The Positive Power of Capital

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The Positive Power of Capital?
A review of Actis Private Equity in Developing
Countries

• EMDC
• Daniel Traça
• 24 April 2007

Laura Maida, Mojgan Saebi, Tanay Tayal
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Agenda

• Introduction to Actis
• Challenges of Private Equity in Developing
  Countries
• Evaluation of project impacts

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What is Actis?
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What and where do Actis invest?
?nuclear, military equipment, pornography,
gambling, tobacco animal testing, GMO, countries
with a record of human rights abuse (China?!)
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Agenda

• Introduction to Actis
• Challenges of Private Equity in Developing
  Countries
• Evaluation of project impacts

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Challenges of Private Equity in Developing
Countries
Poor and opaque corporate governance
Limited legal comeback
Underdeveloped stock markets limiting exit
strategy
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Overcoming Challenges of Private Equity in
Developing Countries
Poor and opaque corporate governance
A local presence, Actis has 90 local staff in 16
offices worldwide
Limited legal comeback
Careful deal and location selection, avoid
entrenched family enterprises
Underdeveloped stock markets limiting exit
strategy
Creative exit strategies beyond the IPO
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Agenda

• Introduction to Actis
• Challenges of Private Equity in Developing
  Countries
• Evaluation of project impacts

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Project Overview
Description
Example of projects
Expansion capital
To accelerate the growth of an established
business either organically or through acquisition
Celtel International (Telecom, Africa)
Management buyouts
Enabling management teams to buy a company or a
non-core division of a large corporate from its
existing owners
Lenco (Manufacturing, South Africa)
Privatisation
Transfer of ownership of state-owned assets to
the private sector
Punjab Tractors (Manufacturing, India)
For large infrastructure projects
Mezzanine finance
Grameenphone (Telecom, Bangladesh)
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Evaluation criteria
Positive Power?
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Project 1
Lenco Manufacturing South Africa
2003 16m for 58 of this existing plastics
manufacturing company enabled management buyout
In 2007 Actis sold its share to an South African
multinational manufacturing company
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Project 1
Lenco Manufacturing South Africa
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Project 2
Grameenphone

• First mobile company in Bangladesh, founded in
  1996 by Iqbal Quadir
• Unexpected success
• Goal of 70K subscribers by 2002
• Already 100K in 2000
• Breakeven in 2001
• Today gt10M subscribers (Nov 06)
• Actis financed them in 1999 with 18.2M, and
  realized the investment in 2003

http//www.youtube.com/watch?vIxjxvzb2-Fw
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Project 2
Grameenphone Evaluation
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Summary
Private Equity in developing countries- Actis
has shown the positive power of capital

• QA