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Klm Club Africa FMO


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Believing in entrepreneurship, means investing in entrepreneurship and thus in your businesses. Throughout the years we have applied best practices, adopted international benchmarks and invented them if they were not present.

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Klm Club Africa FMO

  1. 1. Development impact through private equity in Africa March 24, 2009 KLM Club Africa, Amstelveen Yvonne Bakkum, Director Private Equity
  2. 2. Private equity in Africa – March 2009 FMO, the Dutch Development Bank Our vision is that a thriving private sector will lead to lasting economic and social development, which will empower people to employ their skills and improve their quality of life. <ul><li>Established in 1970 </li></ul><ul><li>Dutch State owned 51% and major banks 42% </li></ul><ul><li>AAA rating from Standard & Poor’s </li></ul><ul><li>Total committed portfolio EUR 4.2 bln (by year end 2008) </li></ul><ul><li>Focus sectors: financial sector, renewable energy, low income housing </li></ul>
  3. 3. Private equity in Africa – March 2009 <ul><li>Our global network </li></ul><ul><li>As a committed and experienced emerging markets investor FMO has developed a broad network of partners across the globe, including a strong presence in Africa. </li></ul><ul><li>Partners include: </li></ul><ul><li>Other Development Finance Institutions such as IFC, DEG and Proparco </li></ul><ul><li>Commercial banks such as Rabobank, Deutsche Bank (Capital Markets products) and Citigroup (risk sharing) </li></ul><ul><li>Global investment firms with similar ‘mindset’: Aga Khan Foundation, TBI </li></ul><ul><li>Other partners in specific areas such as Microfinance, and Private Equity Funds </li></ul>
  4. 4. Private equity in Africa – March 2009 FMO’s strategy in Africa: “ Banking the Unbankable” <ul><li>Africa is full of opportunities </li></ul><ul><li>But lacks parties that can transform opportunity into bankable projects </li></ul><ul><li>FMO supports or creates parties that can… </li></ul><ul><li>In Financial Sector, especially PE funds; Housing, Energy, and Mining . </li></ul><ul><li>Venture Capital from government funds (LDC, AEF, MASSIF) is crucial </li></ul>
  5. 5. Private equity in Africa – March 2009 FMO’s committed portfolio 1998 - 2008 Africa now 28% of total portfolio
  6. 6. FMO’s client countries in Africa Private equity in Africa – March 2009
  7. 7. Private equity in Africa – March 2009 Private equity in Africa - snapshots 1994: FMO’s first African private equity initiative in Tunesia 1996: FMO initiates first of several small SME funds in West-Africa 2000: African Venture Capital Association (AVCA) established 2003: still few private equity funds outside South-Africa 2007: fund raising for Sub-Saharan African PE funds tripled in 2 yrs, to $ 2.3 bln 2008: African funds raise record high volume of $ 3.2 bln, trend is pan-African 2009: African private equity exits and investments ongoing but slower pace 2010: fund managers expect investment opportunities at reasonable valuations
  8. 8. Private equity in Africa – March 2009 FMO’s private equity network in Africa <ul><li>Private Equity Funds (now 28) for African companies, including: </li></ul><ul><ul><li>Tuninvest Finance Group, 4 funds for North Africa region </li></ul></ul><ul><ul><li>AfricInvest Capital Partners, 3 funds Pan African. </li></ul></ul><ul><ul><li>Aureos Africa Fund (pan-African), Aureos East-Africa </li></ul></ul><ul><ul><li>Fidelity Capital Partners, 2 funds for Ghana, Liberia en Sierra Leone </li></ul></ul><ul><ul><li>Central Africa Investment for Cameroon, Chad, Congo DRC </li></ul></ul><ul><ul><li>GroFin , SME finance in Kenya, Uganda, Tanzania, Rwanda </li></ul></ul><ul><ul><li>KIBO Fund, Mauritius - operational in southern Africa countries </li></ul></ul><ul><li>Direct equity investments (now 25), often together with funds: </li></ul><ul><ul><li>Financial sector (banks, leasing companies, microfinance, insurance) </li></ul></ul><ul><ul><li>SME / small corporates in various sectors including energy </li></ul></ul><ul><li>African Venture Capital Association </li></ul>
  9. 9. Private equity in Africa – March 2009 Development impact through private equity <ul><li>Private sector development </li></ul><ul><ul><li>Return on investment to local shareholders </li></ul></ul><ul><ul><li>Introduction of international best practice management systems </li></ul></ul><ul><ul><li>Technology and knowledge transfer </li></ul></ul><ul><li>Employment creation => poverty reduction </li></ul><ul><ul><li>-FMO research shows 30 new jobs per USD 1 mln invested </li></ul></ul><ul><ul><li>-Improve “employability” through training </li></ul></ul><ul><li>Improving corporate governance </li></ul><ul><ul><li>-Financial transparency, IFRS accounting </li></ul></ul><ul><ul><li>-Independent board members </li></ul></ul><ul><li>Implementing environmental & social standards </li></ul><ul><ul><li>- Work towards World Bank/IFC performance standards in agreed action plans </li></ul></ul><ul><ul><li>-ESG is a business case! </li></ul></ul>
  10. 10. Private equity in Africa – March 2009 Case studies
  11. 11. Case study: Celtel
  12. 12. <ul><li>The Opportunity: </li></ul><ul><li>Pan-African mobile telephony operator started in 1998, needed capital to meet </li></ul><ul><li>huge demand of underserved telecom market in Africa </li></ul><ul><li>FMO’s role: </li></ul><ul><li>Invested scarce risk capital from LDC Fund together with other DFIs in 2001 </li></ul><ul><li>Provided local currency financing to various Celtel operating companies </li></ul>Private equity in Africa – March 2009 Celtel was acquired by MTC in May 2005 for $3.45 billion, and currently operates in 15 countries in Sub Sahara Africa
  13. 13. <ul><li>Today’s situation: </li></ul><ul><li>Celtel sold to MTC Kuwait (today ZAIN) in 2005 </li></ul><ul><li>This “Infrastructure deal of the year” showed FDI in Africa pays off! </li></ul><ul><li>Celtel is a profitable company operating in 15 African countries </li></ul><ul><li>More than 26 million customers </li></ul><ul><li>More than 98% of workforce and management is African </li></ul><ul><li>FMO continues (local currency) lending to various Celtel companies </li></ul>Private equity in Africa – March 2009
  14. 14. Case study: Bank of Africa Group
  15. 15. <ul><li>The Opportunity: </li></ul><ul><li>African-owned SME banking group with ambition to expand in Africa </li></ul><ul><li>FMO’s role: </li></ul><ul><li>Invested risk capital in African Financial Holding, the group’s holding company </li></ul><ul><li>Shareholder in various local BoA banks, incl. BoA Madagascar and BoA-Kenya </li></ul><ul><li>Promoted improvement of corporate governance </li></ul><ul><li>Initiated discussions to seek strong banking partner for further growth </li></ul>Private equity in Africa – March 2009
  16. 16. <ul><li>Today’s situation: </li></ul><ul><li>Large Moroccan banking group BMCE acquired significant stake in 2008 </li></ul><ul><li>BoA Group active in 12 countries in French and English speaking Africa </li></ul><ul><li>FMO still involved as active shareholder at request of BoA and its new owner </li></ul><ul><li>Many DFIs are interested in funding BoA group entities </li></ul>Private equity in Africa – March 2009
  17. 17. Case study: Maghreb Leasing, Algeria
  18. 18. <ul><li>The Opportunity: </li></ul><ul><li>Algeria, where SME’s have no access to financing </li></ul><ul><li>FMO’s role </li></ul><ul><li>Involve Tunisie Leasing </li></ul><ul><li>Founding shareholder together with our partner Tuninvest </li></ul><ul><li>First long term local currency financing </li></ul><ul><li>E&S, corporate governance and risk management through Board involvement </li></ul>Private equity in Africa – March 2009
  19. 19. <ul><li>Today’s situation: </li></ul><ul><li>Profitable since 1,5 year of operations </li></ul><ul><li>High growth </li></ul><ul><li>Capacity Development to extend product portfolio </li></ul>Private equity in Africa – March 2009
  20. 20. <ul><li>Conclusion </li></ul><ul><li>Africa is a growing and interesting market for private equity investments </li></ul><ul><li>Local partners are key to successful investing </li></ul><ul><li>FMO is seen as an innovative and creative DFI by clients and peers </li></ul><ul><li>We are dedicated to the African opportunity, and aim to catalyse others </li></ul><ul><li>Since 2008: Africa largest region in FMO overall and private equity portfolio! </li></ul><ul><li>Serious reforms, governance improvements, fight against corruption and return of well-educated Africans continue to improve investment climate. Africa is not immune for global crisis, but investors widely believe Africa offers good opportunities for sustainable profits . </li></ul>Private equity in Africa – March 2009
  21. 21. Questions & Comments