Presentation on The Africa Health Fund February 6, 2013

Transcription

1 Presentation on The Africa Health Fund February 6, 2013

2 Abraaj Group A Leading Private Equity Firm in Global Growth Markets Founded in 2002, Abraaj Group is a leading private equity manager investing in the rapidly growing economies of Asia, the Middle East, Latin America, and Africa across three distinct business lines Abraaj Capital Holding Limited (Capitalized at US$ 1.5 billion) Private Equity High Growth SMC Real Estate Three funds raised, closed, and fully invested (in harvesting phase) c. US$ 4 billion in equity deployed / committed across 30+ deals Fourth fund currently being invested US$ 1.75 billion AUM Completed more than 165 investments in four high growth regions 50 full and partial exits Active engagement model on the ground Focus on sustainability/esg Launched ASAS, an income generating real estate fund US$ 250 million yield generating vehicle First deal consummated in Egypt ( The 47th ) c. US$ 7.5 billion of assets under management, managed by a dedicated team of more than 150 investment professionals with a presence in over 30 countries 2

3 Primary Objectives The Vision Set up in 2009, the AHF is a pioneering collaboration between a select investor group and Aureos to answer the following questions: Viability Is there a base of opportunities broad enough, and a risk capital appetite deep enough, to allow a fund focused on private healthcare in Africa to deploy capital viably? Commercial attractiveness Would such a fund be able to generate commercial returns and crystalize exits sufficient to attract a wider pool of investors? Impact Can a social mandate to increase quality, improve accessibility and reduce costs for the disenfranchised (BOP) be successfully embedded within the investment objectives of the fund? This presentation provides an overview of progress made to date. 3

4 The Market The private healthcare space in Africa is only now starting to mature, requiring care in the deployment of capital Deal universe Companies Predominance of faith-based, non- profits & development organizations in health sector serving the BoP in Africa Majority of private companies are in the small or early stage category some of which are only now just at break even Investing in such early stage companies will result in small deal sizes (ranging between $0.25m- $3m on average) Provision of subsidized healthcare goods and services distorts market, particularly for businesses serving the BoP Limited information on the BoP population, and a challenge collecting data on BoP impact Require significant handholding to take companies to scale (Management have limited business skills) Limited understanding of private equity by company sponsors Dominance of sole proprietorships, familyowned businesses No formal Corporate governance structures Majority of the companies lack good financial systems and internal controls (do not conduct annual audits, filing taxes) Information is usually company specific and cannot be transferred 4

5 Our Strategy The Abraaj Group has been employing innovative strategies to ensure the primary objectives of the fund are met. The Deal Universe Unfamiliarity with PE Small Companies Sub-scale operations AHF s Strategy Elements Managed Deployment Specific Selection Preserving investor funds through considered deployment while carefully selecting initial investments to ensure in line with fund objectives Identify potential champions, deploy smaller amounts of capital initially, then drive to scale and impact with substantial follow-on and other resources Regulatory Hurdles Poor Governance Low BoP incentive Robust deal structuring Resource for impact Investment structures configured to protect capital while offering upside Resource up internally and externally to ensure impact mandate Technical Assistance 5

6 Africa Health Fund Overview of the Africa Health Fund ( AHF ) Fund Size: Fund Manager: Investors: Deal Size: Deal Type: Overview US $105.4 M Abraaj Group IFC, Gates Foundation, African Development Bank, DEG, Elma Foundation, Maria Wrigley Trust, ASN Bank, Proparco, Norfund, DBSA US $250,000 -US $5.0M Debt, Equity and Quasi- Equity Objectives - Invest in socially responsible and financially sustainable private health care companies in Africa. - Expand health care services and products so that low income populations in Africa have access. Investment Period: No more than 5 years 6

7 Investment Policy Deal Size: Sector: Sub sectors: Country exposure Sub-sector exposure Single Company Exposure Early Stage Exposure US$ 250K US$5 Million Healthcare and related subsectors only Healthcare services provision, risk pooling & healthcare financing, distribution & retail, pharmaceuticals & medical related manufacturing, healthcare training, telemedicine and healthcare business services providers (IT) No more than 20% of total commitments No more than 35% of total commitments No more than 10% of total commitments No more than 10% of total commitments 7

8 AHF Investment Strategy Value realisation: Alignment on exit Proactive Earnings growth the key driver to returns Value Creation Strong Target Management Health Sector Teams Champions Fund sector champions: Identify and aggressively target the champions in each health subsector Drive these companies to scale by promoting an inorganic and organic growth agenda Value addition to portfolio companies: Strengthening internal controls & governance Market focus on Base of Pyramid Board representation Apply the TA Facility to strengthen and develop portfolio company strategies Active Portfolio Management Appropriate Deal Structures Diversified Strong Management Country Teams Matching investment to company s cash flow: Complement equity and quasi-equity with debt instruments Flexibility Capital preservation Focus on effective Management: Relationship based investing 8

9 Technical Assistance The Fund has a Technical Assistance Facility, to which some first close investors have contributed TA Facility of US$5 million TA Facility is being used to provide a range of business development services to the partner companies by strengthening and developing business growth strategies. They include: Financial Controls Enhancement of operations, finance and management systems Building and strengthening management capabilities Assist product development Perform feasibility studies, industry research, maintain international health related compliance standards Transfer proven healthcare business models across market Appointment of experienced practitioners/advisers at board or senior management level TA Facility will enable the Fund to: Provide guidance, training and value addition required by partner companies in key operational areas Maximize development impact of increasing access to quality healthcare goods and services within low income population 9

10 THANK YOU Contact: Basil Nundwe : basil.nundwe@abraaj,com 10