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Private Equity in Africa A Case Study Presented by: William Jimerson Managing Director, The Africa Millennium Fund Africa ...
Contents <ul><li>What is Private Equity in Africa?  </li></ul><ul><li>The Role of Private Equity in Capital Market Develop...
Africa is a New Frontier for Private Equity Investment <ul><li>There is currently an estimated $2 billion of private equit...
The Essentials <ul><li>Public </li></ul><ul><li>Equity </li></ul><ul><li>Public </li></ul><ul><li>Debt Mkts </li></ul><ul>...
Investors Seek Value- ”Core Values” <ul><li>Value Identification </li></ul><ul><li>Value Creation </li></ul><ul><li>Value ...
Investment Process  Sourcing Opportunities Investment Banks Commercial Banks Development Institutions Local Governments Lo...
Key Investment Themes by Sector TELECOM ENERGY TRANSPORT/ WATER/SANITATION/ ENVIRONMENT FINANCIAL SERVICES AGRIBUSINESS   ...
Structuring <ul><li>Transactions must be structured to accommodate investor and operator/company goals </li></ul><ul><li>I...
Case Study <ul><li>Source of Funds </li></ul><ul><li>Common; $20 MM (Div. Yield: 4%) </li></ul><ul><li>Pref: 10% (Non-cash...
Exit Strategies - Defined at the Outset Asset aggregation-Build Scale Cash is King Identify appropriate operational-Buyout...
Close <ul><li>Though nascent, Private Equity is key to capital market development in Africa  </li></ul><ul><li>There are a...
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    1. 1. Private Equity in Africa A Case Study Presented by: William Jimerson Managing Director, The Africa Millennium Fund Africa Millennium Fund
    2. 2. Contents <ul><li>What is Private Equity in Africa? </li></ul><ul><li>The Role of Private Equity in Capital Market Development </li></ul><ul><li>What are Private Equity Investors Looking For? </li></ul><ul><li>Case Study: A nuts and bolts discussion of how to source, structure, and exit a Private Equity Deal in Africa </li></ul><ul><li>Conclusion </li></ul>
    3. 3. Africa is a New Frontier for Private Equity Investment <ul><li>There is currently an estimated $2 billion of private equity capital dedicated to the Sub-Saharan Africa Market. With over $1 billion targeted for South Africa alone </li></ul><ul><li>Though there is plenty of opportunity—Most transactions lack the proper “Core Values” for success </li></ul><ul><li>Private Equity is an essential element in the development of efficient Capital Markets </li></ul>
    4. 4. The Essentials <ul><li>Public </li></ul><ul><li>Equity </li></ul><ul><li>Public </li></ul><ul><li>Debt Mkts </li></ul><ul><li>Bank Debt Financing </li></ul><ul><li>Private Equity </li></ul>Equity Syndicate Bank Debt Int’l Partner Sponsor Equity Private Placement
    5. 5. Investors Seek Value- ”Core Values” <ul><li>Value Identification </li></ul><ul><li>Value Creation </li></ul><ul><li>Value Maintenance </li></ul><ul><li>Value Realization </li></ul>
    6. 6. Investment Process Sourcing Opportunities Investment Banks Commercial Banks Development Institutions Local Governments Local Entrepreneurs Law Firms Global Corporates Preliminary Evaluation Funds Criteria Macro-Review Evaluation and Due Diligence Business Review Industry and Competitor Analysis Financial Review Valuation Capital Structure Risk Assessment Return Analysis Exit Alternatives Investment Committee Monitoring and Value Creation Setting performance timetable Project implementation Contract negotiations Capital structuring Customer pricing agreements Board representation Liquidity and Exit Strategy Cash Flow Strategic Sales Public Market Listings Shareholder Puts Deal Rejected Deal Rejected Deal Rejected &quot;Core Values&quot;
    7. 7. Key Investment Themes by Sector TELECOM ENERGY TRANSPORT/ WATER/SANITATION/ ENVIRONMENT FINANCIAL SERVICES AGRIBUSINESS PROCESSING
    8. 8. Structuring <ul><li>Transactions must be structured to accommodate investor and operator/company goals </li></ul><ul><li>Instruments include: </li></ul><ul><ul><li>Common Stock </li></ul></ul><ul><ul><li>Equity Linked Units </li></ul></ul><ul><ul><li>Shotguns (Puts and Calls) </li></ul></ul><ul><li>Liquidity is the KEY! </li></ul>
    9. 9. Case Study <ul><li>Source of Funds </li></ul><ul><li>Common; $20 MM (Div. Yield: 4%) </li></ul><ul><li>Pref: 10% (Non-cash) </li></ul><ul><li>5 Yr. Put to Mgmt with 25% ROI </li></ul><ul><li>$50 MM Bank Line of Credit </li></ul><ul><li>$50 MM Vendor Financing </li></ul><ul><li>Use of Funds </li></ul><ul><li>Earnings Expansion: (increase subsidiary ownership) </li></ul><ul><li>Technology Upgrade (Vendor) </li></ul><ul><li>Acquisition of New Markets </li></ul>
    10. 10. Exit Strategies - Defined at the Outset Asset aggregation-Build Scale Cash is King Identify appropriate operational-Buyout Partners STRATEGIC BUYERS SELF- LIQUIDATION PUBLIC MARKET LISTING INVESTMENT STRATEGY EXIT MECHANISM
    11. 11. Close <ul><li>Though nascent, Private Equity is key to capital market development in Africa </li></ul><ul><li>There are a few “Core Values” that drive private equity investment </li></ul><ul><li>It all comes down to Value Realization! </li></ul>
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