Professor Eli Talmor, 2006 AVCA Conference, Dakar, Senegal

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Private Equity in Africa Establishing a
Development Impact Model
Professor Eli Talmor, 2006 AVCA Conference,
Dakar, Senegal
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Private Equity Institute

• London - centre of European private equity,
  gateway to emerging markets
• Founded in 2005
• Independent Objective

Students and alumni
Industry associations
Academia
Practitioners
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Private Equity Institute a network of networks

• High Powered Advisory Board
• GPs, Fund of Funds, Venture Capital, Buyout,
  Secondaries, Gatekeepers, Corporate Ventures,
  Legal and Accounting Firms
• Strategic partnerships
• Conduct research for AVCA, EVCA and the World
  Economic Forum, amongst others
• Collaboration with other academic institutions

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Development Impact Model (DIM) objectives

• What do we mean by impact? Direct and spillover
  effects
• Creation of a measurement model
• Systematic reporting from African VC/PE managers
• Multi-firm, Multi-investment, regional, and
  continental view of African VC/PE market
• Building of a framework to generate meaningful
  metrics
• Reliable, ongoing and accessible reporting to
  investment community
• Providing government with a benchmark for
  creating effective policy
• Stimulate VC/PE to generate economic, social and
  environmental benefits
• Project Initiation Sept. 2006, Project
  Completion March 2007

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Leveraging economic studies

• Development economics helps define relevant
  issues
• Conditions for meaningful economic growth
• Learn from experiences of other developing
  regions
• The regional economic environment must be
  reflected
• To promote appropriate policy
• To encourage optimal investment projects
• To create desired societal benefits

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Leveraging economic studies

• Economic Studies
• Institutional requirements
• Effective policy reforms
• Legal considerations
• Entrepreneurial considerations
• Innovation
• Labour markets
• Historical Impacts
• Specialization
• Private investment
• Lessons from developing nations

Focus on Relevant Issues Relate to African
Environment Build Issues into Framework
Effective DIM Model
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Holistic assessment of development impact

• Financial indicators IRR
• Economic indicators employment, innovation,
  education, diversification
• Environmental indicators compliance, technical
  assistance
• Social indicators labour standards, poverty
  alleviation, workplace standards, health
• Governance/institutional indicators human
  rights, reporting systems
• Overall reporting structure

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Process overview

• Review, refine and harmonize existing framework
• Draw upon economic studies and other development
  impact models
• Ribbink and Vergeer 2005 AVCA Conference
  Mombasa, Kenya.
• Construct survey for Fund Managers
• Work with AVCA and sample of Fund Managers to
  ensure usability and quality of data
• Analyze data, provide feedback to EIB, refine
  model
• Produce report final proposals for refinements

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Process overview
Economic Studies
Completion Recommend Refinements
Propose Implementation Plan
Pilot survey Input from Selected
Managers through Calls Field Visits
Analyze DI Data Prepare DI Reports
Phase 1 DIM Survey
Existing DIM Models
Review EIB Frameworks
March 2007
Nov. Dec. 2006
Jan. Feb. 2007
Nov. 2006
Sept. 2006
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Positive Results for African VC/PE Community

• Standardised benchmarks for measurement of
  ongoing development impacts in Africa
• Quantify impact for communication to investors
  international financial institutions
• Increase visibility and attract investment
• Attract positive attention and new
  assets/opportunities
• Encourage growth of VC/PE presence in Africa