Presentation on lessons learned from InReturn Capital to businesses and organisations in The Netherlands that address the finance and business service needs of SMEs in developing countries.

1. InReturn East Africa Fund
SME Round Table meeting
Amsterdam
10th of November 2009
Confidential

2. Contents
1. Fund characteristics
2. Milestones achieved
3. Team
4. InReturn approach and lessons learned
5. Offer to SME round table partners

3. Fund Characteristics
• Target fund size: EUR 15m (USD 20m)
• Fund term: 10 years
• Equity and mezzanine for +/- 30 SMEs
• Existing businesses seeking growth finance
• Financing up to EUR 1m for 3 to 7 years
• Kenya, Uganda and Tanzania
• Agro & food processing, ICT, media, energy, manufacturing, logistics, finance
• Returns: Gross return 25% / annum local currency
Management fee 3% / annum
Operating costs 1% / annum (max, budget based)
Carried Interest 20%, 6% hurdle
Net return 10-15% / annum in euro (after taxes & hedging risks)
• EUR 0.5m grant for TA of Dutch Ministry of Foreign Affairs
• EUR 1.55m subordinated investment of Cordaid & InReturn

4. Milestones Achieved
• Entrepreneurial approach: management team invests EUR 300k
• Office and local investment team of 4 on the ground in Nairobi
• Relevant and committed partner network in place
• First Closing achieved at EUR 4m ($ 6m), current commitments of EUR 5,3m
• Investors are both institutional and private
• Investors are looking for a combination of financial and social returns
• EUR 500k management development grant from Dutch Ministry of Foreign
Affairs
• Full pipeline: 76 SMEs analyzed since January 2009
• 5 deals presented to Investment Committee EAF

5. InReturn team
Anthony Gichini • 10 years consultancy at Deloitte and PwC in Kenya and Tanzania
Managing partner
• 4 years SME Solution Centre of IFC, Nairobi
• 30 SME investments in Kenya
Nairobi • CPA, MBA, Bachelor of Commerce in Accounting at University of Nairobi
Steven Otto • 10 years experience as successful SME entrepreneur
Managing partner
• 5 years experience as advisor / investor in SMEs in developing countries
• Master in International Relations from University of Amsterdam and degree
Nairobi from Small Business School at University of Rotterdam
Bart Meijs • 4 years Financial Management in FMCG sector, restructuring and sale of plant
Managing partner
• 8 years Financial Management consultancy at PwC and RebelGroup
Nairobi / • Born and raised in developing countries
Rotterdam • Certified Controller & Master in Corporate Finance, University of Rotterdam
Eelco Benink • Experience in investment banking at NIBC Bank Corporate Finance Mergers and
Investment
manager
Acquisitions in The Hague
• Former consultant at RebelGroup and political assistant in Dutch Parliament
Nairobi • Studied Economics and International Law at Erasmus University Rotterdam
Njeri Ngaruiya • Former analyst at East Africa Capital Partners, Nairobi and Societe Generale,
Investment
analyst
London
• Undergraduate in Business Management from University of Surrey, U.K
Nairobi • Masters degree in Finance from Cass Business School, London

6. InReturn approach and lessons learned (1)
PAGE 6
Successful investing starts with being local
• Investing in SMEs (< EUR 1m) starts with being on the ground
• In all stages of the investment process regular and direct contact with
entrepreneur and company
• Local office creates credibility and lowers the threshold
• Ability to act fast is crucial
• Nothing can beat personal interaction when it gets exciting

7. InReturn approach and lessons learned (2)
PAGE 7
Team is everything
• No go without a local team
• Experienced local investment managers are scarce
• Young talent can be sourced, though needs training
• Align team, financially and through management development

8. InReturn approach and lessons learned (3)
PAGE 8
Product tailored to SMEs need
• Finance need of the SME is starting point of our approach
• Product range: everything between mezzanine and equity
• Typical EAF structure: subordinated debt with ’upside sharing’
• Risk capital: focus on track record of entrepreneur and viability of the
business case
• Entrepreneur should bear higher risk
• TA on secondary processes like financial management and governance

9. InReturn approach and lessons learned (4)
PAGE 9
Efficient investment process is key
• Efficiency: find out as early as possible on which deals to spend time
• If we see show stoppers, address them immediately
• Out of 100 finance requests only 5 deals
• SMEs need time to put their documentation together
• Use consultants to assist, but the entrepreneur pays
• Have documented processes and continuous focus on improvement:
be ready for growth and scale

10. InReturn approach and lessons learned (5)
PAGE 10
Pipeline needs a lot of marketing
• Good deals are there, but hard to find
• New financiers have to educate the market
• Actively build local networks: banks, consultants, investment companies
• Build trustworthy relationships with entrepreneur
• It takes time !
• Goes faster with local team members with relevant networks
• Best deals are sourced locally

11. InReturn approach and lessons learned (6)
PAGE 11
Social returns are integral part of the proposition
• Knock out criteria upfront
• Entrepreneur has to comply with labor, tax and environmental
regulations: both pre and post investment
• Actively measure and monitor: scorecard for social and environmental
indicators developed with DOEN foundation
• “Nul meting” plus yearly update
• Non compliancy is reason for default (term sheet)

12. Offer to SME Round table partners
PAGE 12
InReturn is open for co-financing partners:
• For partners that have access to deal flow but lack a team on the ground
• For partners that have access to deal flow but don’t have a fund
• For partners that bring specific sector knowledge to a deal
• For deals that need to be shared because of size
InReturn is open again for investment partners
• For the Second Closing in 2010

13. Contact
InReturn Capital Kenya Ltd InReturn BV
Ushindi Bank House ‘Witte Huis’
Statehouse Road Wijnhaven 3-O
Nairobi NL-3011 WG Rotterdam
Kenya The Netherlands
Tel + 254 20 250 4775 Tel + 31 10 2755 995
Fax + 254 20 250 4776 Fax + 31 10 755 999
Anthony Gichini Bart Meijs
Managing Partner Managing Partner
anthony.gichini@inreturncapital.com bart.meijs@inreturncapital.com
Mobile + 254 7 212 458 74 Mobile + 31 6 5156 0926
+ 254 7 367 47 153
Steven Otto
Managing Partner
Steven.otto@inreturncapital.com
Mobile +254 7 155 99 60
+31 6 518 33 976
www.inreturncapital.com