private equity and agriculture: challenges and investment opportunity in africa october, 2010...
TRANSCRIPT
Private Equity and Agriculture: Challenges Private Equity and Agriculture: Challenges and Investment Opportunity in Africa and Investment Opportunity in Africa
October, 2010
Financing agriculture in Southern Africa
Malawi
SOUTHERN AFRICA REGIONAL DEVELOPMENT BRIEFING N° 3
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Private Equity: Securitisation of Private Equity: Securitisation of agriculture as a salable product and agriculture as a salable product and
as a business.as a business.
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Presentation Structure
• Introduction
• Challenges
• Opportunities
• Capital formation.
• Conclusion.
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Introduction
• Joint venture between Emergent Asset Management of UK and Grainvest of South Africa.
• Private equity fund management business.
• Sub-Sahara Africa focus.
• Value chain-Primary producer, food distribution, food processing.
• Products include: grains, banana, tea, macadamia, livestock, fruit & vegetables.
• Unique structured operational model.
• Asset Manager
• Agriculture operating company
• Regional hubs-shared resources
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Challenges • Risk aversion translating to high financing costs.
• Market imperfections.
• High cost of doing business.
• Institutional voids.
• Unpredictable geo-politics
• Government and policy inconsistency
• Land tenure systems
• Poor infrastructure
• Community involvement
• Technology, skills transfer, education & literacy
• Blending all stakeholders -private, public, communities and channelling funds to grass roots level
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Opportunity• Taking the lead to extract value and on sell.
• Innovative strategic partnerships utilising existing equity, structural capacity and value chains.
• Transmission of technology and best practise.
• Full endorsement of a sustainable agenda.
• Participation on the whole value chain
• Social Responsible Investment funds
• Trade liberalisation and Regional integration and harmonisation
• Entrepreneurship- Spotting and filling institutional voids
• Entrepreneurial approach to farmer organisation-ability to execute outgrower schemes.
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Capital Formation
• Take the lead utilising own equity creating collateral and track record.
• Brings together multiple financial participants with larger investment appetite.
• More hybrid structures inclusive of all stakeholders such as NGO’s, communities and government.
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Conclusion • Key role of intermediating financial players role initiating and
stimulating further investment and funding from other players.
• Private equity as a credible transmission mechanism:
o Attracts and fosters agriculture investment and participation.
o Economic development.
o Accountability corporate government.
o Capacity building.
o Generates economies of scale
• Smallholder access to inputs and to markets.
• Community upliftment and poverty alleviation.
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Zikomo
Thank you