"The article ought to wake us from our perpetual slumber."
From: 'Mannu T.' via ambasbay <ambasbay@googlegroups.com>
To: "camnetwork@yahoogroups.com" <camnetwork@yahoogroups.com>; ambasbay <ambasbay@googlegroups.com>; SHESA USA <shesausa@yahoogroups.com>; ACCDF <accdf@yahoogroups.com>; cameroon politics <cameroon_politics@yahoogroups.com>; "mankonforum@yahoogroups.com" <mankonforum@yahoogroups.com>
Sent: Thursday, June 5, 2014 6:21 AM
Subject: Re: [camnetwork] THE NEW PARTITION OF AFRICA BY PRIVATE EQUITY FIRMS...INTERESTING
"How did War-torn Ethiopia, Rwanda and Ghana emerge from a sinister World Bank listing of "Very Poor and Indebted Countries" to become the fastest growing African Economies in front of our very own eyes? Where did Cameroon go wrong? NA WHO GO PAY??????? Na which kanna badluck dis norh?" (Mishe FON)
Mishe Fon:
Thank you so very much for sharing. The article ought to wake us from our perpetual somber. Cameroon is indeed a cursed Country. We are here wishing each other liver failures or a very long life and "Poverty". What a country!
To some of us, the only plausible and befitting job for a Cameroonian is being a MAN OF GOD or a Con Artist.
Becoming a DJ, working in the Banking sector or owing a small business are demeaning and unfit for Royals without "Fakedoms" oops Kingdoms!! Unfortunately,we can't all be Camnet 'MOGs and pay our bills and invest in our future generations. It's Me, Myself and I for some.
Cameroonians, from 'fakedom" thou was born, in "fakedom" thou will remain and in "fakedom'" thou shall die ..thanks partly to "FROGMITES"
Manu
Sent from Yahoo Mail on Android
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From: Mishe Fon mishefon@yahoo.com [camnetwork] <camnetwork@yahoogroups.com>;
To: CAMNETWORK list <camnetwork@yahoogroups.com>; ambasbay <ambasbay@googlegroups.com>; SHESA USA <shesausa@yahoogroups.com>; ACCDF <accdf@yahoogroups.com>; cameroon politics <cameroon_politics@yahoogroups.com>; mankonforum@yahoogroups.com <mankonforum@yahoogroups.com>;
Subject: [camnetwork] THE NEW PARTITION OF AFRICA BY PRIVATE EQUITY FIRMS...INTERESTING
Sent: Thu, Jun 5, 2014 5:45:29 AM
While we spend an inordinate amount of time trying to excoriate, character assassinate, inflict as much damage as we can on our perceived, imagined or supposed "enemies"; this is what the BIG BOYS, yes "Heavy Weights" are discussing...about the new PARTITION OF AFRICA. We are here "killing each other" with the most vile uncouth vocabulary while a few savvy guys are silently making a KILL in our backyard AFRICA now considered as the fastest growing economy in the world. While our country Cameroon is not remotely mentioned in the discussion, we loose nothing in learning from the best. Let me even start by asking a straight forward question. How did War-torn Ethiopia, Rwanda and Ghana emerge from a sinister World Bank listing of "Very Poor and Indebted Countries" to become the fastest growing African Economies in front of our very own eyes? Where did Cameroon go wrong? NA WHO GO PAY??????? Na which kanna badluck dis norh?
The article is rather long BUT it is a scholarly paper not meant for the Fast and Furious Internet Warriors, who are only reading any article to extract negative points to "Hammer" their "Frienemies" with. God don surely tchakala we head.
Mishe Fon
READ ON AND PONDER
"We see opportunity in a lot of different sectors in many
different countries in Africa. As a result, we have invested in a broad range
of sectors including diapers, bottled water, restaurants, cell phones, rubber,
power and water, airlines, cable television, and tuna fish processing."…Hurley
Duddey.
Private equity firms are approaching investment in Africa from a
variety of perspectives, with different goals and objectives. Some have
established histories in the region, while others are relative newcomers.
There are a few fundamental ways for institutional investors to
invest in Africa. They can invest directly in companies. They can select one or
two funds investing in the region and invest in those directly. They can
assemble a team internally to build a diversified portfolio from the ground up.
Or they can use an intermediary firm that partners with organizations with ties
to the region. For example, Blackstone, which entered Africa about a decade
ago, invests primarily in the energy and power sector. It does not maintain
region-specific funds, instead making investments from its global private
equity and energy funds, which combined hold some $19 billion in capital.
Blackstone's investments in Africa, most of which have been made through
Greenfield Development Projects, range from developing the Bujagali
Hydroelectric Dam, a $900 million project in Uganda, to investing in Kosmos
Energy in Ghana.
The Carlyle Group, on the other hand, invests through funds that
are dedicated to a particular region or sector. Based in both Johannesburg and
Lagos, they are investing mostly in medium- to large-sized companies that are
growing as a result of rising demand from middle-class consumers.
Fairview Capital Partners is entering the African market through a
partnership with FMO, the Dutch Development Finance Institution (DFI), which
has been investing in Africa since 1970 and in African private equity funds
since the mid-1990s. Fairview takes a fund of funds and co-investment approach
to investing in Africa, acting in essence as an arbitrager for other investors.
A typical private equity fund invests directly in companies, helping to grow
them to the point that their interest can be sold at a profitable return to the
fund's investors. When there are a large number of these funds, investors don't
always have the resources to do the due diligence needed to build a strong
portfolio. That's where firms like Fairview Capital Partners come in. Fairview
invests in the infrastructure and teams needed to do this and, acting as a
general partner, raises capital from investors and then serves as a limited
partner in the individual funds.
Emerging Capital Partners (ECP) has launched a series of
Africa-focused private equity funds that each typically invest directly in
eight to twelve African companies that it then helps develop to a point where
they can be profitably sold. Since launching the business in 2000, ECP has
invested about $1.3 billion in over fifty companies in more than forty African
countries. Notes Hurley Doddy, co-chief executive officer of ECP, "We see
opportunity in a lot of different sectors in many different countries in
Africa. As a result, we have invested in a broad range of sectors including
diapers, bottled water, restaurants, cell phones, rubber, power and water,
airlines, cable television, and tuna fish processing."
Despite their strategic differences, private equity investors
agree on what makes the African market attractive: a growing population, a burgeoning
middle class, and improved governance and economic policies.
Africa was not as obvious a play in 2000 as it is today, according
to Doddy. Nevertheless, many of the structural adjustments that have made
investing there attractive were already under way in the 1990s, including
managing the debt and even more important, reducing the role of government in
the economy.
The demographics are also favourable. There are a billion
Africans. The workforce is growing, unlike much of the rest of the world, where
both the workforce and the population are shrinking. In fact, Africa will
eventually have a bigger workforce than China.
Demographics are one important reason for Blackstone's power and
energy investments in Africa. There is and will continue to be a tremendous
need for electrification, according to Senior Managing Director Sean Klimczak,
who points out that the entire continent has the installed energy base of
Spain, with twenty times as many people.
The economic picture is also increasingly bright. Compared with
countries like the United States, where long-run annual GDP growth has been in
the range of 2-3 percent, the sub-Saharan Africa countries, where long-run
annual GDP growth has been above 5 percent, look relatively attractive in terms
of their ability to invest in large-scale power projects. As a result,
Blackstone is focusing on transformative projects with good developers. Says
Klimczak, "In Uganda we were able to double the amount of available power. At
the same time, the country cut the cost of power by two-thirds and expects to almost
double GDP growth."
David Marchick, managing director at The Carlyle Group, points to
an intangible test his firm uses to gauge the attractiveness of an emerging
market: Some 15 years ago, many Chinese citizens wanted to come to the United
States, go to the best business schools, and then work here. About ten years
ago, those same high achievers became interested in returning to China. Over
the past four or five years, the same thing has been happening with citizens of
sub-Saharan African countries. Says Marchick, "For us, it's a sign of
confidence that the most talented people want to go back to the countries where
they grew up because they see greater opportunity there. It's a signal that
Africa is probably a good place to invest."
Those signals have not gone unheeded by the investment community
at large. Demand for well-vetted investment opportunities is on the rise.
Institutional investors are clamoring for access to private equity funds with
assets in Africa, but don't have the resources to make informed decisions about
which funds are the best fit. For intermediaries like Fairview, this is
probably the strongest indication that this is the time to go into Africa.
Notes Kola Olofinboba, who heads up Fairview's African Practice, "There is
something happening—there's a significant structural shift and we think it's
there to stay. And yet when you look at the amount of private equity capital
that has actually come into the continent annually over the last ten years, it
has grown a little bit but hasn't really spiked. So we think the opportunity is
still very early. And for people who get in now, the view through the
windscreen is a lot brighter than what you see in the rear view mirror."
Private equity firms entering new markets must decide the extent
to which they will operate out of headquarters versus stationing personnel in
the countries where they are making investments. Operating from a central
headquarters is advantageous both because it is a less expensive way to enter a
market and because it places decision-making closer to the technical expertise
and resources that the firm has built up over time. On the other hand, placing
"troops on the ground" helps firms conduct more effective due diligence and
intelligence gathering.
Private equity firms vary in how they deal with the
centralization/ decentralization issue. While about 10 percent of Blackstone's
investors are in Africa, the firm has no investment professionals based on the
continent. The firm's professionals, who are stationed in the United States,
Europe, and India, as well as other parts of Asia, are responsible for
investment decisions globally. These executives log hundreds of thousands of
miles each year as they vet different companies in Africa and elsewhere.
In contrast, about 70 percent of ECP's African investment
professionals are stationed in Africa, operating out of seven offices across
the continent. These individuals work hand-in-hand with the companies ECP has
invested in, learning their needs and helping them develop. Migrating personnel
to Africa was a gradual process, notes ECP Co-CEO Doddy. They started out with
most people based in Washington D.C, building the team and strengthening
relationships. But over time, they found it was important to move people closer
to the investment destinations.
This approach has made it easier for ECP to perform due diligence
and manage its investments. Furthermore, because many of the companies that the
firm is investing in are growth businesses that are looking to expand to other
parts of Africa, having personnel stationed in various regions across the
continent signals that ECP is prepared to support their expansion.
Carlyle has also chosen to station its investment personnel in
Africa. In fact, according to Marchick, 100 percent of the people investing in
the region are from the region and live there, including team members from
South Africa, Zimbabwe, and Liberia.
Despite Africa's significant opportunities, there are also
considerable risks. Private equity firms manage these risks using a variety of
strategies.
Fairview's fund of funds approach allows the firm to build a
portfolio of investments, creating diversification for its limited partners.
This helps mitigate the idiosyncratic risk of investing in any single fund.
What investors pay for is Fairview's ability to pick the best managers in a
particular market with the help of its sizable research team.
ECP also spreads risk through diversification, even within a
single fund. Each fund will typically invest in ten or so different companies
in different sectors, operating in different countries.
As with Fairview, ECP's comprehensive due diligence makes it
possible to select the companies in each sector that have the best potential to
perform well.
Carlyle manages risk by sticking with what it knows. Says Managing
Director Marchick, "We tend to focus on transactions where we can actually add
value, where there's some niche or some capability that allows us to help that
business grow faster, expand internationally, strengthen governance, or improve
financial management. In Africa we concentrate on sectors where we can help
companies globally."
The firm uses this approach in every region where it invests. As
one of the larger investors in China, Carlyle has managed or invested in about
55 transactions totalling more than $4.5 billion; most of these are minority
investments in growth-oriented companies. The firm plans to take the same
approach in sub-Saharan Africa. An example might be a family-owned business
that has grown to the point where it needs the financial management,
operational management, and branding capabilities of a larger company. Large
firms like Carlyle or Blackstone can bring to these capabilities to the table
and help that company reach the next level.
Not all private equity firms choose to go it alone, especially
when entering a new market. Many of them opt for co-investment, a strategy that
allows them to place larger bets without having to allocate too much of the
fund's capital to a single transaction. Says Carlyle's David Marchick,
"Co-investment is becoming a much more important part of all of our
businesses—Blackstone, Carlyle, every private equity firm." He points to two
main types of co-investment. The first is a private equity fund's investors,
who are limited partners in the fund. These investors are pension funds, high
net-worth individuals, and foundations. According to Marchick, there is
increasing demand from these investors to co-invest alongside their general
partners, so it is important for private equity funds to provide these kinds of
opportunities.
The other type of co-investment Marchick describes is done with a
competitor firm. For example, Carlyle has partnered with Blackstone on a number
of transactions in the United States and around the world. This is an important
strategy when the other firm offers complementary capabilities that can benefit
the transaction. Marchick notes that it is especially important to find a
partner with a similar investing philosophy or one with similar objectives for
a particular project.
Blackstone's Klimczak points to two other types of co-investors.
One is strategic partners. For example, when Blackstone invested in The Weather
Channel, it partnered with NBC because of its valuable knowledge of the
industry. For Blackstone's energy investments in Africa, having a strategic
energy partner is equally critical.
Finally, in a region like Africa, identifying a local partner can
be critical. Blackstone tries to partner with local institutions and successful
entrepreneurs in the countries where it is investing. For example, in Uganda,
the firm partnered with The Aga Khan, who has a stellar track record and
reputation. Establishing local partnerships, especially in the absence of
significant resources on the ground, is the best way to ensure that the firm
truly understands the lay of the land in a particular market.
Around the world, people are beginning to see Africa as a market
with healthy prospects for growth. As a result, over the last decade and a half
a number of non-traditional investors, including Chinese and Indian companies,
have entered Africa. This trend has important implications for private equity.
One consequence is that private equity firms have a wider group of
candidates to sell portfolio companies to, once they have built them up. At the
beginning of the century almost all investment and development was being
financed by Europeans. Now, Indian companies have become big players.
As ECP's Doddy explains, Indian companies tend to be comfortable
with the income level that exists in many African countries. Drawing on their
own success, they are looking to expand in a number of industries. The same
holds true of many capital-rich Middle Eastern-based companies, which are
especially comfortable expanding in North Africa.
In China, by contrast, investment tends to be more
government-to-government. The Chinese are not yet as likely as the Indians to
buy and take control of an African company. But Doddy believes this will
probably begin to change.
African companies themselves, as they become more successful, are
pursuing expansion in other regions. Some South African businesses are seeking
opportunities in the north, while Moroccan enterprises are casting their sights
south. Doddy expects that in the next 10 years a broad range of African
companies will begin expanding into other markets on the continent.
Carlyle addresses the issue by including a rigorous evaluation of
economic, social, and governance factors in its due diligence process for
investments in Africa. According to Managing Director Marchick, the firm's
investment criteria have so far been fairly consistent with many of the
development goals of both the leaders in the region and those of multilateral institutions.
For example, the firm's first investment target was a distribution company in
the agribusiness sector. Focused on regional integration in East Africa, the
company brings products from small farmers to the market, creating greater
efficiencies. This business model accords well with Carlyle's emphasis on
investments to promote the strength of the middle class, upward mobility, and
regional integration. ECP's Doddy believes that private equity firms have a
good reputation in Africa because they are fundamentally growth investors
there. They are focusing on helping good companies that want to get bigger and
better, provide services, and fill in some of the many gaps in Africa.
While the private equity community has not always been ahead of
corporate investors, it is clearly playing a leading role in emerging markets,
particularly in Africa. If private equity investors prove successful there,
they may promote even greater investment and economic growth in a region where
profits can accrue not just to investors but to local businesses and the people
whose livelihoods depend on them.
Written By:
Harry Broadman, Senior Managing Director PwC Emerging Markets
Management Consulting Leader
Martyn Curragh Principal PwC US Deals Leader, Andrew
Cristinzio Partner PwC US Private Equity Leader
Read Complete Article Here:
http://www.pwc.com/en_US/us/transaction-services/publications/assets/investment-in-africa.pdf
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Posted by: Mishe Fon <mishefon@yahoo.com>
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