Private Equity in Africa A Case Study Presented by: William Jimerson Managing Director, The Africa Millennium Fund Africa Millennium Fund
What is Private Equity in Africa?
The Role of Private Equity in Capital Market Development
What are Private Equity Investors Looking For?
Case Study: A nuts and bolts discussion of how to source, structure, and exit a Private Equity Deal in Africa
Africa is a New Frontier for Private Equity Investment
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
Though there is plenty of opportunity—Most transactions lack the proper “Core Values” for success
Private Equity is an essential element in the development of efficient Capital Markets
Bank Debt Financing
Equity Syndicate Bank Debt Int’l Partner Sponsor Equity Private Placement
Investors Seek Value- ”Core Values”
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 "Core Values"
Key Investment Themes by Sector TELECOM ENERGY TRANSPORT/ WATER/SANITATION/ ENVIRONMENT FINANCIAL SERVICES AGRIBUSINESS PROCESSING
Transactions must be structured to accommodate investor and operator/company goals
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
Though nascent, Private Equity is key to capital market development in Africa
There are a few “Core Values” that drive private equity investment