Zephyr Management, L'P'

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Increasing Capital Flows to Africa
Conference Strategic Partnerships and Alliances
in Private Equity in Africa
Mark JenningsManaging Principal Zephyr
Management Africa, and Chairman African Venture
Capital Association 30 September 2004
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TABLE OF CONTENTS

• I. Overview
• Zephyr Management
• African Venture Capital Association
• II. Strategic Partnerships and Alliances
  
  Framework Fund Management
  Level Investee Company Level Observations
• III.Contact Details

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I. Zephyr Management

• Zephyr Management founded 1994 By Thomas C. Barry
• Focus on emerging markets and niche investment
  opportunities private equity/investment funds
• Invest where Reality is better than Perception
• Involvement to date in 13 private
  equity/investment funds around US800 million
  nearly 50 of business in Africa

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African Venture Capital Association (AVCA)

• Representative body of the private equity and
  venture capital profession in Africa.
• Current membership of around 50 institutions.
• Fourth Annual Conference, held in April 2004 in
  Morocco, attracted 250 delegates. Next
  conference in Nairobi in 2005.
• Initiatives include quarterly newsletter,
  training, guidelines on valuation and reporting,
  annual directory of members, research
  publications, lobbying to create an enabling
  environment, enhancement of website.

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II. Framework for Partnerships/Alliances in
Private Equity
Private Equity Fund
Fund Manager
Investee Companies
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Fund Manager Level Examples of
Partnerships/Alliances

• Zephyr examples
• South African Capital Growth Fund (Brait)
• Capital Alliance Private Equity (Capital Alliance
  Nigeria)
• Pan African Investment Partners Pan
  Commonwealth African Partners (Kingdom Holding)
• Other fund-manager examples
• AfricInvest Fund (Tuninvest Tunisia, Morocco,
  Algeria IBTC-Nigeria Fidelity Partners Ghana
  Cauris Togo Cenainvest Cameroon)
• South Africa Infrastructure Fund (Old Mutual
  Asset Managers South Africa, Macquarie Bank -
  Australia)
• Other examples
• Relationships with specific institutions e.g.
  accounting firms, financial institutions
• Relationships with specialists e.g. sector
  specialists (energy, banking, mining)

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Benefits of partnerships/alliances

• Complementary skills and resources
• Extended network deal sourcing
• Local presence and local knowledge
• Product specialisation
• Combined track record
• Innovation

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New Pan-African Private Equity Fund

• Pan African Investment Partners (PAIP) and Pan
  Commonwealth African Partners (PCAP) - US100
  million in commitments- Expansion funding to
  create multi-country African
• businesses
• Strategic Partnerships
• - Variety of roles funding, co-investment,
  network
• - IFC, FMO, DBSA, Kingdom Holding
• - Joint management company Kingdom Zephyr
• Management Company
• - Exploring co-investment, and other,
  opportunities to
• work with other fund managers across
  Africa.

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Kingdom Holding Company

• Kingdom Holding Company (KHC) is an investment
  vehicle headed by HRH Prince Alwaleed Bin Talal
  Bin Abdulaziz Al Saud, member of the Saudi Royal
  family, private entrepreneur and international
  investor
• Kingdom Holding is estimated to have assets of US
  24.6 billion and a capital base of US 19.7
  billion
• Kingdom Holding has a wide range of investments
  in banking, telecommunications, broadcasting
  media, entertainment, hospitality, computers and
  electronics, agriculture, restaurants, upscale
  fashion, retailing, supermarkets, tourism,
  travel, and automotive manufacturing.
• Selected current holdings include
• CitiCorp 4.9
• Time Warner, approximately 1
• Apple Computers Inc., 5
• Canary Wharf, London, approximately 2
• Cal Merchant Bank, Ghana, 14
• Disneyland Resort and Theme Park, Paris, 17.3
• EcoBank, 10
• George V Hotel, Paris, 100
• Hewlett-Packard (HP), approximately 1
• Kodak Corporation, 1
• Senegalese Telecom. Co. (SONATEL), 10

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Convergence of Favorable Macro Factors in Africa
are Facilitating Private Equity Investment
Improvements in Telecommunications Transportatio
n Infrastructure
Privatizations in Critical Industry Sectors
(Financial Services, Telecom, Transportation,
Energy, Media, etc)
Improved Economic Business Environment for
Capital Investments
Globalization Market Liberalization
Political Economic Africa Integration
Initiatives (NEPAD, etc.)
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Aided by Improved Investment Climate, Many Firms
are Expanding into Regional/Pan-African Businesses
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Investee Company Level

• Examples of
• Strategic partnering
• Freeplay with Coleman (Branding and Distribution)
• MTN Nigeria/ MTN (Operating and Equity partner)
• Strategic exits
• Grey Security Services to Securicor
• Coinvestment
• Celtel (Zephyr/ZMAIF, CDC, EMP/AAIF, IFC, FMO,
  DEG, Citigroup, Bessemer, Capital International)

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Benefits of Partnerships/Alliances at Investee
Company level

• Strategic and operational skills that partner
  brings to investee company
• Market access (for both partner and investee
  company)
• Financial capacity of partner
• Local presence and local knowledge of investee
  company
• Exit options for investee company shareholders
  e.g. private equity fund (but perhaps also
  constraints)
• Coinvestors can bring
• - financing capacity
• - complimentary skills
• - geographic spread local knowledge and
  expertise
• - network to recruit managers, raise
  additional funding, etc

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Conclusion

• Making partnerships/alliances work can be
  challenging
• Need to establish clear goals and objectives
• Communication a priority
• Culture fit and chemistry is critical
• Flexibility required needs can change and needs
  can differ
• However
• Real benefits achievable through
  partnerships/alliances with others
• Need to look not only internationally but also
  within Africa for such partners

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Contacts

• Kingdom Zephyr Africa Management Company
• Mark Jennings Johannesburg, South Africa
• Phone [phone]
• Fax [phone]
• Email mcj_at_zmlp.co.za
• Runa Alam Washington, DC, USA
• Phone [phone]
• Fax [phone]
• Email rna_at_zmlp.com
• Kofi Bucknor Accra, Ghana
• Phone [phone]
• Fax [phone]
• Email jkb_at_jkb-associates.com
• African Venture Capital Association
• Mark Jennings (Chairman as above)Sanda Oumarou
  (Secretary General, Cameroon)
• Phone [phone]
• Fax [phone]
• Email avcasecgen_at_avcanet.com