Private Equity Funds and the Listing of Portfolio Companies A Presentation to the Workshop on North

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Private Equity Funds and the Listing of
Portfolio CompaniesA Presentation to the
Workshop on North African Emerging Capital
Marketsby Papa Madiaw NdiayeDirector, AIG
African Infrastructure FundCairo, March 31 2004
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What is the AAIF?

• Largest pool of private equity capital ever to
  target Africa
• Industry Leader among Pan-African/Regional Funds
• Size of funds raised 400m
• Shareholders are among largest Global players
  focused on Africa
• Include AIG, IFC, ADB, EIB, DBSA, El Paso
• 16 professionals, 49 years African private equity
  experience and 68 years
• of Wall St. experience President Mandela
  Chairman of Advisory Board
• AAIF is part of a family of funds which total the
  largest pool of
• equity capital targeting the emerging markets
  with 6.6bn raised
• Performance of AAIF to-date
• 9 investments totaling 166.8m in commitments
• One exit thus far after an 18 month holding
  period leading to a 30 return
• 12 investments currently under active review
  totaling 235m in commitments
• Conservative model expects at least 21 return to
  shareholders net of fees

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Portfolio Distribution
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Sector Distribution
Current Investments
Including Near-Term Pipeline
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Portfolio Companies
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How Funds Interact with Public Markets

• _at_ Exit IPO (of investee or parent company)
• Local listing -- Africa
• International listing -- outside of Africa
• Joint Listing -- Africa and outside
• _at_ Exit Swap into IPO of parent of investee
  company
• _at_ Exit Flip up of stake into listed parent
  company equity
• E.g., Possibility for OTA into OTH (PE of 12.4x)
• _at_ Entry De-listing of company
• E.g., Pan-African Energy (Ocelot Energy de-listed
  from TSE, June 99)
• Co-investor, Pan Ocean Energy Corp, listed since
  April 1991
• Between Entry and Exit Debt Raising
• E.g., Charaf initiated CP program

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Advantages of Exit Via Listing

• Orderly way to exit
• Market comparables facilitate estimation of exit
  valuation
• Investors can expect premium to entry valuation
• Public multiples generally higher than private
  multiples
• Governance requirements for listing similar to
  those required by EMP

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Desirable prerequisites for listing

• Sectoral Pure Plays
• Easier to find comparables
• Easier for the market to value
• Easier for the market to forecast
• Critical Mass
• Minimum of c. 50m for major African exchanges
  (Cairo, Casablanca, Tunis, Johannesburg)
• Greater size required for listing in London or
  Paris
• Smaller size acceptable for smaller African
  exchanges
• Transparency
• Previous experience with capital markets
• CP issues, Debt issues, Debt rating
• Attractive and credible growth profile
• Early on J curve
• Track record

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Further improvements to Maghreb Capital Markets

• Increase Liquidity
• Reduce Bleed Out time period
• Simplification of listing rules
• Reduce costs involved in listing
• Reduce prerequisites
• Better market information/transparency
• Quality research on listed companies
• Rating agency coverage of listed companies
• IAS reporting

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Papa Madiaw NdiayeDirector, AIG Africa
Infrastructure FundWorkshop on North African
Emerging Capital Markets