Venture Capital in Nigeria   The Story So Far An Appetizer Rotimi Oyekanmi President, Venture Capital Association of Niger...
Nigeria <ul><ul><li>Full of Challenges </li></ul></ul><ul><ul><li>OR  </li></ul></ul><ul><ul><li>Full of Opportunities ???...
Challenges <ul><li>Inconsistent economic policies  </li></ul><ul><li>Corruption </li></ul><ul><li>“ Walk” the “Talk”??? </...
Opportunities <ul><li>Population around 120 (or 150??) million people </li></ul><ul><ul><li>Arguably the biggest market in...
Investment Opportunities <ul><li>Significant investment opportunities in </li></ul><ul><ul><li>Telecoms </li></ul></ul><ul...
Nigerian Initiatives (2001/2) <ul><li>Small and Medium Enterprises Equity Investment Scheme  (SMEEIS) - Funds for Equity i...
SMEEIS <ul><li>Recognition and acknowledgement of important role of SMEs in economic development </li></ul><ul><ul><li>SME...
SMEEIS objectives <ul><ul><li>SMEEIS aims for  SUSTAINED ECONOMIC DEVELOPMENT  through: </li></ul></ul><ul><ul><ul><li>Emp...
SMEEIS <ul><li>As at September 30, 2005 </li></ul><ul><ul><li>N31 billion (US$ 220 million) set aside </li></ul></ul><ul><...
Key Players <ul><ul><li>Amalgamated Capital </li></ul></ul><ul><ul><ul><li>Manage SMEEIS funds for a few Banks </li></ul><...
SMEEIS <ul><li>Co-investment opportunities </li></ul><ul><ul><li>Accion (MicroFinance) </li></ul></ul><ul><ul><li>AfriCap ...
SMEEIS <ul><li>Already an  EXIT  in SMEEIS </li></ul><ul><ul><li>Executive Development Business in Lagos </li></ul></ul><u...
Key Players  <ul><li>Non SMEEIS Fund Managers </li></ul><ul><ul><li>Actis   </li></ul></ul><ul><ul><ul><li>Formerly CDC Ca...
Venture Capital Association of Nigeria (VCAN) <ul><li>Industry players collaborated to promote VCAN  </li></ul><ul><ul><li...
Next Steps for VCAN <ul><ul><li>Work with like-minded organisations for: </li></ul></ul><ul><ul><ul><li>Capacity building ...
Outline for breakout session <ul><li>Nigeria – Background Information </li></ul><ul><li>Nigerian Experience </li></ul><ul>...
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Venture Capital in Nigeria

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  • Venture Capital in Nigeria

    1. 1. Venture Capital in Nigeria The Story So Far An Appetizer Rotimi Oyekanmi President, Venture Capital Association of Nigeria African Venture Capital Association Conference Mombasa, Kenya November 9, 2005
    2. 2. Nigeria <ul><ul><li>Full of Challenges </li></ul></ul><ul><ul><li>OR </li></ul></ul><ul><ul><li>Full of Opportunities ???? </li></ul></ul>
    3. 3. Challenges <ul><li>Inconsistent economic policies </li></ul><ul><li>Corruption </li></ul><ul><li>“ Walk” the “Talk”??? </li></ul><ul><li>Brash </li></ul>
    4. 4. Opportunities <ul><li>Population around 120 (or 150??) million people </li></ul><ul><ul><li>Arguably the biggest market in Africa </li></ul></ul><ul><ul><li>Probably the largest telecoms market in Africa </li></ul></ul><ul><li>Probably 2 nd or 3 rd largest economy in Africa </li></ul><ul><li>Major oil exporter (OPEC member) </li></ul><ul><li>Huge informal sector </li></ul><ul><li>Major exporter of skilled professional to Western world </li></ul><ul><li>Democratic Government in place since 1999 </li></ul><ul><ul><li>President Olusegun Obasanjo </li></ul></ul>
    5. 5. Investment Opportunities <ul><li>Significant investment opportunities in </li></ul><ul><ul><li>Telecoms </li></ul></ul><ul><ul><li>Power/Energy </li></ul></ul><ul><ul><li>Banking </li></ul></ul><ul><ul><li>FMCGs </li></ul></ul><ul><ul><li>Shipping </li></ul></ul><ul><li>Due to: </li></ul><ul><ul><li>Democratization (political stability) </li></ul></ul><ul><ul><li>Deregulation </li></ul></ul><ul><ul><li>Privatization </li></ul></ul><ul><ul><li>Reforms </li></ul></ul><ul><ul><ul><li>Pension Reforms </li></ul></ul></ul><ul><ul><ul><li>Banking consolidation </li></ul></ul></ul>
    6. 6. Nigerian Initiatives (2001/2) <ul><li>Small and Medium Enterprises Equity Investment Scheme (SMEEIS) - Funds for Equity in SMEs </li></ul><ul><li>Bank of Industry (BoI) - Funds for Debt financing </li></ul><ul><li>Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) – Ensure Enabling Environment for SMEs </li></ul>
    7. 7. SMEEIS <ul><li>Recognition and acknowledgement of important role of SMEs in economic development </li></ul><ul><ul><li>SMEs claimed lack of LT funding is problem </li></ul></ul><ul><li>In 2001, Small and Medium Enterprises Equity Investment Scheme launched </li></ul><ul><ul><li>Nigerian Banks contribute 10% of PAT for equity investment in SMEs </li></ul></ul><ul><ul><li>Mode implementation via: </li></ul></ul><ul><ul><ul><li>Banks directly </li></ul></ul></ul><ul><ul><ul><li>Bank subsidiaries </li></ul></ul></ul><ul><ul><ul><li>Independent fund managers </li></ul></ul></ul>
    8. 8. SMEEIS objectives <ul><ul><li>SMEEIS aims for SUSTAINED ECONOMIC DEVELOPMENT through: </li></ul></ul><ul><ul><ul><li>Employment generation </li></ul></ul></ul><ul><ul><ul><li>Value added production </li></ul></ul></ul><ul><ul><ul><li>Movement from informal to formal sector </li></ul></ul></ul><ul><ul><ul><li>Develop equity investment culture </li></ul></ul></ul>
    9. 9. SMEEIS <ul><li>As at September 30, 2005 </li></ul><ul><ul><li>N31 billion (US$ 220 million) set aside </li></ul></ul><ul><ul><li>N10 billion (US$ 71 million) invested </li></ul></ul><ul><ul><li>About 200 investments </li></ul></ul><ul><li>Slow pace due to lack of preparedness for quantum of funds available ( funds came before PE/VC skills ) </li></ul>
    10. 10. Key Players <ul><ul><li>Amalgamated Capital </li></ul></ul><ul><ul><ul><li>Manage SMEEIS funds for a few Banks </li></ul></ul></ul><ul><ul><li>Aureos </li></ul></ul><ul><ul><ul><li>SME Investment vehicle (also manages SMEEIS funds for a few banks) . </li></ul></ul></ul><ul><ul><li>First Funds </li></ul></ul><ul><ul><ul><li>Subsidiary of First Bank </li></ul></ul></ul><ul><ul><li>First SMI </li></ul></ul><ul><ul><ul><li>Manage SMEEIS funds for 3 banks </li></ul></ul></ul><ul><ul><li>SME Manager </li></ul></ul><ul><ul><ul><li>Manages SMEEIS funds for 14 banks </li></ul></ul></ul><ul><ul><li>UBA Private Equity </li></ul></ul><ul><ul><ul><li>Subsidiary of UBA </li></ul></ul></ul><ul><ul><li>Unique Venture Capital </li></ul></ul><ul><ul><ul><li>Manage SMEEIS funds for a few Banks </li></ul></ul></ul><ul><ul><li>Several Banks manage the funds in-house </li></ul></ul>
    11. 11. SMEEIS <ul><li>Co-investment opportunities </li></ul><ul><ul><li>Accion (MicroFinance) </li></ul></ul><ul><ul><li>AfriCap (MicroFinance) </li></ul></ul><ul><ul><li>AfricInvest (PE firm) </li></ul></ul>
    12. 12. SMEEIS <ul><li>Already an EXIT in SMEEIS </li></ul><ul><ul><li>Executive Development Business in Lagos </li></ul></ul><ul><ul><li>Investment – N35 mln (US$250,000) </li></ul></ul><ul><ul><li>Dividends – N9 mln (US$ 65,000) </li></ul></ul><ul><ul><li>MBO (after 39 months) – N90 mln (US$ 650,000) </li></ul></ul><ul><ul><li>Gross IRR (in Naira) – 50.1% </li></ul></ul><ul><ul><li>Employment – 5 staff to 35 at exit </li></ul></ul><ul><ul><li>Turnover – N30 mln (US$ 214,000) to N150 mln (US$ 1,071,000) at exit </li></ul></ul><ul><ul><li>Customer base now includes Blue chip companies </li></ul></ul>
    13. 13. Key Players <ul><li>Non SMEEIS Fund Managers </li></ul><ul><ul><li>Actis </li></ul></ul><ul><ul><ul><li>Formerly CDC Capital Partners </li></ul></ul></ul><ul><ul><li>Avante Capital </li></ul></ul><ul><ul><ul><li>Promoted by Ocean and Oil Holdings </li></ul></ul></ul><ul><ul><li>Capital Alliance Nigeria (ACA) </li></ul></ul><ul><ul><ul><li>CAPE fully invested </li></ul></ul></ul><ul><ul><ul><li>CAPE II - follow-up to CAPE being raised </li></ul></ul></ul><ul><ul><li>Vectis </li></ul></ul><ul><ul><ul><li>Newly promoted Fund </li></ul></ul></ul><ul><li>Increased activity by DFIs in Nigeria </li></ul><ul><ul><li>IFC made Nigeria its regional office for West Africa </li></ul></ul><ul><ul><li>FMO also in Nigeria </li></ul></ul><ul><ul><li>European Investment Bank increasing its activities </li></ul></ul><ul><li>Beginning of critical mass for the VC industry </li></ul>
    14. 14. Venture Capital Association of Nigeria (VCAN) <ul><li>Industry players collaborated to promote VCAN </li></ul><ul><ul><li>Initial start-up supported by FF and CDVCA </li></ul></ul><ul><li>VCAN aims to promote growth of Venture Capital in Nigeria </li></ul><ul><li>VCAN formed in 2003 and elected pioneer executives </li></ul><ul><ul><li>Rotimi Oyekanmi – President </li></ul></ul><ul><ul><li>Kayode Ayeni – Vice President </li></ul></ul><ul><ul><li>Soye Adetunji – Treasurer </li></ul></ul><ul><ul><li>Peter Longe – Ex Officio </li></ul></ul><ul><ul><li>Kunle Wright – Ex Officio </li></ul></ul>
    15. 15. Next Steps for VCAN <ul><ul><li>Work with like-minded organisations for: </li></ul></ul><ul><ul><ul><li>Capacity building </li></ul></ul></ul><ul><ul><ul><ul><li>PE/VC practitioners </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Entrepreneurs </li></ul></ul></ul></ul><ul><ul><li>Advocacy for enabling environment for PE/VC to succeed in Nigeria (especially with regulators) </li></ul></ul><ul><ul><li>Work with BoI and SMEDAN to ensure they operate efficiently </li></ul></ul><ul><ul><li>Institute high ethical standards for the profession </li></ul></ul>
    16. 16. Outline for breakout session <ul><li>Nigeria – Background Information </li></ul><ul><li>Nigerian Experience </li></ul><ul><ul><li>Pre 1997 </li></ul></ul><ul><ul><li>1997 – 2002/3 </li></ul></ul><ul><ul><li>2002/3 - Date </li></ul></ul><ul><li>Challenges for VC in Nigeria </li></ul><ul><li>Conclusion </li></ul>
    17. 17. Thank You

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