Frontier Markets Fund Managers by Orli Arav


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  • In this presentation I would discuss how FMFM supports the private sector in emerging markets
  • Frontier Markets Fund Managers are currently managing 2 funds, and have access to a third fund which are all part of the PIDG initiative We can see in the blue box the funds which FMFM manages and have access to
  • who we are?
  • We are a fund management team with experience in Emerging Markets and especially Sub Saharan Africa
  • This is the first fund Frontier Markets Fund Managers have managed
  • It is a dedicated Debt Fund for Sub Saharan Africa The fund is unique it is the only open ended emerging market Debt Fund The Fund’s size is 360 million dollars Its shareholders are 4 European governments UK Sweden Netherlands Swiss Last month our Board approved 4 projects in the region Power Project in Tanzania Aviation in Ethiopia and Telecoms for a pan African rollout
  • The Emerging Africa Infrastructure Fund main features are It supports the private sector It provides debt funding to infrastructure projects in Sub Saharan Africa Investment size between US$10-36 million Tenor of up to 15 years door to door Does not require PRI
  • GuarantCo is a recent addition to the portfolio of the Frontier Markets Fund Managers
  • GuarantCo is a credit enhancement fund which facilitates funding in Local Currency to projects in Emerging Markets (not only Sub Saharan Africa)
  • GuarantCo’s is a “tailor made fund”, we structure the credit enhancement product to fit your needs The products usually have a risk sharing with the local debt provider Recently our board approved a guarantee for cross border CFA loan to a leading mobile operator, in order to avoid the breach of a single customer limit by the lending bank
  • The third fund Frontier Markets Fund mangers can provide finance from is TAF
  • TAF provides grant funding to Governments and or Sponsors in order to initiate and/or facilitate projects which EAIF or GuarantCo have an interest in Recently TAF approved funding for a Bio fuel feasibility study in East Africa; and a monitoring program for Lake Kivu
  • Frontier Markets Fund Managers by Orli Arav

    1. 1. Frontier Markets Fund Managers Orli Arav Senior Investment Advisor
    2. 2. Private Infrastructure Development Group - PIDG PIDG U.K. SWEDEN NETHERLANDS SWITZERLAND AUSTRIA WBG GUARANTCO TAF EAIF ASPIFF INFRACO FMFM Management Agreement Management Agreement will be signed soon
    3. 3. - FMFM
    4. 4. Frontier Markets Fund Mangers - FMFM <ul><li>A Fund Management Team </li></ul><ul><li>Managing transactions for </li></ul><ul><ul><li>Emerging Africa Infrastructure Fund; and </li></ul></ul><ul><ul><li>GuarantCo </li></ul></ul><ul><li>A group of multi nationals fluent in English; French; Dutch; Italian and Russian </li></ul><ul><li>Based in London </li></ul>
    5. 5. - EAIF
    6. 6. Emerging Africa Infrastructure Fund - EAIF <ul><li>First dedicated debt fund for sub-Saharan Africa </li></ul><ul><li>Size: US$305 million, refinanced to US$360 at the end of 2006 </li></ul><ul><li>Original sponsor: UK Government – DFID </li></ul><ul><li>3 other European Governments joined (Sweden, Netherland, Swiss) </li></ul><ul><li>Debt from three development finance institutions and two private sector international banks </li></ul><ul><li>Public/private sector partnership </li></ul><ul><li>Donor aid funds leveraged private sector capital for development purposes </li></ul><ul><li>First multi-donor initiative by Private Infrastructure Development Group (PIDG) </li></ul>
    7. 7. EAIF – investment policy <ul><li>Lend to private sector owned, managed and controlled entities with infrastructure sector focus </li></ul><ul><ul><li>Power </li></ul></ul><ul><ul><li>Transport </li></ul></ul><ul><ul><li>Telecoms </li></ul></ul><ul><ul><li>Water </li></ul></ul><ul><ul><li>Manufacturers of components of infrastructure e.g. cement </li></ul></ul><ul><ul><li>Infrastructure within mining, agribusiness projects </li></ul></ul><ul><li>Sub-Saharan Africa focus excluding Mauritius </li></ul><ul><li>Investment Size:US$10 -36 million </li></ul><ul><li>Tenor: up to 15 years </li></ul><ul><li>Instruments: Senior and Mezzanine Debt (possibly with equity features) </li></ul><ul><li>Dose not require a Political Risk Insurance (PRI) </li></ul>
    8. 8. EAIF - sample transactions <ul><li>Project: Ethiopian Airlines </li></ul><ul><li>Sector: Transport </li></ul><ul><li>Country: Ethiopia </li></ul><ul><li>Description and Financing Parameters: </li></ul><ul><ul><li>this is a unique project, EAIF has committed a US$ 36 million loan to the airline expansion project. </li></ul></ul><ul><ul><li>Ethiopian Airlines is a 100% publicly-owned entity often held up as a model business for other airlines in Africa. </li></ul></ul><ul><ul><li>The EAIF financing is bridging a crucial gap enabling the airline to purchase additional, new aircraft at a cost of US$ 460 million. </li></ul></ul><ul><li>Project: Celtel Nigeria </li></ul><ul><li>Sector: Telecoms </li></ul><ul><li>Country: Nigeria </li></ul><ul><li>Description and Financing Parameters: </li></ul><ul><ul><li>EAIF has committed a US$ 35 million loan to Celtel Nigeria, the third largest mobile operator in Nigeria. </li></ul></ul><ul><ul><li>The financing is part of a US$ 350 million financing package for the expansion and upgrading of their entire network. </li></ul></ul>
    9. 9. EAIF - sample transactions (contd’) <ul><li>Project: Moma </li></ul><ul><li>Sector: Mining </li></ul><ul><li>Country: Mozambique </li></ul><ul><li>Description and Financing Parameters: </li></ul><ul><ul><li>The developers of this titanium mineral sands project approached EAIF as a ‘lender of last resort’. </li></ul></ul><ul><ul><li>Located in one of the most under-developed regions of Mozambique, the US$ 413 million project is the second lowest cost producer of titanium in the world. </li></ul></ul><ul><ul><li>EAIF committed US$ 24.5 million of senior and subordinate debt (total debt package of US$270 m </li></ul></ul><ul><ul><li>illion) as Senior and Subordinated Lender. The project received deal of year awards from both the Mining Journal and Project Finance International publications. </li></ul></ul><ul><li>Project: Mnazi Bay Energy </li></ul><ul><li>Sector: Power </li></ul><ul><li>Country: Tanzania </li></ul><ul><li>Description and Financing Parameters: EAIF arranged US$ 35 million </li></ul><ul><ul><li>This is the first integrated utility project in Sub Saharan Africa, the project includes: </li></ul></ul><ul><ul><li>the development of an existing natural gas reserve; </li></ul></ul><ul><ul><li>the construction, operation and maintenance of a pipeline and gas processing facilities; </li></ul></ul><ul><ul><li>the installation, construction, operation and maintenance of a power plant; </li></ul></ul><ul><ul><li>the upgrade, operation and maintenance of a transmission and distribution system </li></ul></ul>
    10. 11. GuarantCo <ul><li>Credit enhancement of local currency debt issuance by the private, municipal and Parastatal infrastructure sectors in lower income countries </li></ul><ul><li>Covers similar infrastructure sectors to EAIF </li></ul><ul><li>Operates globally </li></ul>
    11. 12. GuarantCo offers <ul><li>Guarantees covering default risk on underlying debt service - partial credit guarantees </li></ul><ul><li>Guarantees covering default risk due to specific events - partial risk guarantees </li></ul><ul><li>Cover for senior, mezzanine or sub debt; maturity, coupon or principal strips, carbon credits </li></ul><ul><li>Other methods of risk transference e.g. insurance / reinsurance or CDS / derivatives </li></ul><ul><li>Preference for risk sharing (defined on a case-by-case basis) </li></ul><ul><li>Acceptance of certain local currency risks </li></ul>
    12. 13. GuarntCo - sample transactions <ul><li>Celtel Kenya </li></ul><ul><li>Partial Credit Guarantee (75%) of a $50m equivalent 5 year bond issue for network expansion. Only the third commercial bond issued in Kenya and largest at that time </li></ul><ul><ul><li>Closed Dec 05. </li></ul></ul><ul><ul><li>Refinanced in Feb 07 without credit enhancement </li></ul></ul><ul><li>Celtel Tchad </li></ul><ul><li>100% guarantee of $14m equivalent bank loan. Local lenders, Afriland First Bank and BDEAC, also lent $20m equivalent without guarantee </li></ul><ul><ul><li>Closed April 2007 </li></ul></ul><ul><ul><li>Network expansion to more rural areas, which will aid both local communities and the significant nomadic population in Chad </li></ul></ul>
    13. 14. <ul><li>TECHNICAL ASSITANT FACILITY </li></ul><ul><li>- TAF </li></ul>
    14. 15. We can provide TAF funding <ul><li>TAF provides grant funding to support the following activities; </li></ul><ul><li>Infrastructure development strategies </li></ul><ul><ul><li>studies intended to guide governments on options for financing of infrastructure </li></ul></ul><ul><li>Policy, regulatory and institutional reforms </li></ul><ul><ul><li>advice and training on the design and implementation of specific reforms aimed at facilitating infrastructure financing by the private sector </li></ul></ul><ul><li>Pioneering or pilot transactions </li></ul><ul><ul><li>support for the design and implementation of particular projects or transactions that are pioneering in some important respect or reflect some measure of innovation </li></ul></ul><ul><li>Capacity building </li></ul><ul><ul><li>activities aimed at building government capacity and/or the capacity of local capital markets, financial institutions, and/or quasi-public enterprises </li></ul></ul>
    15. 16. Infrastructure projects financed or in the process of financing by FMFM (*)                  * In Sub Saharan Africa
    16. 17. An example of companies we worked and are working with
    17. 18. Contact details <ul><li>Orli Arav </li></ul><ul><li>Senior Investment Adviser </li></ul><ul><li>Frontier Markets Fund Managers </li></ul><ul><li>T: +44 (0) 20 7815- 2782 </li></ul><ul><li>M: +44 (0) 77254 - 29177 </li></ul><ul><li>E: [email_address] </li></ul>