Fundraising Strategies for a Nigerian firm

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Fundraising Strategies for a Nigerian firm

• UGO IKEMBA
• MD, VECTIS CAPITAL, NIGERIA
• September 2006

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Table of Contents

• Overview of the Nigeria Private Equity
  Industry
• Major Sector Investment Opportunities
• Raising funds generally and for PE
• Vectis Capital Nigeria Introduction
• The Future Outlook of Private Equity in Nigeria
• Closing Comments

Vectis Capital
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Nigerian Private Equity - Overview

• The country offers a compelling investment
  opportunity due to
• Vast resources and largest population.
• Inadequate infrastructure.
• Maturing leadership.
• Largest untapped African Market.
• Fastest growing market in sub-Saharan Africa (6)
  
• New technologies are creating various Private
  Equity opportunities. A vivid example lies in the
  growth of the telecom industry.

Vectis Capital
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Nigerian Private Equity Major Players
Vectis Capital
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Nigerian Private Equity The Process
Banks
Insurance companies
Pension funds
High net worth individuals
Fund Pool
Fund of Funds??
International Financial Institutions
Target sectors
A. - Telecom B. - Mining C. - Property Services
D. - Construction materials E. - Packaging F. - L
ogistics and distribution G. - Oil and
gas H. - Manufacturing for export (food, gems,
etc)
Vectis Capital
Vectis Capital
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Nigerian Private Equity Challenges

• Easy to under-estimate implementation challenges
  and difficulty of operating in Nigeria
  difficulty maintaining world class standards
• Proactive strategy and effort required to
  generate good deal flow for fund
• Ability to add value critical to investment
  success requires on-the-ground presence and
  knowledge of the businesses and operating
  environment
• Gaining liquidity and exit from investments pose
  particular challenges
• Foreign exchange risks including currency
  devaluation can significantly erode capital and
  investment returns
• Political instability and other macro-economic
  risk can destroy value even when the
  micro-business fundamentals are right

Vectis Capital
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Major Sector Opportunities- Economic
Transformations
Deregulation The removal of government
controls from certain sectors, in order to create
a free and efficient market place is creating
opportunities for private sector entrepreneurs.
Favorable FDI policies Creating multinational
partnering opportunities, particularly with South
African European businesses.
Outsourcing Large companies and institutions are
deciding to pay outside firms to handle various
internal functions in order to become more
efficient and focus on their core competencies.
Export-businesses Government incentives are
favoring export oriented businesses.
Shifts in Govt. Spending Creating opportunities
in favored sectors such as education, healthcare
and infrastructure.
Vectis Capital
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Major Sector Opportunities
PRIORITY THEMES INDUSTRY SECTORS TABLE
Economic Transformation
Co-location, ASPs GSM Distribution
SNO, Backbone Provider
Internet, E-Commerce GSM Cellular, PTOs
ICT
Raw Processed mineral Export
Equipment leasing and maintenance
Technical alliances
Junior Mining Cos
Mining
Tile sanitary ware, local mfg.
Bus. Publishing TV networks
Local furniture mfg
Mktg/ Advertising
Construction Materials
Hospitality and Tourism
Industry Sectors
R E Development Management
Facilities / Records/ Security Waste/ Mgmt
Property Services
Cargo Handling, Catering services
Strategic Alliances
Airline Facilities Maintenance
Transportation
Agro-allied/and food processing
Processed Food Exports
Grocery Retail, Fast Food
Food
Vectis Capital
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Major Sector Opportunities
PRIORITY THEMES INDUSTRY SECTORS TABLE
Economic Transformation
Cash mgmt, Debt Collection services
Financial Services
Credit, Mortgage support services
Micro finance services
Bottling, canning for gas (LC), juices, etc
Technical Alliances
Packaging and news paper inks/ paints
Packaging
Privatizations
Bus. Publishing TV networks
Marketing/Advertising
Media Entertainment
Media MBOs
Local Content, Marg. Fields/ IPPS
Upstream services, Local Content, Billing Services
Hospitality and Tourism
Industry Sectors
Privatizations, New Refineries
Energy
Healthcare Delivery Services
Intl healthcare companies
Human Capital
Vectis Capital
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So how do you raise funds globally locally?

• Identify target market
• Pre-marketing
• Establishing Fund structure
• Preparing and distributing marketing materials
• Visiting and following up with potential
  investors
• Investor due diligence
• Preparing legal documentation
• Closing

Vectis Capital
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So how do you raise funds globally locally

• Have a clear and compelling strategy. Believe in
  something. Think big. Be bold.
• Be really committed. Forward ever, backward
  never. You will want to give up. Be relentless in
  the pursuit of your goals. Get rich or die
  trying. (Which one are you the chicken or the
  pig?)
• Write your idea down, pray and then develop the
  business plan. God likes business plans. So do
  investors. Dont tell me about it be about it!
• Be ready for rejection. Why not me! Be
  creative in getting around them. Be realistic.
  (Out 500 business plans only 1 will get funding.
  Not everyone gets it)

Vectis Capital
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So how do you raise funds globally locally

• Be willing to share with a partner that either
  gives you credibility or brings capital
• (Do not overestimate or underestimate your worth.
  Are you bringing tech expertise, market
  knowledge, cash, nothing, etc)
• Start making lists. Lists of all investors
  locally and globally. Start traveling
• Be disciplined. Be professional. Pay to create
  organized professional documents. Hire the best
  advisers that you can afford. Legal, accounting,
  tax, etc. They save you from costly mistakes
• Start with the possible and it will help achieve
  the impossible
• (Money pursues money once you have one strong
  backer others will follow bandwagon effect)

Vectis Capital
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The Future of Private Equity in Nigeria

• Growing future as many funds are planning to come
  into the country
• There is a lot of excess liquidity in the market
  and productivity is on the rise
• Skilled Nigerians and others are also coming into
  the market and setting up educated experienced
  management teams
• The Nigerian government is seeking to attract
  investments and thus liberalizing its economy and
  privatizing state-owned enterprises in high
  potential sectors
• Successful Nigerian businesses are increasingly
  pursuing continent-wide growth strategies
  dreamers and doers

Vectis Capital
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.The PE train is leaving the station. Get on
board and transform Africa.