successive rounds Governance role in considering IPO versus sale of Company Africa provides opportunities for investments in high growth fields. Celtel meets global standards of transparency, governance and lack of corruption 11