financing opportunities in east africa - ahk kenia€¦ · financing opportunities in east africa...

Sponsored by:

Thursday, 17th September

InterContinental Hotel, Nairobi

10.00 – 10.05 Welcome - Daniella Pleitz, Chairlady, German Business Association

10.05 – 10.25

Presentation “Scope of Finance Opportunities for Large and Small Scale Projects; Seed Investment and Innovative Funding”

- Andreas Kaiser, Head of the Energy Desk, Delegation of German Industry and Commerce

10.25 – 10.45 Presentation “Responding to the Current Economic Times”

- Juulia Laakso, Relationship Manager – Multinational Corporates and James Mwaura, General Manager – Corporate Assets, Chase Bank

10.45 – 11.05 Presentation “Legal Framework for Public Private Partnerships” - Amar Mehta, Roedl & Partner

11.05 – 11.30 Tea Break

11.30 – 12.00 Presentation “The Role of DEG to promote German Investment in East Africa” - Simarjit Singh, Investment Manager, DEG

12.00 – 12.15 Presentation “Practical Example of a Project Funded by DEG ” - Daniel Paffeholz, Taka taka Solutions

12.15 – 12.45

Presentation “Export Credit Guarantees and Investment Insurance of the German Government – Supporting German Investment in Kenya”

- Rainald Koester, Export and Investment Finance, Price Waterhouse Coopers (German ECA)

12.45 – 14.00 Lunch

Financing Opportunities in East Africa

A workshop organized by the German Business Association (GBA) and the Delegation of German Industry and Commerce in Kenya

17th September 2015


Finance Opportunities in East Africa

A workshop organized by the German Business Association and the Delegation of German Industry and Commerce in Kenya.

17th September, 2015


Sponsored by

Scope of Finance

Opportunities for Large

to Small Scale Projects

Finance Opportunities in East Africa

Nairobi, 17.09.2015

Andreas Kaiser, 17.09.2015

Agenda

• Trading transactions integrated finance

• Financing of exports andimpact investment

• Crowd finance facilitator

• Value added projects

• HR development

• Our Services Human component, project oriented

Size

of p

roje

cts,

dea

l orie

nted


Missing know-how about> Benefits> Possibilities of financing

Investment competition

Time constraints for dealingwith “non-core business“

High upfront investments forrenewable energy and energy effiency projects1

1Compared to business as usual

Which hurdles prevent the implementation of projects?


Multi-sourcing including finance by CCC Machinery

Buyer’s credit for Molino Cañuelas SACIFIA, Argentina, 2013, with Deutsche Bank: US$ 24.6 mn. and deliveryof flour mills, processing, packaging, baking equipment

• Multisource technically not-specified trading (one exporter package deals) of:

> Machinery> Facilities> Technical products> Raw materials

• Non-industry specific trading of turn-key industrial facilities and laboratories

• Many times in combination with export finance solutions> Supplier‘s credits> Buyer‘s loans

• (Usually) starting at € 3 mn.; repayment 2-10 years• Proper finance or with financial institutions (multiple

lender syndication possible)• Cooperation with Export Credit Agencies• Integral part of Ferrostaal Equipment Solutions

Source: CCC Machinery, Judith Ojinnaka, 2015.


Northstar Europe S.A. provides

small ticket export credits

• Trade and export finance for Kenyan/ non-European small and medium-sized enterprises

> ECA1 covered buyer’s loans> € 0.25-5 mn. for 2 to max. 5 years> 85% of contract volume

• Northstar one-stop shop> Negotiates directly with the buyer> Applies for ECA coverage

• How to approach> German/ European2 supplier

via IPEX-Bank (int. export and project financier)> Kenyan/ foreign buyer

directly via Northstar Europe S.A.

1Export Credit Agency 2Austria, Germany, France, Denmark, Spain, BelgiumSource: KfW IPEX-Bank, Northstar Trade Finance 2015.

<€ 2 mn. buyer’s credit for ISO Hospital Dia, Brazil secured by ECA Office du Ducroire for 4 years

• develoPPP program of German Federal Ministryfor Economic Cooperation and Development (BMZ)

> Promotes company investments with a perspective of making their entrepreneurial activities more sustainable

> Combines business interests and development-policy criteria

• German public partners/ institutions bear up to 50 % of the project costs (not more than € 200,000)

• Company contributes at least 50 % of the overall project cost for a project duration of max. 3 years

> Jobs and training positions

> Environmental and climate protection


Co-financing projects through

the develoPPP program

> Labor and social standards

> Qualification of customers and suppliers

> Energy and water supply

Source: SEWOH Stakeholder Meeting, 2015.


Project criteria for develoPPP

Source: SEWOH Stakeholder Meeting, 2015.

Criteria for projects Criteria for companies

• Compatibilitywith German development cooperation goals

• >1 mn. Euro annual turnover

• Complementarityof private and public goals

• >10 employees

• Subsidiarityproject wouldn‘t be executed without support

• 3 years active in the market

• Competition neutralgenerally open for all companies

• Long-term engagement in the target market planned

• Company contributionminimum 50 per cent of the project costs

• Commercial interest of the company is visible

• Embedded in a long-term sustainable engagement of the company in the target market

Step 2

Checking companycredit-worthiness

Evaluation according to pre-determinedcriteria

Step 3

Work on proposal withpartners

Project concept

Put up cost structure

Step 4

Evaluation of concept

Conclusion of contract

Step 5

Start implementing

Pay-out according to project progress

Interimreports

Step 6

Project finish

Final project report

Final accounting and payment

Step 1

Turn in project proposal/ application

Deadline until the end of each quarter


Application process

Tanzania: Maschinenfabrik Reinhausen(components for electrical transformers)

• Safe-guarding electricity transmission and distribution

• Stabilizing the supply quality for energy consumers

• Training of local sales personal andresponsible decision makers (customers/ government)

Kenya• Establishment of small-home biogas plants

• Biogas and electricity from avocado waste

• Software development training forKenyan IT professionals and students

Nigeria: Qualification of stakeholders in renewable energy in the Nigerian bottlers industry and implementation of two demonstration projects


Examples of implemented

projects in Sub-Sahara Africa

Source: SEWOH Stakeholder Meeting,Maschinenfabrik Reinhausen, AHK Kenia 2015.

Bettervest.de is a market

place for project bound credit


• “Crowdinvesting“-platform for energy efficiency/renewable energy projects

> Facilitates project initiation by administeringthe procedures between project owners and investors

> Increases visibility of projects/ acquires investors> Investor transfers fund to escrow> Recommends energy (audit) consultants and solution providers

• bettervest receives a one-time commission on the investmentand an annual handling-fee during the financing period

• ~1,900 private investments/ subordinated loans in 27 projectssince two years

• € 5,000-390,000 raised within 1-80 days• 6-10 % p.a. interest for 3-10 years

Source: bettervest.de, Marilyn Heib, 2015.

Market place bridges project owners and investors


Individual investments€ 50 – 12,500

InvestmentsPaid into escrow deposit

Payout of ~80% of the savings (BAU)

Financing of projects< 10 years; ~20%of the savings (BAU1)Then 100%

Up to 100% finance

CrowdAnnual paybackof investment> 5% interest< 10 years payback

Annual paybackand interest

1Business as usualSource: bettervest.de, Marilyn Heib, 2015.

Close relationship between debtor and creditor


Debtor• Financial due diligence

by bettervest;technical due diligenceby independent consultant

• 100% finance withoutguarantee deposits

• Facility becomes part of equity• Lower energy costs from

savings generated by projects(competitive advantage)

Creditor• “Ecological/ green” investment• Low investment threshold• Return above market rate• Transparent and project bound

investment• Close connection to debtor


• Solar-PV off-grid system (30 kW)1 forMourdiah village, Mali

• Necessary investment € 107,700(turn-key incl. bettervest handling)

• € 25,700 p.a. savings to BAU2 /€ 21,600 investmentpaid back in 7 years with 9% p.a.

• ~46,500 kWh electricity production= ~16,000 l Diesel p.a.

• Project implementation and management by Mobile Solarkraftwerke Afrika GmbH

• Village community rents the facilityand owns it after 10th year

• Usage of German/ European equipment

Solar-PV installation in Mali,

financed in early 2015

Andreas Kaiser, 17.09.20151Assuming facility lifetime 20-25 years 2Business as usual


• Solar-PV off-grid system (17.2 kW)1 plus additional installations for farm in Tanzania

• Necessary investment € 75,500 turn-key incl. bettervest handling)

• Up to € 26,000 p.a. additional return on crop yields (3.6 ha irrigation for > 7 months)and ~€ 8,900 savings on Diesel (BAU2: 0.6 ha for 3 months)paid back in 8 years with 8.5% p.a.

• ~15,500 kWh electricity production= ~8,300 l Diesel p.a.

• Project implementation and management by EnergieKonzepte Fischer GmbH

• Farmer pays off the facility to EnergieKonzepte within 11 years

Solar-PV drip irrigation in

Tanzania, financed in 2015

Andreas Kaiser, 17.09.20151Assuming facility lifetime 20-25 years 2Business as usual


Impact investment in emerging economies


responsAbility Investments AG, Switzerland

• Debt and equity financing for non-listed companies in emerging economies

• Value-based investment culture- stable/ sustained returns on investments

• Sector foci/ basic services to population> Finance: Microfinance institutions,

i.e. Rafiki Microfinance Bank, Subsidiary of Chase Bank, Kenya

> Agriculture: Cooperatives> Energy: Provider of solar home systems, bioenergy> Health: Manufacturers/ operators of sanitary

installations> Education: Private primary schooling

• Kenya is ranked 9th place of 93 investment countries

Equity stake in Punjab Renewable Energy Systems Pvt Ltd.: Village Level Entrepreneurs deliver biomass to power stations and manufacturers

Source: responsAbility Investments AG, 2015.

• Retirees from Germany in SME1 and projects> Pass on their skills/ knowledge through training

specialist workers and mgmt. staff> Work voluntarily> Assignments from three weeks to max.

six months; follow-up assignment possible• Client covers the expenses of the expert

> Board and lodging, small daily allowance and transport

> Air fares, SES project handling costs and additional cost [waived in special cases]

> 2014: 328 placed in Africa/ MENA (1,590 worldwide)

Senior Expert Service (SES)

places retirees in projects

Andreas Kaiser, 17.09.20151Small and Medium Enterprises

Source: Senior Experten Service, Anke Tenambergen, 2015.

Wolfgang Mitternachtprepares the study course “Solar-PV” with trainers of the Sigalagala Technical Training Institute (STTI), Kakamega, 2014.Agriculture Education

Health Charitable Inst.Food Public ServiceTextile TourismCommercial Inst.


Serge Armand Etoundifounded Sun-Bio-Technology and consults its customers in the whole solar energy life cycle implementing projects in Cameroon.

• Center for International Migration and Development (CIM) is a joint operation of GIZ and the German Federal Employment Agency

• Personnel placement institution

• Places on demand> German/ European experts/ personnel> “Returning” nationals of partner countries> “Returning” national interns

• Sponsors variety of costs incurred

• Receiving institution sponsors base salary; personnel receives a local contract

CIM places experts and

interns in projects of partners

Source: CIM Online, Johannes Schilling, 2015.

Energy Desk as your service provider and objective broker


Optimizing the energy value chain in Kenya/ East Africa by facilitating German expertise and solutions

Facilitation of seminars, conferences, trainings in Kenya/ East Africa; to Germany

One-Stop-Shop“Energy Germany“

Support project development and pilot projects

Advisory services

Market research and assessment

Feasibility check of RE projects

(Temporary) Salesrepresentative

Information provider and contact broker


ContactAndreas Kaiser

Head Energy [email protected]

+254 724 561 682

+254 20 214 0008; +254 20 214 0009This position is supported by the Centre for International Migration and Development (CIM). CIM is a joint operation of the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH and the International Placement Services (ZAV) of the German Federal Employment Agency (BA).

Responding to

the Current Economic Changes

in Kenya September 2015

Enabling people

achieve what matters

most to them

Investor Information Cautionary

Statement Disclaimer

The information contained on this presentation is for

information purposes only and is not intended to constitute an offering of investment advice. Certain statements

constitute forward-looking information under applicable market conditions. Readers are cautioned that such

information is expressly subject to Chase Bank Officer’s forward looking knowledge and perception.

Information contained on this presentation was accurate at the time of posting, but may be updated, amended or superseded by subsequent disclosures, or may become outdated and inaccurate over time. Changes can be

updated as soon as possible, at request of the partners, investors or clients.

2

Current Developments in the Kenyan Economy

3

How to Be Proactive or Reactive?

Financial Industry Intermediation

Content

2

Overview of the Kenyan Economy

Chase Bank Proposition

4

Overview of the Kenyan Economy

4

Source: Kenya National Bureau of Statistics & National Treasury

The Kenyan economy is expected to grow in excess of 5.25% annually following a rebase

from the forecasted 6% annually.

Main Macroeconomic Indicators 2011 2012 2013 2014

Nominal GDP (current US$, billions) 42 50.4 55.3 60.9

GDP growth (annual %) 6.1 4.5 5.7 5.4

GDP per capita (US$) 999.3 1,164.9 1,244.5 1,337.9

Total revenues, (% of GDP) 19.4 18.8 18.8 19.4

Total public debt, net (% of GDP) 39.1 37 38.5 43.1

Inflation, consumer prices (annual %, end of year) 18.9 3.2 7.2 6.6

Inflation, consumer prices (annual %, period average) 14 9.6 5.7 7.2

Exports (% of GDP) 13.8 12.3 10.5 9.9

Imports (% of GDP) 35.3 33.2 30.9 29

5

GDP Composition – Main Sectors

5

Agriculture and forestry

25%

Mining and quarry ing

1%

Manufacturing

9%

Construction

4%

Wholesale and retail

trade, repairs

10%

Hotels and restaurants

2%

Transport and

communication

9%

Financial intermediation

5%

Real estate, renting and

business serv ices

4%

Taxes less subsidies on

products

10%

Agriculture and forestry

Fishing

Mining and quarry ing

Manufacturing

Electricity and water supply

Construction

Wholesale and retail trade, repairs

Hotels and restaurants

Transport and communication

Financial intermediation

Real estate, renting and business serv

icesPublic administration and defence

Education

Health and social work

Other community , social and personal

serv icesPriv ate households with employ ed

persons

GDP growth at 5.25 % (2015 IMF adjusted forecast)

Growth driven mainly by agriculture, construction, oil & gas and

manufacturing

Confidence in the economy high – Kenya hosting major global

entrepreneurship summits and world leaders

Currency – between KES/USD 101-106

Inflation – within Central Bank target 5 % with a band of 2.5 %

Interest Rate – monetary policy committee likely to maintain a

neutral monetary policy stance

Kenya dubbed as the best African emerging economy to invest

(fortune Magazine Jan 2015) – more multinationals to set their

regional hubs in Kenya

Economic Outlook

6

Current Developments in the

Kenyan Economy

Kenyan economic growth adjusted downwards from detrimental changes in the underlying macros 6.9 % to levels of 5.25 % considering:

• High interest rates

• Depreciating currency

• Unstable inflation

• Expected El Nino

• Weaker earnings by companies

• Low tourism activity

6

Drivers behind the Growth

1. Heavy infrastructure investment

• Lamu Port and New Transport Corridor Development to

Southern Sudan and Ethiopia (LAPSSET)

• JKIA expansion and modernization

• Mombasa Port development project

• Standard Gauge Rail (SGR)

• Road network expansion

2. Lucrative Oil & Gas sector

• Power generation projects

• Discovery of commercially viable oil in Turkana

7

Drivers behind the Growth

3. Growing private sector

• Real estate/ construction

• Financial Services

• Manufacturing

• Agriculture (Especially for export)

4. Launch of COMESA- SADC-EAC Tripartite Free Trade Area

• Ready market for products and services

• Free flow of factors of production

8

10

Key Project Areas

10

Garissa

Samburu

LAPSSETT Railway

LAPSSETT Highway

Oil Pipeline

Northern Corridor

Related Link

Standard Gauge Railway

LAPSSET Growth Areas

Mombasa

Mandera

Marsabit

Wajir

Turkana

Lamu Nairobi

Ijara

Hola

Moyale

Maralal

Lodwar

LAMU GROWTH AREA - International Gateway Port (Free Trade

Zone) - Oil Pipeline & Crude oil Export facility - Special Economic Zone (SEZ) - Electric Power Plants (Coal, LNG fired) - Ship Building & repair - Transit container centre - Food processing industry - Fish processing - International Airport - Chemical industry - Tourism centre (Resort city) - High-tech industry

Kisumu

Eldoret

Isiolo

Lokichoggio

Mwingi

MANDERA GROWTH AREA - Warehousing - Livestock Farming

WAJIR GROWTH AREA - Export Processing Zone (EPZ) - Livestock Farming - Meat Processing

GARISSA GROWTH AREA - Irrigation Agriculture - Export Processing Zone (Animal By

Products) - Food Processing

MWINGI GROWTH AREA - Coal mining industries

ISIOLO-MERU ARCHER’S POST GROWTH AREA - Export Processing Zone - Tourism centre (Resort city) - Livestock processing - Inland container depot - Wildlife conservation - Food Processing - Oil depot - International Airport

TURKANA GROWTH AREA - Oil exploration - Fishing industry - Tourism centre (Resort city) - Boat making - Turkana Wind Power Project

LOKICHOGGIO GROWTH AREA - Free Trade Zone (FTZ) - Inland container depot - Tourism centre (Resort city) - Domestic Airport

MOYALE GROWTH AREA - Inland container depot - Free Trade Zone (FTZ)

To Kisangani

To Kampala, Kigali, Bujumbura

To Juba

To Addis Ababa

11

Ways to Be Proactive or Reactive?

1. Portfolio diversification – Spreading risks

• Invest in different sectors and products to hedge against systematic risks

2. Asset/ Liabilities matching

• Match the short term financing to current assets and long term financing to non current assets

• Match currency financing to expected receivables

currency

3. Currency and operations standardization (Multinationals)

• When possible, have a standardized currency and

operational structures in order to eliminate FX risks and

agency costs

12

Ways to Be Proactive or Reactive?

4. Critical analysis of risk and return

• Ensure compensating return for the risk taken; the current risk free rate in Kenya is on average 13% p.a.

5. Hedging – forwards, swaps and spot contracts

• Treasury agreements to trade currencies

6. Mix of debt and equity financing

• Apply the most optimal debt- equity mix that yield

optimum returns

13

Financial Industry Intermediation

1. The financial sector grew by 9.15 % during Q1, 2015 compared to 8.3 %

during the same period in 2014.

2. Credit from commercial banks to domestic market rose by 19.1 % during

Q2, 2015.

3. Credit to private sector expanded from KES 1.56 BN in Q1, 2014 to 1.88

BN in the same period in 2015. (26 % growth)

4. Credit to the national government increased by 13.3 % during Q1, 2015.

5. Broad money supply increased by 3 % to KES 2.39 BN in Q1, 2015

compared to 3.2 % recorded during same period in 2014.

6. Average interest on 91-day T-Bill stood at 8.49 % during Q1, 2015. This has

drastically increased to an average of 13 % as at September 2015.

14

Money Market Changes

Information provided is as at 11th September, 2015

Chase Bank Proposition

Tailor Made Solutions

• Well structured facilities that adds value to businesses – product diversification

• Treasury services – FX deals, forwards, swaps and money market loans

• Dedicated relationship management coupled by Corporate Advisory Services

• Daily money market updates

Growth and Expansion

• A leading local financial services group anchored on mutual relationship and professionalism

• IT enabled business transformation – automated banking

• Developed and retained talent

15

2004

Wealth Management 2008

Investment Banking 2013

Leasing

Associate Companies

1996

Banking

2010

Insurance 2011

Microfinance

Chase Bank & Subsidiaries

Chase Group of Companies

Properties International Medical

“Success is where preparation and opportunity meet.”

- Bobby Unser

17

Juulia Laakso Relationship Manager – Corporate Banking

* [email protected]

( 0727 806 586

Victor Ngari

Senior Relationship Officer - Corporate Banking * [email protected]

( 0736 333 700

1© Rödl & Partner 18.09.2015

Globally active

Amar Mehta│ Nairobi │ 17 September 2015

Presenting Rödl & PartnerFirm presentation

2© Rödl & Partner 18.09.2015

Agenda

01 Historical Background of PPPs

04 Practical Experience and projects underway

05 The future of infrastructure projects in Kenya

06 Questions

02 The Public Private Partnerships Act No. 15 of 2013

03 Decision making chain and capacity challenges

3© Rödl & Partner 18.09.2015

Historical Background of PPPs

PPPs first governed by the now repealed Public Procurement and Disposal (Public Private Partnerships) Regulations, 2009 (the “PPP Regulations”).

Public – Private Partnership Act(came into force on 8th February)

National PPP Regulations (gazetted on 17th October, 2014)

County PPP Regulations(nearing publication date)

PPP Instructions – which will be akin to practice notes soon to be published to make it easier to understand the framework

4© Rödl & Partner 18.09.2015

Types of PPP ArrangementsManagement contracts: The private contractor is responsible for the management and performance of a specified obligation for a specified period of time (not exceeding ten years) and the contracting authority retains ownership of the facility and capitalassets.Output performance based contracts: The private contractor is responsible for the operation, maintenance and management of an infrastructure facility for a specified period of time (not exceeding ten years) and the contracting authority retains ownership of the facility and capital assets.

Leases (particularly with respect to exploitation of minerals and other natural resources) The private contractor pays the contracting authority rent or royalties and manages, operates and maintains the facility or utilises the leased property for thepurpose of exploration, production and development of minerals and receives fees, charges or benefits from consumers for the provision of the service or sale of products for specified period of time not exceeding thirty years.

Concessions: The contracting authority issues a contractual licence to the private contractor to operate, maintain, rehabilitate or upgrade an infrastructure facility and to charge a user fee while paying a concession fee to the contracting authority.

Land swaps: The contracting authority transfers existing public land or an asset to the private contractor in consideration of an asset or facility that has been developed by that private contractor.

Build-Own-Operate-Transfer schemes: The private contractor designs, constructs, finances, operates and maintains an infrastructure facility owned by the private contractor for a specified time period (not exceeding thirty years), or such longerperiod as may be agreed, after which the private party transfers the facility to the contracting authority.

Rehabilitate-Operate-and-Transfer schemes: The private party refurbishes, operates and maintains for a specified period, an existing facility at the expiry of which the private party transfers the facility to the contracting authority.

5© Rödl & Partner 18.09.2015

Decision making chain and capacity challenges

Cabinet or Parliamentary Approval of PPP projects

Petition Committee PPP Committee PPP Unit PPP Node

6© Rödl & Partner 18.09.2015

Practical Experience and projects underway

Several projects that I have been involved in Kenya University Hostels, Container Terminal and the Inflight Catering at JKIA

Six projects are underway ranging from in the low hundreds to about 2 billion dollars

Mombasa – Nairobi Highway

Nairobi – Nakuru Highway of which the bypasses around Nairobi will be intergrated to the Highway

O&M of the Nairobi Southern Bypass

2nd Nyali Bridge

Kisumu Sea Port

7© Rödl & Partner 18.09.2015

The future of infrastructure projects in Kenya

Wish list of 71 projects in the pipeline

Number of long term plans to improve the transit system in and around Nairobi

Several ambitious projects (not under the PPP framework)

LAPSSET (not under the PPP framework)

Pipeline projects

Standard gauge railway

The above add to the pressure of funding – being eased by donor funding and private sector participation.

8© Rödl & Partner 18.09.2015

We welcome your questions and feedback

18.09.2015

9© Rödl & Partner 18.09.2015

„Each and every person counts“ – to the Castellers and to us.

Human towers symbolise in a unique way the Rödl & Partner corporate culture. They personify our philosophy of solidarity, balance, courage and team spirit. They stand for the growth that is based on own resources, the growth which has made Rödl & Partner the company we are today. „Força, Equilibri, Valor i Seny“ (strength, equilibrium, valour and common sense) is the Catalan motto of all Castellers, describing their fundamental values very accurately. It is to our liking and also reflects our mentality. Therefore Rödl & Partner embarked on a collaborative journey with the representatives of this long-standing tradition of human towers – Castellers de Barcelona – in May 2011. The association from Barcelona stands, among many other things, for this intangible cultural heritage.

Your contact

Amar MehtaPartner, Chebet Mehta in association withRödl & Partner2nd Floor ICEA Lion Centre, Chiromo RoadWestlandsPhone: +254 (0) 722 457 [email protected]

mailto:[email protected]

DEG in East Africa

17 September 2015

Simarjit Singh, Investment Manager

DEG: We finance opportunities.

A bank with a wide Range of ResponsibilitiesDEG, a 100% subsidiary of KfW

Developing andemerging-market

countries:Financial cooperation

International Financing

We promote Germany

Promotion construction

of new housing and modernisation

as well as education

Promotion of SMEs, business founders,

start-ups

Financing municipal infrastructure projects

and global loans Germany agency

business for Federal Government

Domestic Promotion

We ensure internationalisation

International project and

export finance

Business area Mittelstandsbank

Business area Privatkundenbank

Business area Kommunalbank

KfW IPEX-Bank Business area KfWEntwicklungsbank

Developing andemerging-market

countries:Private sector promotion

DEG

Promotion of environmental and climate protection

We promote development

1

Agenda

1 DEG – Overview, Strategic Focus and Scope of Funding

2 DEG’s Mandate

3 DEG East Africa – Portfolio Overview and Project Examples

4 Financing Criteria and Specifics

5 DEG – Member of European Development Finance Institutions

2

DEG at a glanceFacts and Figures 31.12.2014

3

› Established 1962› Employees 503› Head office Cologne, Germany› Shareholder KfW Frankfurt› Equity EUR 2.1 billion

› Balance sheet total EUR 5.3 billion

› New business EUR 1.47 billion› Portfolio EUR 7.7 billion

DEG is a partner for companies investing in emerging markets and developing countries. For more than 50 years, we have been successfully supporting people and markets on the spot.

DEG’s Strategic Focus

Africa and Future Markets

Risk Capital

SME (through SME-funds and local banks)

Climate Protection (renewable energy, energy efficiency, biomass)

German Clients

4

Risk continuum assumed by DEG

Loans

Guaranteed loans

Loans with partial

guarantees Hedged equity participation

Subordinated loans

Partially hedged equity participation

Risk participation

Loans with local security

Equity participations

Scope of DFI Funding

5

DEG’s Mandate

› Contribution to sustainable economic growth and poverty reduction through

promotion of private sector development in emerging markets

› Provider of long-term capital for private enterprises

› Usually > 4 years up to 15 years

› „Additionality“ by definition; complementary financing to commercial banks / PE funds

6

Sectors

› Availability of Business Support Services

(BSS) to support

› Feasibility studies

› E&S management systems

› Special social programs

Additional Services

› Agribusiness

› Financial sector

› Infrastructure

› Manufacturing and services

Financing of financially sustainable projects/companies

Key financial figures Breakdown by product

Breakdown by industry

› EUR 358 million net commitments

› DEG invested in more than 30 companies

› Financial sector: banks and insurance

companies

› Power infrastructure (IPPs - Independent

Power Producers)

› Horticulture and floriculture

› Food processing

› Construction

› Mineral resources

› Transport infrastructure

› Regional Private equity funds

DEG’s Commitment in East Africa (31.12.2014)Sectors and products

7

52%

26%

18%

4%

Financial Sector / PE

Funds

Infrastructure

Manufacturing

Industries and

Services

Agribusiness

46%54%

Risk Capital

Loans

DEG’s new Commitments in 2014 – East AfricaExamples

8

Project Instrument Amount Comment

Rift Valley Railways Equity EUR 6.7 mln Equity repeat business

Kibo Fund Equity USD 12.5 mln PE fund focussing on Southern and Eastern Africa

Lake Turkana –

300 MW wind

energy Project

Mezzanine EUR 20 mln Largest wind energy Project in sub-Saharan Africa

Diamond Trust

Bank KenyaLoan USD 25 mln Fast-growing SME-focussed bank

Diamond Trust

Bank UgandaTier II - Loan USD 5 mln Fast-growing SME-focussed bank

I&M Bank Tanzania Tier II - Loan USD 10 mln Fast-growing regional bank

Exim Bank

TanzaniaLoan USD 10 mln Fast-growing SME-focussed Tier I bank

We create Opportunities – For People and MarketDevelopmental effects of DEG's portfolio companies

9

Development effects of DEG’s portfolio companies

› More than just finance: Successful private companies are drivers for economic development

› DEG's commitment benefits people, markets and the companies we promote –to the same degree.

Increased demandand con-sumption

We create Opportunities – For People and Market

› Non-repayable co-financing for eligible projects that help companies to improve their performance,

growth and developmental impact

› Related costs can be co-funded up to 50 per cent

› Examples

› Peer-to-peer training on medical awareness for female workers at large (flower-)farms

› Development of a sustainable finance website with the Kenyan Banking Association

10

develoPPP.de

› Innovative pioneering investments of German

and local small and medium-sized enterprises

(SME) in developing countries

› Awarded six times a year by up to EUR

500,000 – repayable on success

Up-Scaling

› Support of up to EUR 200,000 for European

companies aiming to implement a project with

development effects

› Co-financed with BMZ

› Awarded four times a year

Business Support Services (BSS)

Training and Development for Corporates

Project ExamplesSelecta Kenya, Kenya

› Expand the production capacities to supply the

German holding company Selecta Klemm

› Build stable relationship with European companies

The challenge

› Long term loan allowing to buy new machinery and

equipment and strengthen the financial structure of

Selecta Kenya

The solution

› Securing of 1,025 existing and creation of 100 new

local jobs

› Staff retention through benefits such as free medical

treatment, meals, transport of staff and free HIV-

counselling

Value Added by DEG

12

Contribution of a long term loan

› DEG provides a long term loan of EUR 3 mln to

expand investments in Africa

› BSS measure in renewable energies

Project ExamplesMobisol, Tanzania

› Mobisol relies on micro financing in selling its solar

energy systems and has to furnish the costs upfront

› Vision to equip 150,000 people in East Africa

The challenge

› Pre-finance around 2,000 solar home systems and

enable income generating activities

› Provision of risk capital in combination with long-

lasting support

The solution

› Contribution to energy supply in rural areas of East

Africa

› Replacement of kerosene and candles with eco-

friendly solar energy

Value Added by DEG

11

Contribution of Up-Scaling and further financing

› 2012: DEG provides EUR 500k repayable grant

› 2015: DEG provides the company with a convertible

loan for expansion investments and takes and equity

stake in the company

Project ExamplesKevian juice production, Kenya

Financing of the expansion project of a local juice

producer

› DEG contributed a long term loan of USD 7.5 mln

› Continuous Business Support Services

› Expand the food processing facilities for growth in the

local market and the export market

› Implement high quality standards

The challenge

› Long term loan allowing quality P&E investments

› New German machinery increasing the output and

introducing the production of concentrates (for the

export)

The solution

› First DFI loan to Kevian

› In preparation: business support to improve the

supply chain with local small farmers and technical

assistance for financial management

Value Added by DEG

13

Project ExamplesI&M Bank, Kenya

Contribution of risk capital and long term loans

› DEG provided EUR 9 mln equity and a USD 15 mln loan

› Substantial BSS-Projects for E&S Management System,

Risk Management and IT- Solutions

› Reinforce I&M positive impact on local financing

especially for medium-sized companies

› Provide long term funding basis for the

implementation of regional growth strategy

The challenge

› DEG and Proparco both provided equity and loans

› DEG and Proparco share a board seat

› real impact on strategic decisions in order to

assure the continuing growth of I&M

The solution

› BSS for risk management and E&S management

› International recognition of I&M

› Increased share capital and improved credit rating

› Knowledge transfer concerning accounting standards

Value Added by DEG

14

General requirements for all projects

› Sound business plan

› Investment plan

› Market analysis

› Due-diligence study

› Financial contribution of owner(s) and co-

lenders

› Qualified management

› Good Credit standing

› Proven track record

› High Corporate Governance standards

› International environmental and social

standards

› Developmental effects

Financing Criteria

15

Debt

› Size: USD 5 – 25 mln

› DEG Role: significant minority (10-30%), joint

control, active shareholder

› Sectors: “old-economy“ sectors, with growth

linked to economic development

› Risk: moderate, later stage, no rescues, focus

on current yield

› Instruments: equity, risk mitigated equity,

equity mezz, debt mezz

› Transactions: prefer growth over buyout,

alignment of interest, 5–7 year exit horizon,

multiple & reasonable exit options, minority

protection rights, risk/return balance

Equity

› Size: USD 10 – 30 mln*

› Tenor: 4 – 15 years

› Focus on industries with hard currency

incomes

› Instruments: senior debt fully covered

(coverage ratio 1.5), subordinated debt

(second ranking securities)

› DEG financing maximum 35% of total assets

› Sponsor‘s equity minimum 35% of total

assets

*smaller amounts possible for German clients and projects

with high developmental impact

Financing Specifics

16

Cologne

DEG’s Offices

Nairobi

Accra

Johannesburg

Istanbul

Moscow

Mexico City

Lima

São Paulo

New Delhi

Beijing

Bangkok

Jakarta

Singapore

17

A strong AllianceMember of the European Development Finance Institutions (EDFI)

› Mobilization of further capital

› Shared risks

› Structuring of complex finance

› Further partners outside Europe (International Finance Corporation (IFC), regional development banks)

› European Financing Partners (EFP)

› Joint projects of European DFIs up to USD 150 mln

International partnerships

DEG is one of the leading European development finance institutions which have joined to become the association of European Development Finance Institutions (EDFI).

18

http://www.ifu.dk/

http://www.ifu.dk/

http://www.sofid.pt/index.php?option=com_frontpage&Itemid=1

Get in Touch!

19

East Africa Office

Simarjit Singh

Investment Manager

[email protected]

DEG – Deutsche Investitions- und

Entwicklungsgesellschaft mbH Nairobi

Riverside Drive

P.O. Box 52074 – 00200

NAIROBI

Tel. : + 254 20 4228-200

Fax: + 254 20 4228-222

mailto:[email protected]

Providing affordable and environmentally friendlywaste management services

AHK Presentation, 17th September 2015

Nairobi produces 2,000 tons of waste per day

66% of the population without waste management services

Recycling rate of below 10%

Current solutions: - City County only collects in public places- Private companies only serve middle & high income areas- Youth groups collect and illegally dispose in low-income areas

Kenyan farmers experience decliningsoil fertility due to climate change &

high fertilizer usage

TakaTaka Solutions Nairobi-based waste collection and recycling

business Founded in 2011 Operates two business units:

TakaTaka Solutions:– Provides affordable waste collection services to all income areas– Recycles and composts 90% of collected waste reduced

disposal costs & increased revenues from sales of recyclables– Compost increases soil fertility of smallholder farmers– Creates jobs in lower income areas for previously unemployed

youths

Business unit: TakaCollect Services to residential & commercial properties in all

income areas Revenues from collection fees & sales of

recyclables Service provision: bins, bin liners or cement bags Modern collection infrastructure & trucks 90% and more of waste is recycled

ComparisonofresidentialwastecollectionfeesinKES/month

Typeofclient Informalcompetitors Formalcompetitors TakaTakaSolutions

Lower-incomehouseholds 50-150 200–400 80-120

Middle-incomehouseholds 150-300 200–600 150-200

Higher-incomehouseholds Notapplicable 400–1200 400-500

Business unit: TakaCompost Composting facility near Karen Clients: Small & medium sized commercial farmers Successful market entry done from April 2015 around

Thika Markets currently one product: Soil Plus Compost is not chemical fertilizer need for market

awareness variety of farmer trials done

PriceUSD/tonne

RuralSMEs 425-610

TakaTakaSolutions 200

Chemicalfertilizer 590–820

Progress so far 8,000 households served (32,000 people) 12 tons of waste collected per day 94% recycling rate (USA = 33%) 3 recycling points & 1 composting plant Team: 80 employees (70% women),

management team of 5 Key clients

Low-income: 6,000 households in Kangemi & Kawangware

Middle-income: 1,000 households in Ruaka & Kiambu Road

High-income: Runda Residents Association & Village Market

Scale-up plan Focus on middle income & commercial clients 2 new recycling points & expansion of composting facility

Future recycling point

Current recycling point

Current composting facility

Future service area

Current service area

Partners & AwardsPartners:

Awards:

• Criteria• Investment size• Due diligence process• Post investment experience

Further information: https://www.deginvest.de/International-financing/DEG/Unser-Angebot/Förderprogramme/Up-Scaling/

DEG Up-Scaling Program

Daniel Luis Paffenholz+254 (0) 710 342 203

[email protected]

Sponsored by:

Name of Company Name of Participant

1 Achelis David Rehahn

2 Africa Family Health Eva Muuthuri

3 Africa Family Health Daisy Ireri

4 Africa Family Health Dr. Beatrice Gichuru

5 Africa Family Health Violet Rwengo

6 Africa Family Health Carol Mchome-Oparanya

7 Africa Infrastructure Digest Racheal Keino

8 AHK Andreas Kaiser

9 AHK Chris Wegner

10 AHK Ingo Badoreck

11 AHK Sonia Mideva

12 AHK Jeff Murage

13 Allianz-Kenya Demba SY

14 Alumniportal-Deutschland Leo Mutisya

15 Anchorage Limited Mumbi Waweru

16 Chase Bank Juulia Laakso

17 Chase Bank James Mwaura

18 Conbee Construction C N.mwaura

Financing Opportunities in East Africa

Participant List

17th September 2015


Sponsored by:

19 DEG Sebastian Berns

20 DEG Simarjit Singh

21 DHL Kenya Joanne Ombete

22 DHL Kenya Edna Kerubo

23 Discover the world Alfred Musachi

24 Discover the world Mugo Nyoike Mugo

25 Fragomen Willys Mac'Olale

26 Fragomen Faith Nyambura

27 GIZ Maryanne Maina

28 Green Clean LTD Njenga M. P

29 Histoto Andrew Karuga

30 Hoso Investment Limited Shem O. Obong'o

31 Hydromatics ltd Jetinder Sagoo

32 Hydromatics ltd James Waweru

33 ikapamedia East Africa Florence Sugut

34 ikapamedia East Africa Faith Koskey

35 Infinte Insight Margit Cleveland

36 Infinte Insight Althea McCourt

37 Interpack Jacques Hess

38 Interpack Sudhir Patel

39 JWSeagon James Maina

40 Kenblest Vikesh Shah

41 KHS Daniella Plietz

42 Konica Minolta Business Solutions George Wanyoike

43 Maley Camp Stanley Makewa

44 MAN Diesel and Turbo Kenya Ltd Claudius Heller

45 Meghraj Capital Rupen Shah

46 Meru Greens Lucy Doris Karimi

Sponsored by:

47 Muthengi Foundation David Muthengi

48 Panalpina Kenya Josephine Buenaventura

49 Prakla Michael Mwangi Muthee

50 PWC Rainald Koester

51 RAD Solutions Daniel Gluche

52 Roedl and Partner Amar Mehta

53 Sitima Printers & Stationers Ltd Birju Shah

54 Taka Taka Solutions Daniel Paffeholz

55 Tausi Kenya fairtrade ltd Farah Shukri

56 Thorn Power Chirag Amin

57 Thorn Power Vipul Amin

58 Tradelinks Limited Cathy Irungu

59 Truman Africa Paul Alal

60 Truman Africa Micheal Tabuke

61 UKO-wapi Steve Odhiambo

62 Vanguard Group of Companies Priten Patel

63 Vanguard Group of Companies Rajeev Ghumare

64 Xcom Africa Thairu Gichuhi

financing opportunities in east africa - ahk kenia€¦ · financing opportunities in east africa...

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