TBN National Conf. '11 - Mark Paper - Business Partners

1,782 views
1,738 views

Published on

Mark Paper, MD of Business Partners International, talks about investing for a sustainable development impact in the SME sector, unleashing entrepreneurs, and creating jobs.

Business Partners have made 32,000 investments worth US $1.43bn.

Be sure to check out the other presentations, videos and audio recordings from the conference at www.tbnetwork.org/uknc11/media

Published in: Business
0 Comments
1 Like
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total views
1,782
On SlideShare
0
From Embeds
0
Number of Embeds
1
Actions
Shares
0
Downloads
0
Comments
0
Likes
1
Embeds 0
No embeds

No notes for slide
  • As well as providing financing instruments that meet their needs, we know that they need strong mentorship and business guidance
  • TBN National Conf. '11 - Mark Paper - Business Partners

    1. 2. BUSINESS PARTNERS THESIS To have a development impact (unleash entrepreneurs who pursue wealth for themselves and create jobs for many) … in the SME sector (bolstering the “middle class”, the fulcrum of successful democracies) AND To make profits (thus ensuring a sustainable and growing development impact)
    2. 3. Fact Sheet Business Partners is a leading specialised investment group providing debt and equity investment, mentorship and property management services for small and medium enterprises (SMEs) With initial establishment capital of US$ 20 million, the company has grown it’s total investment portfolio, through positive reinvestment activity and without further capital calls, to US$ 300 million, made up of over 3,200 active investments and now has a total net asset value of US$ 380 million. To date the company has made over 35,000 investments to the value of in excess of US$ 1 billion and has facilitated more than 500,000 employment opportunities. Target investment range is between US$50,000 and US$ 1 million
    3. 4. The Business Partners edge is driven by a number of key factors <ul><li>30-year experience </li></ul><ul><li>Exclusive focus on family SMEs that make up majority of SMEs </li></ul><ul><li>Underserved segment by banks and PE funds </li></ul>Focus on the SME segment Efficiency in process Flexible, tailored financing instruments Sector diversifi-cation Active value-adding Achieve scale of reach to SMEs Alignment of interests The Business Partners Edge <ul><li>Suite of five innovative instruments </li></ul><ul><li>Offers flexible combination of secured, partially secured, cashflow, and equity financing </li></ul><ul><li>Self-liquidating structure and preferential cashflow rights mitigate risk </li></ul><ul><li>Deep sector-specific knowledge from 35,000+ transactions </li></ul><ul><li>Detailed understanding of key financial drivers for each sector </li></ul><ul><li>Lowers due diligence costs of cashflow-based financing </li></ul><ul><li>Active technical assistance at every stage of investment </li></ul><ul><li>Dedicated TA facility allocated as loans, not grants </li></ul><ul><li>Database of 400+ experienced Mentors </li></ul><ul><li>Investment strategy is locally deployed, centrally managed and supported </li></ul><ul><li>Local teams with strong local networks </li></ul><ul><li>Target 5-7 deals per investment officer per year </li></ul><ul><li>Proprietary systems and processes ensure quality control throughout </li></ul><ul><li>30-year experience </li></ul><ul><li>Exclusive focus on family SMEs that make up majority of SMEs in Southern Africa </li></ul><ul><li>Underserved segment by banks and PE funds </li></ul>Generate high-volume, high-quality deal flow Offer finance solutions matched to needs Benefit from diversification without high cost Boost returns and build long-term capacity Ensure superior, consistent execution Generate stable returns while building SME sectors
    4. 5. SME Focus (Lifestyle)
    5. 6. The Business Partners edge is driven by a number of key factors <ul><li>30-year experience </li></ul><ul><li>Exclusive focus on family SMEs that make up majority of SMEs in Southern Africa </li></ul><ul><li>Underserved segment by banks and PE funds </li></ul>Focus on the SME segment Efficiency in process Flexible, tailored financing instruments Sector diversifi-cation Active value-adding Achieve scale of reach to SMEs Alignment of interests The Business Partners Edge <ul><li>Suite of five innovative instruments </li></ul><ul><li>Offers flexible combination of secured, partially secured, cashflow, and equity financing </li></ul><ul><li>Self-liquidating structure and preferential cashflow rights mitigate risk </li></ul><ul><li>Deep sector-specific knowledge from 35,000+ transactions </li></ul><ul><li>Detailed understanding of key financial drivers for each sector </li></ul><ul><li>Lowers due diligence costs of cashflow-based financing </li></ul><ul><li>Active technical assistance at every stage of investment </li></ul><ul><li>Dedicated TA facility allocated as loans, not grants </li></ul><ul><li>Database of 400+ experienced Mentors </li></ul><ul><li>Investment strategy is locally deployed, centrally managed and supported </li></ul><ul><li>Local teams with strong local networks </li></ul><ul><li>Target 7.2 deals per investment officer per year </li></ul><ul><li>Proprietary systems and processes ensure quality control throughout </li></ul><ul><li>30-year experience </li></ul><ul><li>Exclusive focus on family SMEs that make up majority of SMEs in Southern Africa </li></ul><ul><li>Underserved segment by banks and PE funds </li></ul>Generate high-volume, high-quality deal flow Offer finance solutions matched to needs Benefit from diversification without high cost Boost returns and build long-term capacity Ensure superior, consistent execution Generate stable returns while building SME sectors
    6. 7. Business Partners has developed proprietary processes and systems, certified to ISO standards for quality management In accordance with ISO 9001:2000 certification, we have developed a number of proprietary operating systems Our unique capabilities in credit risk analysis help streamline due diligence and minimize costs Database Risk analysis Due diligence Deal processing <ul><li>System used to monitor activities from the pre-screening phase of a potential investment through the completion of due diligence </li></ul><ul><li>Output is recommendation for approval to the committee, rejection of business plan by BPI, or withdrawal by client </li></ul><ul><li>Addresses keys issues such as level of deal flow, turnaround times, source of deal flow, sector </li></ul>Orion <ul><li>Software used to provide investment officers with database and resources covering information on all investments made and profiles on sector specific industries, due diligence facilitators, due diligence resources, macroeconomic resources and reference guides </li></ul>Expert Resource Center <ul><li>System designed to assist the investment officers in compiling all terms/conditions relating to investment decision </li></ul><ul><li>Platform for automatic generation of legal documentation </li></ul>Prise <ul><li>Database of specialist technical assistance service providers </li></ul>Mentor <ul><ul><li>Proprietary database of investment information accumulated over almost 30 years </li></ul></ul><ul><ul><li>Unparalleled sector-level insight </li></ul></ul><ul><ul><li>Focusing on most critical risks streamlines due diligence process </li></ul></ul><ul><ul><li>Due diligence costs are minimized </li></ul></ul><ul><ul><li>For most projects, an initial review is usually complete within 4 days </li></ul></ul><ul><ul><li>If a project proceeds to full due diligence, process takes 3-4 weeks </li></ul></ul><ul><ul><li>Loan and equity products are standardized as are legal documents, with very little need for costly customization or negotiation </li></ul></ul><ul><ul><li>Sector-specific knowledge enables focus on most critical credit issues </li></ul></ul><ul><ul><li>Efficient assessment of key credit risks </li></ul></ul>
    7. 8. The Business Partners edge is driven by a number of key factors <ul><li>30-year experience </li></ul><ul><li>Exclusive focus on family SMEs that make up majority of SMEs in Southern Africa </li></ul><ul><li>Underserved segment by banks and PE funds </li></ul>Focus on the SME segment Efficiency in process Flexible, tailored financing instruments Sector diversifi-cation Active value-adding Achieve scale of reach to SMEs Alignment of interests The Business Partners Edge <ul><li>Suite of five innovative instruments </li></ul><ul><li>Offers flexible combination of secured, partially secured, cashflow, and equity financing </li></ul><ul><li>Self-liquidating structure and preferential cashflow rights mitigate risk </li></ul><ul><li>Deep sector-specific knowledge from 35,000+ transactions </li></ul><ul><li>Detailed understanding of key financial drivers for each sector </li></ul><ul><li>Lowers due diligence costs of cashflow-based financing </li></ul><ul><li>Active technical assistance at every stage of investment </li></ul><ul><li>Dedicated TA facility allocated as loans, not grants </li></ul><ul><li>Database of 400+ experienced Mentors </li></ul><ul><li>Investment strategy is locally deployed, centrally managed and supported </li></ul><ul><li>Local teams with strong local networks </li></ul><ul><li>Target 5-7 deals per investment officer per year </li></ul><ul><li>Proprietary systems and processes ensure quality control throughout </li></ul><ul><li>30-year experience </li></ul><ul><li>Exclusive focus on family SMEs that make up majority of SMEs in Southern Africa </li></ul><ul><li>Underserved segment by banks and PE funds </li></ul>Generate high-volume, high-quality deal flow Offer finance solutions matched to needs Benefit from diversification without high cost Boost returns and build long-term capacity Ensure superior, consistent execution Generate stable returns while building SME sectors
    8. 9. The Business Partners Solution: Flexible, Tailored, and Risk Weighted
    9. 10. The Business Partners edge is driven by a number of key factors <ul><li>30-year experience </li></ul><ul><li>Exclusive focus on family SMEs that make up majority of SMEs in Southern Africa </li></ul><ul><li>Underserved segment by banks and PE funds </li></ul>Focus on the SME segment Efficiency in process Flexible, tailored financing instruments Sector diversifi-cation Active value-adding Achieve scale of reach to SMEs Alignment of interests The Business Partners Edge <ul><li>Suite of five innovative instruments </li></ul><ul><li>Offers flexible combination of secured, partially secured, cashflow, and equity financing </li></ul><ul><li>Self-liquidating structure and preferential cashflow rights mitigate risk </li></ul><ul><li>Deep sector-specific knowledge from 35,000+ transactions </li></ul><ul><li>Detailed understanding of key financial drivers for each sector </li></ul><ul><li>Lowers due diligence costs of cashflow-based financing </li></ul><ul><li>Active technical assistance at every stage of investment </li></ul><ul><li>Dedicated TA facility allocated as loans, not grants </li></ul><ul><li>Database of 400+ experienced Mentors </li></ul><ul><li>Investment strategy is locally deployed, centrally managed and supported </li></ul><ul><li>Local teams with strong local networks </li></ul><ul><li>Target 5-7 deals per investment officer per year </li></ul><ul><li>Proprietary systems and processes ensure quality control throughout </li></ul><ul><li>30-year experience </li></ul><ul><li>Exclusive focus on family SMEs that make up majority of SMEs in Southern Africa </li></ul><ul><li>Underserved segment by banks and PE funds </li></ul>Generate high-volume, high-quality deal flow Offer finance solutions matched to needs Benefit from diversification without high cost Boost returns and build long-term capacity Ensure superior, consistent execution Generate stable returns while building SME sectors
    10. 11. Web-based tools leverage Business Partners’ internal knowledge across investment teams and provides maximum reach and support to SME entrepreneurs SME Toolkit is a flagship enterprise development program providing free info/resources for entrepreneurs Our internal intranet provides easy access to internal BP information for all staff <ul><li>In-house system accessible to all staff </li></ul><ul><li>Provides access to all BP proprietary systems, software, and databases </li></ul><ul><li>Provides access to ISO 9001:2000 accredited documentation and standard forms </li></ul><ul><li>Joint initiative with the International Finance Corporation (IFC) and IBM </li></ul><ul><li>Aims to provide information and resources to as many entrepreneurs as possible via the internet </li></ul><ul><li>Offers how-to articles, business forms, financial tools, online training, and information resources developed by leading experts, as well as free software tailor-made for SMEs </li></ul>
    11. 12. The Business Partners edge is driven by a number of key factors <ul><li>30-year experience </li></ul><ul><li>Exclusive focus on family SMEs that make up majority of SMEs in Southern Africa </li></ul><ul><li>Underserved segment by banks and PE funds </li></ul>Focus on the SME segment Efficiency in process Flexible, tailored financing instruments Sector diversifi-cation Active value-adding Achieve scale of reach to SMEs Alignment of interests The Business Partners Edge <ul><li>Suite of five innovative instruments </li></ul><ul><li>Offers flexible combination of secured, partially secured, cashflow, and equity financing </li></ul><ul><li>Self-liquidating structure and preferential cashflow rights mitigate risk </li></ul><ul><li>Deep sector-specific knowledge from 35,000+ transactions </li></ul><ul><li>Detailed understanding of key financial drivers for each sector </li></ul><ul><li>Lowers due diligence costs of cashflow-based financing </li></ul><ul><li>Active technical assistance at every stage of investment </li></ul><ul><li>Dedicated TA facility allocated as loans, not grants </li></ul><ul><li>Database of 400+ experienced Mentors </li></ul><ul><li>Investment strategy is locally deployed, centrally managed and supported </li></ul><ul><li>Local teams with strong local networks </li></ul><ul><li>Target 5-7 deals per investment officer per year </li></ul><ul><li>Proprietary systems and processes ensure quality control throughout </li></ul><ul><li>30-year experience </li></ul><ul><li>Exclusive focus on family SMEs that make up majority of SMEs in Southern Africa </li></ul><ul><li>Underserved segment by banks and PE funds </li></ul>Generate high-volume, high-quality deal flow Offer finance solutions matched to needs Benefit from diversification without high cost Boost returns and build long-term capacity Ensure superior, consistent execution Generate stable returns while building SME sectors
    12. 13. Business Partners provides mentorship and business development guidance at every stage of investment We provide technical assistance via a database of ~400 mentors as well as dedicated TA facilities Most business failures are caused by problems that can be addressed through technical assistance to investees A review over five years of Business Partners’ South Africa portfolio reports that 62% of business failures are due to financial, management, and reporting factors that can be addressed through better due diligence and better technical assistance Poor management of financial activities Lack of management competence Inflation & economic conditions Poor bookkeeping % records Sales & marketing problems Staffing problems Union problems Causes of Business Failure 16% 12% 12% Range of value-adding services Carefully-selected database of experienced mentors TA Facility <ul><li>Management information systems </li></ul><ul><li>Market research and product development </li></ul><ul><li>Quality assurance </li></ul><ul><li>Process efficiency improvements </li></ul><ul><li>Staff training and skill development </li></ul><ul><li>Turnaround advisory for investee companies experiencing difficulties </li></ul><ul><li>Current database of 400+ active mentors </li></ul><ul><li>Mentors as well as independent consultants </li></ul><ul><li>Mentors are carefully selected individuals who have proven themselves successful in their businesses and can share their experiences with investees </li></ul><ul><li>Funds are supported by dedicated TA facilities, funded by donor agencies, managed by BPI </li></ul><ul><li>Each investee to be allocated up to 30% of investment amount in TA funds </li></ul><ul><li>TA funds are allocated as interest-free loans, to be repaid by investee at end of investment term </li></ul>2
    13. 14. The Business Partners edge is driven by a number of key factors <ul><li>30-year experience </li></ul><ul><li>Exclusive focus on family SMEs that make up majority of SMEs in Southern Africa </li></ul><ul><li>Underserved segment by banks and PE funds </li></ul>Focus on the SME segment Efficiency in process Flexible, tailored financing instruments Sector diversifi-cation Active value-adding Achieve scale of reach to SMEs Alignment of interests The Business Partners Edge <ul><li>Suite of five innovative instruments </li></ul><ul><li>Offers flexible combination of secured, partially secured, cashflow, and equity financing </li></ul><ul><li>Self-liquidating structure and preferential cashflow rights mitigate risk </li></ul><ul><li>Deep sector-specific knowledge from 35,000+ transactions </li></ul><ul><li>Detailed understanding of key financial drivers for each sector </li></ul><ul><li>Lowers due diligence costs of cashflow-based financing </li></ul><ul><li>Active technical assistance at every stage of investment </li></ul><ul><li>Dedicated TA facility allocated as loans, not grants </li></ul><ul><li>Database of 400+ experienced Mentors </li></ul><ul><li>Investment strategy is locally deployed, centrally managed and supported </li></ul><ul><li>Local teams with strong local networks </li></ul><ul><li>Target 5-7 deals per investment officer per year </li></ul><ul><li>Proprietary systems and processes ensure quality control throughout </li></ul><ul><li>30-year experience </li></ul><ul><li>Exclusive focus on family SMEs that make up majority of SMEs in Southern Africa </li></ul><ul><li>Underserved segment by banks and PE funds </li></ul>Generate high-volume, high-quality deal flow Offer finance solutions matched to needs Benefit from diversification without high cost Boost returns and build long-term capacity Ensure superior, consistent execution Generate stable returns while building SME sectors
    14. 15. The Fund Manager The Business Partners Incentive system is designed to ensure alignment between investors and investment staff
    15. 16. The Business Partners edge is driven by a number of key factors <ul><li>30-year experience </li></ul><ul><li>Exclusive focus on family SMEs that make up majority of SMEs in Southern Africa </li></ul><ul><li>Underserved segment by banks and PE funds </li></ul>Focus on the SME segment Efficiency in process Flexible, tailored financing instruments Sector diversifi-cation Active value-adding Achieve scale of reach to SMEs Alignment of interests The Business Partners Edge <ul><li>Suite of five innovative instruments </li></ul><ul><li>Offers flexible combination of secured, partially secured, cashflow, and equity financing </li></ul><ul><li>Self-liquidating structure and preferential cashflow rights mitigate risk </li></ul><ul><li>Deep sector-specific knowledge from 35,000+ transactions </li></ul><ul><li>Detailed understanding of key financial drivers for each sector </li></ul><ul><li>Lowers due diligence costs of cashflow-based financing </li></ul><ul><li>Active technical assistance at every stage of investment </li></ul><ul><li>Dedicated TA facility allocated as loans, not grants </li></ul><ul><li>Database of 400+ experienced Mentors </li></ul><ul><li>Investment strategy is locally deployed, centrally managed and supported </li></ul><ul><li>Local teams with strong local networks </li></ul><ul><li>Target 5-7 deals per investment officer per year </li></ul><ul><li>Proprietary systems and processes ensure quality control throughout </li></ul><ul><li>30-year experience </li></ul><ul><li>Exclusive focus on family SMEs that make up majority of SMEs in Southern Africa </li></ul><ul><li>Underserved segment by banks and PE funds </li></ul>Generate high-volume, high-quality deal flow Offer finance solutions matched to needs Benefit from diversification without high cost Boost returns and build long-term capacity Ensure superior, consistent execution Generate stable returns while building SME sectors
    16. 17. Portfolio Growth <ul><li>Cumulatively we have made 32 000 investments worth US $1.43bn </li></ul><ul><li>Have an active investment portfolio of US$ 300 million, made up of approximately 3200 investments </li></ul><ul><li>Make between 428 – 670 investments a year, to the value of between US$ 120 million – US$ 165 million </li></ul>Performance Review
    17. 18. Financial Health <ul><li>Increased the NAV of the company from that of US$ 24 million to US$ 380 million without having made any further capital calls </li></ul><ul><li>Bad debts 0.9% (3 years) – 3.7% </li></ul><ul><li>Dividend payments of US$ 42 million over last 8 years </li></ul><ul><li>Average return on equity </li></ul><ul><li>6.66% - 11.1% </li></ul>Performance Review
    18. 19. Development Impact <ul><li>532,632 new jobs created </li></ul><ul><li>38% of portfolio in woman owned business </li></ul>Performance Review
    19. 20. Recipe: Sustainable SME risk finance, on scale <ul><li>Patient shareholders seeking to do good, sustainably, via a permanent vehicle (“evergreen fund”) </li></ul><ul><li>Burning desire to prove that one could do “development” AND make profits . </li></ul><ul><li>A single-minded, relentless focus on SMEs . </li></ul><ul><li>Appropriate, workable SME risk finance solutions (products) . </li></ul><ul><li>We know that SME finance requires “more than just money” . </li></ul><ul><li>Processes, systems, infrastructure , etc. which enables us to make risk finance solutions available to SMEs on scale. </li></ul><ul><li>Attract, train, reward and retain people </li></ul><ul><ul><li>with a passion for entrepreneurs, entrepreneurship and entrepreneurial development </li></ul></ul><ul><ul><li>who live and behave like investors (not like lenders) </li></ul></ul>

    ×