Security, Stability and Sustainability         Making a Positive Difference in Frontier and Emerging Markets              ...
NOTICE TO INVESTORS    The limited partnership interests (the “Interests”) in Sarona Frontier Markets Fund 2 LP (the “Fund...
ABOUT A NEW OLD MODEL       VIVINA BERLA
THE WORLD IS CHANGINGGDP Growth Rates are Diverging  8.0%                                                     Frontier & E...
THE WORLD IS CHANGING2000-2030 GDP Annual Growth Rates                                                                    ...
THE WORLD IS CHANGING    Share of Nominal GDP               2010                                                          ...
THE WORLD IS CHANGINGThe Phenomenon of Urbanization                                                 • “Population growth a...
THE WORLD IS CHANGINGThe Rising Middle Class : An Engine for Growth   80   70                                    Middle Cl...
THE WORLD IS CHANGING    SME contributions to GDP                        37%                                         30%  ...
AID IS NOT ‘THE’ SOLUTION                                      Aid and Growth 1970-2000                                   ...
AID IS NO LONGER WELCOMEThe American – Journal of the American Enterprise Institute                       3 July 2007     ...
THE UNINTENDED CONSEQUENCES OF AID •   Fosters dependency •   Distorts markets •   Does not increase tax base •   Misalign...
SARONA BELIEVES IN AN ALTERNATIVE MODELDevelopment of Private Equity Industry in Emerging Economies• Started in mid-90s• M...
INVESTORS ARE BEGINNING TO SEE IT TOO                     Now recognizing the potential14                   Sarona at TBN ...
INVESTORS ARE BEGINNING TO SEE IT TOOThey want to align their investment with their values• Ethical• Environmental• Social...
SARONA’S VISION  Working to bring our contribution to Security, Stability and Sustainability  • Bridge between private cap...
TRUE TO OUR ETHICAL AND MORAL VALUES     • Six decades of investing in Frontier and Emerging markets under the banner of  ...
WHAT WE LOOK FOR IN OUR GPS…AND WE LOOK HARD!                                • Local presence, knowledge, experience: an ‘...
STABILITY THROUGH LONG TERM DIVERSIFICATION     Portfolio Exposure                Portfolio Exposure                      ...
SARONA’S IMPACT SO FAR     Investible Universe     China and Russia     Developed Markets41 countries               15,156...
Questions & Answers
saronafund.com         Gerhard Pries                                          Vivina Berla   sarona@saronafund.com        ...
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Vivina Berla, Sarona Asset Management – "Security, Stability and Sustainability" handout version

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Vivina Berla, Sarona Asset Management – "Security, Stability and Sustainability" handout version

  1. 1. Security, Stability and Sustainability Making a Positive Difference in Frontier and Emerging Markets TBN Annual Conference - London, 25 May 2012This presentation does not constitute an offer to sell, or a solicitation to buy, any interest. Any such offer or solicitation will be made to qualified investors only by means of a final offering memorandum and only in those jurisdictions where permitted by law
  2. 2. NOTICE TO INVESTORS The limited partnership interests (the “Interests”) in Sarona Frontier Markets Fund 2 LP (the “Fund”) will be offered pursuant to exemptions from the prospectus and registration requirements of applicable securities laws in the United States. As a result, the Interests in the Fund will be subject to restrictions on their transfer under applicable securities laws. In addition, the terms of the Fund’s limited partnership agreement will also contain restrictions on the transfer of these Interests. All of the statements made and information contained herein concerning the Interests are qualified in their entirety by reference to the final offering memorandum and limited partnership agreement for the Fund. In making an investment decision, investors must rely on their own examination of the Fund and the terms of the offering, including the merits and risks involved. The securities offered hereby have not been recommended by any federal, state or provincial securities commission or regulatory authority. Furthermore, the foregoing authorities have not confirmed the accuracy or determined the adequacy of this document. Any representation to the contrary is a criminal offense. The Interests in the Fund are subject to restrictions on transferability and resale and may not be transferred or resold except as permitted under the United States Securities Act of 1933, as amended, and applicable state securities laws, pursuant to registration or exemption therefrom. Investors should be aware that they will be required to bear the financial risks of this investment for an indefinite period of time. Investment objectives stated herein are goals based on historical results of Sarona’s funds and their typical gross and net exposures. There is no guarantee that Sarona’s funds actually will, or are likely to, achieve these objectives. This summary is for illustration and discussion purposes only and is not intended to be, nor should it be construed or used as, financial, legal, tax or investment advice or an offer to sell, or a solicitation of any offer to buy, an interest in any fund. Sarona Asset Management, Inc. (“Sarona”) acts as investment manager to the Fund. Any offer or solicitation of an investment in any fund managed by Sarona may be made only by delivery of a fund’s Confidential Offering Memorandum to qualified prospective investors. This presentation is provided to you on a confidential basis. This presentation may not be reproduced in whole or in part, nor may its contents be disclosed to any other person without the prior written consent of Sarona.2 Confidential
  3. 3. ABOUT A NEW OLD MODEL VIVINA BERLA
  4. 4. THE WORLD IS CHANGINGGDP Growth Rates are Diverging 8.0% Frontier & Emerging Markets 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% Developed Markets 0.0% 1965 1975 1985 1995 2005 Source: World Bank (2011) Sarona at TBN Annual Conference, London 25 May 2012 Confidential
  5. 5. THE WORLD IS CHANGING2000-2030 GDP Annual Growth Rates 7.1% 0.9% Developed World Sarona Target RegionsSource: World Bank (2012), OECD (2012) Sarona at TBN Annual Conference, London 25 May 2012 Confidential
  6. 6. THE WORLD IS CHANGING Share of Nominal GDP 2010 2030 17% 31% 5% 39% 78% 30% Developed Countries Russia & China Sarona Target Regions Source: World Bank (2012), OECD (2012)6 Sarona at TBN Annual Conference, London 25 May 2012 Confidential
  7. 7. THE WORLD IS CHANGINGThe Phenomenon of Urbanization • “Population growth and rapid urbanization mean creating the equivalent of one new city of one million people every week to 2050”* • In 2010, 33% of the urban population in developing regions lived in slums** - Sub-Saharan Africa 62%=200 million people - Southern Asia 35% =190 million people *The Anthropocene Journal, March 2012 ** UN HABITAT State of the World’s Cities 2010/2011 Sarona at TBN Annual Conference, London 25 May 2012 Confidential
  8. 8. THE WORLD IS CHANGINGThe Rising Middle Class : An Engine for Growth 80 70 Middle Class as % of Global Population 60 50 40 30 20 10 0 1500 1600 1700 1820 1913 1950 1980 2005 2025Source Chart 1: Surjit S. Bhalla, “Second Among Equals: The Middle Class Kingdoms of India and China”, May 2007 Sarona at TBN Annual Conference, London 25 May 2012 Confidential
  9. 9. THE WORLD IS CHANGING SME contributions to GDP 37% 30% 36% 16% 39% 51% 47% 31% 13% Low Income Countries Middle Income Countries High Income Countries Informal SME Remaining Source Chart 2: Small and Medium Enterprises Across the Globe: A new Database, Ayyagari, Beck & Demirguc-Kunt, the World Bank Development Research Group, August 2003: "Venture Capital for Development" Patricof & Sunderland, August 20059 Sarona at TBN Annual Conference, London 25 May 2012 Confidential
  10. 10. AID IS NOT ‘THE’ SOLUTION Aid and Growth 1970-2000 10 year moving average % % Growth/GDP per capita Aid/GNI Source: ECIPE Analysis of World Development Indicators Online Sarona at TBN Annual Conference, London 25 May 2012 Confidential
  11. 11. AID IS NO LONGER WELCOMEThe American – Journal of the American Enterprise Institute 3 July 2007 $300 billion to Africa since 1970: “….there is little to show for it in terms of economic growth and human development” Paul Kagame President of Rwanda (Brendhurst Foundation Discussion Paper 2007) Sarona at TBN Annual Conference, London 25 May 2012 Confidential
  12. 12. THE UNINTENDED CONSEQUENCES OF AID • Fosters dependency • Distorts markets • Does not increase tax base • Misaligns incentives • Is characterized by fickle capital flows • Rarely yields scalable, sustainable impact • Undermines accountability between government and its citizens • Encourages the best and brightest in “recipient” countries to work for government or international NGOs Sarona at TBN Annual Conference, London 25 May 2012 Confidential
  13. 13. SARONA BELIEVES IN AN ALTERNATIVE MODELDevelopment of Private Equity Industry in Emerging Economies• Started in mid-90s• Managers seek international business experience… then come home• Capitalized by Development Finance Institutions• Strong emphasis on ESG criteria and positive outcomes• More than just capital Sarona at TBN Annual Conference, London 25 May 2012 Confidential
  14. 14. INVESTORS ARE BEGINNING TO SEE IT TOO Now recognizing the potential14 Sarona at TBN Annual Conference, London 25 May 2012 Confidential
  15. 15. INVESTORS ARE BEGINNING TO SEE IT TOOThey want to align their investment with their values• Ethical• Environmental• Social Sarona at TBN Annual Conference, London 25 May 2012 Confidential
  16. 16. SARONA’S VISION Working to bring our contribution to Security, Stability and Sustainability • Bridge between private capital and entrepreneurial growth in Frontier and Emerging Markets • Geographic and sector focus on positive change, for all stakeholders, where it is most likely to occur, given the appropriate inputs • Alignment of interests • Focus on positive outcomes valuable to “them”, not us • Benefiting from long experience and an expanding network of partners and supporters (OPIC deserves a special mention) Sarona at TBN Annual Conference, London 25 May 2012 Confidential
  17. 17. TRUE TO OUR ETHICAL AND MORAL VALUES • Six decades of investing in Frontier and Emerging markets under the banner of “Business Solutions to Poverty” • Migrating from a direct investment portfolio to a more scalable, sustainable, and ‘safer’ model for investors and investees: Private Equity Fund of Funds portfolios 1953: MEDA is formed to 1997: Co-founded 2002: Co-founded 2009/10: Sarona invest in Latin America Challenge MicroVest Capital Frontier Markets Sarona Dairies Investment Fund Management Fund 1 LP 2012 : Sarona Frontier Markets Fund 2 LP 1993: Sarona Risk 1999: Sarona 2007: Sarona Risk 2011: Sarona Asset Capital Fund (under Global Capital Fund 1 LP Management Inc. various names) Investment Fund spins out of MEDA17 Sarona at TBN Annual Conference, London 25 May 2012 Confidential
  18. 18. WHAT WE LOOK FOR IN OUR GPS…AND WE LOOK HARD! • Local presence, knowledge, experience: an ‘edge’ Frontier Market Focus • Narrow focus on a strong geography and/or sector • Active value-add approach, relevant to frontier markets • Target profitable deals in growth stage companies Profit Focus • Value-add: Transform companies to world class excellence • Move companies from low to higher liquidity market • Transparent and recognized valuation practices ILPA Adherence • High quality legal documents • Strong governance; alignment of interests • Diversification, selection, due diligence pre-deal Risk Mitigation • Monitoring, active management and proximity post-deal • Experience and thoughtfulness at all times • Explicitly driven by progressive values Positive Outcome Focus • Small/mid-market companies; internal demand of mid-class • Leaders in implementing ESG criteria18 Sarona at TBN Annual Conference, London 25 May 2012 Confidential
  19. 19. STABILITY THROUGH LONG TERM DIVERSIFICATION Portfolio Exposure Portfolio Exposure Portfolio Exposure by Region by Sector by Country Latin America/Caribbean Agribusiness Health India Mexico Philippines Africa Info/Communication Tech Education Turkey Thailand Other (32 South Asia Consumer Goods Affordable Housing Kenya Indonesia countries) East Asia Clean energy Professional Services Peru Morocco Financial Services Sustainable Forestry Light Manufacturing Water19 Sarona at TBN Annual Conference, London 25 May 2012 Confidential
  20. 20. SARONA’S IMPACT SO FAR Investible Universe China and Russia Developed Markets41 countries 15,156,215 - Clients Served 11 funds 19,100 - Permanent Employees 54 Companies3 continents 198.5 - Renewable Energy Megawatts 12 sectors Sarona at TBN Annual Conference, London 25 May 2012 Confidential
  21. 21. Questions & Answers
  22. 22. saronafund.com Gerhard Pries Vivina Berla sarona@saronafund.com europe@saronafund.com +1.519.883.7557 +31.20.798.13.10 110 -1B Frobisher Drive HFC Plaza, Gustav Mahlerplein 3Waterloo ON • N2V 2G7 • Canada Amsterdam • 1082 MS • The Netherlands

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