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    Presentation Presentation Presentation Transcript

    • THE ABC’S OF ACQUIRING INVESTMENT CAPITAL PRESENTATION BY CDC CAPITAL PARTNERS Mrs Adiba Ighodaro – Director, West Africa
      • The facts – who we are, what we do, what we offer.
      • CDC’s investment activity in Africa.
      • CDC’s focus and the challenges.
      • Recent transactions.
      CDC Capital Partners - Contents
      • A leading risk capital investor in emerging markets
      • Committed to ethical best practice
      • Operating on a fully commercial basis
      • 200 professionals: 40 in Africa
      • Targeted sectoral focus
      • Portfolio of US$1.2bn ($315m Africa)
      • Owned 100% by UK Govt -> funds structure to allow: - private sector investors identify with particular region/sector - CDC concentrate efforts on Africa/S Asia + infrastructure
      CDC Capital Partners - the facts
    • Our shareholder’s objectives …
      • Carry on doing what you are doing now, which is to …
      • “ Prove that commercial investment returns can be made in the defined CDC geographies and by doing so contribute towards the corporate and economic development in those geographies.”
      • But also …
      • “ Shout about it as loudly as you can!” and in consequence
      • “ Attract further capital into those geographies.”
    • Where we are today COSTA RICA NIGERIA ZIMBABWE ZAMBIA TANZANIA KENYA PAKISTAN SOUTH AFRICA BOLIVIA LONDON (HQ) EGYPT INDIA (DELHI) INDIA (MUMBAI) INDIA (BANGALORE) CHINA MALAYSIA INDONESIA SINGAPORE THAILAND HOUSTON GHANA MOZAMBIQUE COTE D’IVOIRE MAURITIUS SRI LANKA
    • How much, & what do we invest in?
      • Invest up to US$60m in any one deal
      • Invest in consumer goods and retail, financial institutions, minerals, oil and gas, transport/logistics, TMT, property and healthcare
      • Infrastructure investment is important to us - have established a power company, CDC Globeleq, to manage and grow power assets
    • CDC Globeleq aims to be the ‘Emerging Markets Power Company’
      • Owner, developer, manager and operator of power plants
      • $350m, 17 countries
      • Emerging markets focus
      • Commercial returns
      • Substantial acquisition programme
      • Energy for growth
    • Total portfolio 2002 - by region (US$m)
    • Total portfolio by sector 2002 (US$m)
    • CDC’s investment activity in Africa
      • 1998-2003 US$450m invested in 31 separate businesses in Africa
      • 50% policy
      • Focus on companies rolling out businesses across Africa
      • 11 Africa offices (include main hubs for capital flows – Nigeria, South Africa, Egypt)
      • What we offer – - fresh investment capital focusing on 2 nd & 3 rd stage financing - experience in ‘change of control’ transactions, including MBO s/ MBI s - introduction of co-investors - in-depth local knowledge - sector expertise - a keen appreciation of risk & risk mitigation - access to our worldwide/regional network of contacts
    • CDC’s focus
      • Focus on – Sectors: property, transport & logistics, TMT, minerals, oil & gas, power, financial services, consumer businesses
      • Product type: MBOs/MBIs Mezzanine funding – eg infrastructure
      • Businesses requiring expansion capital
      • First class management capabilities
      • 2001- joint venture established between Norfund and CDC
      • 15 country and regional SME funds (11 in Africa)
      • US$203m under management
      • Norfund committed further US$50m to the venture
      • Recently closed a US$33m Central America fund
      • In process of launching 3 new regional funds
      • Aureos - an effective vehicle for mobilising third party investment
      Aureos Capital
    • Challenges
      • Business principles
      • Misalignment of interests
      • Deal construction versus deal origination – long gestation phase
      • Shaping proposal to a do-able deal (obtaining credible business plan)
      • Quality of earnings and management
      • Vendor price expectations vs. falling market prices
      • US$18m in new gas project, helping bring gas ashore and pipe it inland
      • Largest foreign investment
      • Helping reduce Tanzania’s dependence on expensive imported fuel
      • Should provide 1/3 of country’s power within 5 - 10 years
      Recent deals - Songas, Tanzania
      • CDC invested US$3.1m in this primary healthcare business
      • 50 clinics bringing affordable healthcare to blue collar market
      • Key component of CDC’s regional healthcare strategy
      Recent deals - Prime Cure Clinics, South Africa
    • Recent deals - MSI
      • Financed the continuing expansion of an African telecoms company
      • Invested US$25m
      • Pan African: Existing licences in 13 countries
      • High Quality Shareholders: IFC, Citibank, GE Capital, World Tel, AIG, Bessemer Ventures
      • Protea Hotels, SA
      • Trans African Concessions, SA
      • Tsavo Power, Kenya
      • SSB Ghana
      Some other African deals -
    • MINING SECTOR HIGHLIGHTS CDC CAPITAL PARTNERS
    • AFRICAN MINERALS, OIL & GAS DEALS Africa development of exploration properties US$10,000,000 equity AFRICA LION LIMITED Tanzania additional exploration US$3,168,000 equity EAST AFRICAN GOLD MINES LTD Zambia US$30,000,000 equity KONKOLA COPPER MINES PLC privatisation Mozambique development of an aluminum smelter US$55,000,000 senior/ sub loan facilities MOZAL SARL Ghana gold mine development US$15,000,000 sub- loan facility SATELLITE GOLDFIELDS LTD Ghana gold mine development US$20,000,000 senior/sub loan facilities ABOSSO GOLDFIELDS LTD development of exploration properties South Africa US$2,420,000 equity KUYASA MINING (PTY) LTD development of coal mining interests
    • African Lion Fund
      • CDC founding shareholder of US$34m African mineral fund (1999)
      • Investment in pre-bankable feasibility African exploration & mining projects
      • Partners include Lion Selection, RMB, Investec Bank, EIB & Proparco
      • Currently 12 investments in diamonds, nickel, coal & gold - across Africa
    • East Africa Gold Mines (Tanzania - Gold)
      • CDC invested >US$5m 1997-2001 as exploration seed capital
      • Currently >4m oz gold resource
      • North Mara gold mine developed in 2000 - 100% debt financed by Macquarie Bank
      • Significant exploration successes
    • Mozal I Aluminium, Mozambique
      • US$1.34b smelter outside Maputo
      • CDC investment of US$55m
      • Sponsor - Billiton
      • Co-investor - Mitsubishi
      • Annual capacity of 250,000 tons of primary aluminium ingots
    • BUSINESS PRINCIPLES AND INTEGRITY CDC CAPITAL PARTNERS
    • Introduction
      • CDC also has a core commitment to Business Principles (BPs) which covers Health & Safety, Environmental, Social (HSES) and Business Integrity (BI) issues
      Business Integrity Environment Health & Safety Social
    • The Overall BP Framework
      • CDC uses a linked business principles framework to ensure each investee company is aligned with its business principles and produces the appropriate information for its stakeholders
      BP Management System Policy Organising Planning & Implementing Measuring Performance Reviewing Performance This may be formal eg ISO 14001, etc or informal but with the system elements Investee Company BP Management System Policy Organising Planning & Implementing Measuring Performance Reviewing Performance This may include “dashboard” indicators, BP CBA,, Reputation Management etc CDC Stakeholder Demands Management Systems Check (Investment Management stage) Strategic Indicators (Investment Management stage) Management System Defence / Strategic indicators Initial Checklist (Screening stage)
    • The Strategic Performance Indicator Process Great care has to be taken to ensure that the right balance is found between obtaining the necessary information and not overburdening the investee company ISO 14001? SA 8000? Accident data? AIDs policy? Eco efficiency? Labour practices? Use of renewables? Pro poor? Supplier Codes of Conduct? CSR data? Business Integrity? Sustainable Development? Development?
    • The Strategic Performance Indicator Process Ideally we look for 5 or less strategic performance indicators based on country and/or sector and/or investment
      • Equity/Debt?
      • Size?
      • Majority/Minority?
      • Non-Exec director(s)?
      • Management Commitment
      • Other investors?
      Country/Region ? Sector ? Investment ? Strategic Performance Indicators Investee Company
    • Business Integrity
      • Losing reputation worse than simply losing money
      • Business Integrity – company standards to meet legal and ethical requirements
      • Headline International concerns: - Anti-Corruption - Anti-Money Laundering
      • Anti-Corruption -
      • US took lead in 1977 with FCPA: crime for US companies to bribe foreign public officials
      • OECD catches up in 1999: 35 countries signed OECD Convention on Combating Bribery of Foreign Officials
      • Individual Country laws, e.g. UK – now tightest law
    • Business Integrity
      • Anti-Corruption -
      • US took lead in 1977 with FCPA: crime for US companies to bribe foreign public officials
      • OECD caught up in 1999: 35 countries signed OECD Convention on Combating Bribery of Foreign Officials
      • Individual Country laws, e.g. UK – now tightest law
    • Business Integrity
      • UK Anti-Corruption Law:
        • No bribes, No facilitation payments
        • Criminal offence for Directors in UK, if their companies pay bribes to public officials anywhere in World
      • Internal enforcement better than external sanction
      • International Anti-Money Laundering: OECD Countries’ laws require reporting of money derived from crime
        • All crimes including corruption and tax evasion
        • Reporting even if not a crime in the country it takes place
    •