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Dr. Mark Jennings, Managing Principle, Zephyr Management Africa


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Dr. Mark Jennings, Managing Principle, Zephyr Management Africa

  1. 1. Increasing Capital Flows to Africa Conference “ Strategic Partnerships and Alliances in Private Equity in Africa” Mark Jennings Managing Principal Zephyr Management Africa, and Chairman African Venture Capital Association 30 September 2004
  2. 2. TABLE OF CONTENTS <ul><li>I. Overview: </li></ul><ul><li>Zephyr Management </li></ul><ul><li>African Venture Capital Association </li></ul><ul><li>II. Strategic Partnerships and Alliances: Framework Fund Management Level Investee Company Level Observations </li></ul><ul><li>III.Contact Details </li></ul>
  3. 3. I. Zephyr Management <ul><li>Zephyr Management founded 1994 By Thomas C. Barry </li></ul><ul><li>Focus on emerging markets and niche investment opportunities – private equity/investment funds </li></ul><ul><li>“ Invest where Reality is better than Perception” </li></ul><ul><li>Involvement to date in 13 private equity/investment funds; around US$800 million; nearly 50% of business in Africa </li></ul>
  4. 4. African Venture Capital Association (AVCA) <ul><li>Representative body of the private equity and venture capital profession in Africa. </li></ul><ul><li>Current membership of around 50 institutions. </li></ul><ul><li>Fourth Annual Conference, held in April 2004 in Morocco, attracted 250 delegates. Next conference in Nairobi in 2005. </li></ul><ul><li>Initiatives include: quarterly newsletter, training, guidelines on valuation and reporting, annual directory of members, research publications, lobbying to “create an enabling environment”, enhancement of website. </li></ul>
  5. 5. II. Framework for Partnerships/Alliances in Private Equity Private Equity Fund Investee Companies Fund Manager <ul><li>Strategic partners (growth & development) </li></ul><ul><li>Strategic acquisitions (exit) </li></ul><ul><li>Coinvestment </li></ul><ul><li>Partnership/alliances with </li></ul><ul><li>- other fund managers </li></ul><ul><li>- institutions </li></ul><ul><li>- specialists </li></ul><ul><li>Investors </li></ul><ul><li>Advisory </li></ul><ul><li>Committee </li></ul>
  6. 6. Fund Manager Level : Examples of Partnerships/Alliances <ul><li>Zephyr examples: </li></ul><ul><ul><li>South African Capital Growth Fund (Brait) </li></ul></ul><ul><ul><li>Capital Alliance Private Equity (Capital Alliance Nigeria) </li></ul></ul><ul><ul><li>Pan African Investment Partners & Pan Commonwealth African Partners (Kingdom Holding) </li></ul></ul><ul><li>Other fund-manager examples: </li></ul><ul><ul><li>AfricInvest Fund (Tuninvest – Tunisia, Morocco, Algeria; IBTC-Nigeria; Fidelity Partners – Ghana; Cauris – Togo; Cenainvest – Cameroon) </li></ul></ul><ul><ul><li>South Africa Infrastructure Fund (Old Mutual Asset Managers – South Africa, Macquarie Bank - Australia) </li></ul></ul><ul><li>Other examples: </li></ul><ul><ul><li>Relationships with specific institutions e.g. accounting firms, financial institutions </li></ul></ul><ul><ul><li>Relationships with specialists e.g. sector specialists (energy, banking, mining) </li></ul></ul>
  7. 7. Benefits of partnerships/alliances <ul><li>Complementary skills and resources </li></ul><ul><li>Extended network; deal sourcing </li></ul><ul><li>Local presence and local knowledge </li></ul><ul><li>Product specialisation </li></ul><ul><li>Combined track record </li></ul><ul><li>Innovation </li></ul>
  8. 8. New Pan-African Private Equity Fund <ul><li>Pan African Investment Partners (PAIP) and Pan Commonwealth African Partners (PCAP) - US$100 million in commitments - Expansion funding to create multi-country African </li></ul><ul><li>businesses </li></ul><ul><li>Strategic Partnerships </li></ul><ul><li>- Variety of roles: funding, co-investment, network </li></ul><ul><li>- IFC, FMO, DBSA, Kingdom Holding </li></ul><ul><li>- Joint management company : Kingdom Zephyr </li></ul><ul><li>Management Company </li></ul><ul><li>- Exploring co-investment, and other, opportunities to </li></ul><ul><li>work with other fund managers across Africa. </li></ul>
  9. 9. Kingdom Holding Company <ul><li>Kingdom Holding Company (KHC) is an investment vehicle headed by HRH Prince Alwaleed Bin Talal Bin Abdulaziz Al Saud, member of the Saudi Royal family, private entrepreneur and international investor </li></ul><ul><li>Kingdom Holding is estimated to have assets of US $24.6 billion and a capital base of US $19.7 billion </li></ul><ul><li>Kingdom Holding has a wide range of investments in banking, telecommunications, broadcasting & media, entertainment, hospitality, computers and electronics, agriculture, restaurants, upscale fashion, retailing, supermarkets, tourism, travel, and automotive manufacturing. </li></ul><ul><li>Selected current holdings include: </li></ul><ul><ul><li>CitiCorp 4.9% </li></ul></ul><ul><ul><li>Time Warner, approximately 1% </li></ul></ul><ul><ul><li>Apple Computers Inc., 5% </li></ul></ul><ul><ul><li>Canary Wharf, London, approximately 2% </li></ul></ul><ul><ul><li>Cal Merchant Bank, Ghana, 14% </li></ul></ul><ul><ul><li>Disneyland Resort and Theme Park, Paris, 17.3% </li></ul></ul><ul><ul><li>EcoBank, 10% </li></ul></ul><ul><ul><li>George V Hotel, Paris, 100% </li></ul></ul><ul><ul><li>Hewlett-Packard (HP), approximately 1% </li></ul></ul><ul><ul><li>Kodak Corporation, 1% </li></ul></ul><ul><ul><li>Senegalese Telecom. Co. (SONATEL), 10% </li></ul></ul>
  10. 10. Convergence of Favorable Macro Factors in Africa are Facilitating Private Equity Investment Improvements in Telecommunications & Transportation Infrastructure Globalization & Market Liberalization Privatizations in Critical Industry Sectors (Financial Services, Telecom, Transportation, Energy, Media, etc) Political & Economic Africa Integration Initiatives (NEPAD, etc.) Improved Economic & Business Environment for Capital Investments
  11. 11. Aided by Improved Investment Climate, Many Firms are Expanding into Regional/Pan-African Businesses Pan-Africa (sales in 17) Sub-Saharan Africa (3) Egypt India T3A Ranbaxy Pharmaceutical SADC (6) West Africa (12) West Africa (6) Pan-Africa (4) Pan-Africa (22) Botswana / Zimbabwe Togo Mali South Africa South Africa African Banking Corporation Holdings Ecobank Bank of Africa ABSA Stanbic Financial Services Pan-Africa (13) Pan-Africa (7) Pan-Africa (3) Pan-Africa (10) Pan-Africa (6) Netherlands Nigeria UK, South Africa France South Africa Celtel (MSI) GS Telecom Vodafone, Vodacom France Telecom MTN, MTN Nigeria Telecom Expanding To (No. of African countries) Domicile Company Industry
  12. 12. Investee Company Level <ul><li>Examples of: </li></ul><ul><li>Strategic partnering: </li></ul><ul><ul><li>Freeplay with Coleman (Branding and Distribution) </li></ul></ul><ul><ul><li>MTN Nigeria/ MTN (Operating and Equity partner) </li></ul></ul><ul><li>Strategic exits: </li></ul><ul><ul><li>Grey Security Services to Securicor </li></ul></ul><ul><li>Coinvestment: </li></ul><ul><ul><li>Celtel (Zephyr/ZMAIF, CDC, EMP/AAIF, IFC, FMO, DEG, Citigroup, Bessemer, Capital International) </li></ul></ul>
  13. 13. Benefits of Partnerships/Alliances at Investee Company level <ul><li>Strategic and operational skills that partner brings to investee company </li></ul><ul><li>Market access (for both partner and investee company) </li></ul><ul><li>Financial capacity of partner </li></ul><ul><li>Local presence and local knowledge of investee company </li></ul><ul><li>Exit options for investee company shareholders – e.g. private equity fund (but perhaps also constraints) </li></ul><ul><li>Coinvestors can bring </li></ul><ul><li>- financing capacity </li></ul><ul><li>- complimentary skills </li></ul><ul><li>- geographic spread: local knowledge and expertise </li></ul><ul><li>- network – to recruit managers, raise additional funding, etc </li></ul>
  14. 14. Conclusion <ul><li>Making partnerships/alliances work can be challenging: </li></ul><ul><li>Need to establish clear goals and objectives </li></ul><ul><li>Communication a priority </li></ul><ul><li>Culture fit and chemistry is critical </li></ul><ul><li>Flexibility required – needs can change and needs can differ </li></ul><ul><li>However </li></ul><ul><li>Real benefits achievable through partnerships/alliances with others </li></ul><ul><li>Need to look not only internationally but also within Africa for such partners </li></ul>
  15. 15. Contacts <ul><li>Kingdom Zephyr Africa Management Company </li></ul><ul><li>Mark Jennings; Johannesburg, South Africa </li></ul><ul><ul><li>Phone: +27 (11) 268-9402 </li></ul></ul><ul><ul><li>Fax: +27 (11) 268-6917 </li></ul></ul><ul><ul><li>Email: </li></ul></ul><ul><li>Runa Alam; Washington, DC, USA </li></ul><ul><ul><li>Phone: +1 (202) 342-7095 </li></ul></ul><ul><ul><li>Fax: +1 (202) 342-7098 </li></ul></ul><ul><ul><li>Email: </li></ul></ul><ul><li>Kofi Bucknor; Accra, Ghana </li></ul><ul><ul><li>Phone: +233 (21) 769-725 </li></ul></ul><ul><ul><li>Fax: +233 (21) 769-727 </li></ul></ul><ul><ul><li>Email: </li></ul></ul><ul><li>African Venture Capital Association </li></ul><ul><li>Mark Jennings (Chairman – as above) Sanda Oumarou (Secretary General, Cameroon) </li></ul><ul><ul><li>Phone: +237 223 1898 </li></ul></ul><ul><ul><li>Fax: +237 223 1911 </li></ul></ul><ul><ul><li>Email: </li></ul></ul><ul><ul><li>Website: </li></ul></ul>