Transcript FONDS D’INVESTISSEMENT POUR LA MODERNISATION DE L

THE
AFRICAN AGRICULTURE FUND
AFRICAN AGRICULTURE FUND
• The opportunity of an investment fund
• Investment strategy and targets
• Fund structure
• Fund governance
• Technical Assistance Facility
The opportunity of an Investment Fund (1)
•
•
The rise in global food demand will require doubling food production
by 2050
Private initiatives to increase agricultural production will be boosted
by continued high market prices ( risk of volatility) in the mediumterm and by more supportive and effective public policies
Commodity forecast real prices
Maize $/mt
139
175
126
127
127
125
Wheat $/mt
216
256
194
196
197
197
Rice $/mt
277
513
339
343
343
344
Soybean meal $/mt
260
334
241
235
225
217
Soybean oil $/mt
747
971
685
639
643
570
19
23
21
22
25
27
Sugar c/kg
(source World Bank, Prospects for the Global Economy, April 2009)
Data for 2007 & 2008 are actual prices and data for 2009 - 2020 are price forecasts
The opportunity of an Investment Fund (2)
•
Growing opportunities in domestic and regional food markets /
Investments giving priority to a regional market approach will reduce
the vulnerability of African production
•
The implementation of this type of investment requires FOs,
producers organizations and enterprises financially sound with
sufficient management skills and capacities, capital to mobilize
financing resources
•
New and coordinated mobilization of the international community
(FAO Summit, Doha Conference, EU Food Facility, G 8 L Aquila) within
the framework of a Global Partnership for Food Security and
Agriculture
The « missing middle »
in African agro-enterprises
Source : Market Matters, New York,April 2009 for UNIDO and FAO
The opportunity of an investment fund (3)
• AGRA, AfDB, AGRA, BOAD, IFAD and AFD
have consequently decided to promote the
African Agriculture Fund to boost Africa’s
agriculture and agro-industry (Letter of
Intent )
• South Africa-based Phatisa L.L.C. selected
as Fund Manager.
• The Fund has an initial target size of
US$150M to become operational (November
2009) and expects to raise additional
commitments up to an aggregate capital
Investment strategy and targets (1)
Targets / Business Partners
• Operate in food production industries or provide financial services to
small agri-business operators and SMEs, cooperatives or farmers
organisations
• Have a clear business plan focusing on developing and/or
diversifying their products/services and/or sectoral integration
•
Ability to invest in the value chain to reduce transaction costs of the
producers/processors / storages/marketing interfaces
• Ability to grow their markets within the region levels or to develop
export opportunities
• Ability to maintain satisfactory payment terms to suppliers
especially smallholder farmers
• Implement measures to protect and continuously mitigate their
impact on the environment ( social and environmental standards)
Investment strategy and targets (2)
Main Investment sectors
• Cereals production (rice, maize & wheat)
• Roots and tubers (Cassava …)
• Livestock and diary products
•
Fruit products
• Seeds production and fertilizers
• Fats and oils
• Rural domestic credit and
insurance institutions
Investment strategy and targets (3)
Investment financing
•
Equity and quasi equity products
•
Technical Assistance Facility (TAF)
•
Two windows of financing enterprises:
– A small-medium size company financing window offering investment between
US$ 0.15 M and US $4M
– A large company financing window for investment up to US$15M
The fund will invest a minimum of 20% of the Final Closing in SMEs and
micro-finance sectors
Investment strategy and targets (4)
Investment strategy
• Investment in a company’s own funds will not exceed 20%
• The Fund will invest no more than 30% and no less than 20% of its
total commitment in any single region (Southern, Eastern, West and
Central, North and Eastern Mediterranean)
• Investment in a sector will not exceed 25 % of its total commitments
and will not participate in any hostile transaction.
Investment strategy and targets (5)
Fund term and exit strategy
• Five year commitment period
• Seven/ten year investment maturity
• Exit strategy shall be, as the case may be, to provide for the option
for local agricultural producers to acquire interests in the targets
•
Average IRR per target shall be around the mid-teens
Fund structure
Institutional
Investors Funding
Category A/B
Category C
Commercial
Funding Investors
Technical Assistance Facility - TAF
Sponsors
Funding
AFRICAN
AGRICULTURE
FUND
Fund Manager
Management
Agreement
ADVISORY BOARD
INVESTMENT
COMMITTEE
SME Committee
Investments
Small-size Company Window
USD 150,000 – 4,000,000
T A F
(Grants)
Investments
Medium/Large-size Company Window
USD 15,000,000 on average
Fund Governance
Fund Manager. Responsible for the overall financial and administrative
management for the fund Deal sourcing .
• All diligences required further to targets investments;
• Representation of the Fund with respect to target’s board of directors or
equivalent board or committee;
• Definition of exit strategy
Advisory Board Composed of independent members and representatives of
investors The Fund manager is entitled to participate in the deliberations, but
will not be a voting member
• Guidance on the implementation of the Fund’s investment strategy
• Ensuring adherence of the Fund to its investment charter.
• Resolving conflict of interests
Investment Committee. Comprising representatives of the Fund. promoters or
investors.
• All investment decisions of the Fund, on the basis of reports of evaluations
and due diligence performed by the manager
• Post-investment monitoring,
• Reviewing progress of the Fund’s portfolio and Fund manager performance
Main Objectives of the TAF
• To strengthen the management and
the technical capacities of small scale
farmers and SMEs to access to the
resources of the AAF and of the
business development financing
• To further develop the capacities of
the agricultural financial sector ( to
provide efficient services to SMEs)
Type of technical assistance
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•
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Development of outgrowers and/or contract farming
schemes
Business plans for expansion of SMEs
Capacity-building for managers in areas such as basic
business principles, financial and risk management, human
resource management, information systems and marketing,
entrepreneurial coaching
Agronomical training and contract work for affiliated
smallholders farmers/producers associations
Market research and surveys and market linkages between
SMEs and various actors of value chains, including
technology and knowledge transfer
Assistance with quality certifications,
Training for microfinance organizations staff and
microfinance product development and research to
agrobusinesses and SMEs
Thank you for your attention