swf presentation final

A Presentation at the Sovereign Wealth Funds ForumJumeirah Carlton Towers, LondonFebruary 2009

WHAT’S NEXT FOR SWFs?

An African Strategy: A Case for Sub-Saharan Africa with Nigeria in Focus

2

I. SWFs – Where Next?

IV. Key Sector/ Industry Opportunities

III. The Investment Case for Nigeria

V. About BGL

II. Sub-Saharan Africa – What’s Behind the Growth Story?

Outline

3

SWFs – Where Next?

Although Sovereign Wealth Funds are not a new phenomenon, they have increased their influencein recent years, considering the growing role they have come to play in global financial markets. Itis estimated that the total assets under management currently exceeds US$ 3 trillion.

Sovereign Wealth Funds Investments by Sector: 1995-2008

SWFs – How do they invest and in what?

52

33

15

47

23

30

SWF Private Equity Investments

SWF Private Real Estate Investments

SWF Investing SWFs Not Investing Unknown

Out of a total of 51 funds, about 52% and 47% are confirmed to be investing in private equity and private real estate respectively. Although the

involvement of some SWFs in Private Equity (15%) and Real Estate and (30%) is unknown, its likely that

about half of them invest in these asset classes

Source: Preqin Ltd

4

SWFs – Where Next?Which geographies are they moving to?

• SWFs in the Gulf are switching their focusaway from Western markets to shore up ailingeconomies in the Middle East and protectthemselves from further losses on Wall Street.

• Investment funds in Kuwait, Qatar, Dubai andAbu Dhabi are understood to be changingtheir investment strategies and locationsfollowing the large losses in the West

In Q2 2008, more than half of the SWFsdeals and funds invested were in emergingmarkets. SWFs carried out 26 deals andinvested $15 billion in BRIC and non–OECDcountries

The Kuwait Investment Authority (KIA) hasshifted $4 billion (£2.6 billion) from Westernmarkets into its own bourse.

The Qatar Investment Authority (QIA) hasbegun a bailout of local banks.

Dubai International Capital (DIC) isconcentrating its investment efforts onemerging markets.

Sameer al-AnsariChief Executive, DIC

“…Given the crisis that we are in, the governments in the region have to use their money wisely. That means investing in infrastructure and long-term

projects good for the region and also to look outside the region to diversify, acquire, to buy strategic

assets.”

5

SWFs – Where Next?Africa roll call…

?"If the World Bank Group can help create the platforms and benchmarks for the investment

of even 1% of their wealth funds assets; it would draw $30 billion to African growth,

development and opportunity,"

Robert Zoellick.President, World Bank

Mubadala & Istithmar have investedsignificantly in Nigeria’s telecomssector; power stations & oil and gasprojects in Algeria, as well as inGuinea’s aluminum and oil industry

1 2 3

4 5 6

Dubai Investment Company (DIC)through Dubai World Africa has madesignificant investments in Africafocusing on Hospitality, Tourism, RealEstate and Maritime/ Shipping Sectors

Abu Dhabi Investment Authority (ADIA)currently has an 8% stake in the Egyptianinvestment bank EFG Hermes. It also hassignificant stakes in North Africancompanies like Tunisia Telecom (about17.5%).

The Abu Dhabi Investment Companythrough UBS Global Asset Mgt isinvesting about $500 million in schoolprojects in Egypt

Libya Investment Authority (LIA)through the Libyan Oil HoldingCompany has invested over $300million in oil infrastructure in theDemocratic Republic of Congo

LIA has through various secondaryinstitutions have also invested indiverse sectors in Gambia, Mali, Niger,Chad, Guinea, Togo, Liberia, Ghana,South Africa and a host of others

Sub Saharan Africa – What’s Behind the Growth Story?

7

Sub Saharan Africa – The Growth StoryWhat’s Changing in Africa?

Key Economic trends• GDP Growth has averaged 6% since 2004

compared to less than 3% in last 30 years.

• Average inflation – 7.9% (excluding Zimbabwe)

• South Africa & Nigeria account for over 50% of Africa’s GDP

• Foreign reserves risen from $26bn in 1996 to $150bn in 2007

• Boasts 15% of worlds population and yet contributes only 2% of global output

• Raw materials account for 60% of exports

• Share of World Exports risen from a low of 1.8% in 1998 to 2.5% in 2006

• FDI Inflows in 2007 $53Bn vs. $10bn in 1999

• China – committed to investing $20bn over the next 5 years

• 17 equity markets in 2007 compared to 4 in 1990. Combined Market Cap ex SA was $250bn (end 2007) compared to $58bn in

2000

What’s changing in Africa•Commitment to fighting corruption &

encouraging democracy

•Improving legal structures

• Easing bureaucratic regulations and upgrading frameworks for developing trade

agreements,

•Developing infrastructure

•Developing capital markets and improving transparency

•Increasing Investor confidence

•Changing global attitudes

•Diaspora effect

Natural Resource Wealth• 40% of proven global Gold reserves

•30% of proven global Mineral reserves

•20% of proven global of Uranium reserves

•10% of worlds proven Oil & Gas reservesImproving

Fundamentals

Huge Upside Potentials

Last Frontier in the Emerging

Market Universe

8

Sub-Saharan Africa is blessed with a large share of the earth’s natural resources

The region has very significant reserves of commodities including bauxite, cobalt,gold, diamonds, platinum, titanium and zirconium

10% of the world’s proven oil reserves are in this region and at presentconsumption levels, these reserves are expected to last another 30 years

About 7% of the world’s proven gas reserves lie in Sub-Saharan Africa (Nigeria,Ghana, Cote-d’Ivoire) and are expected to last 80 years more

12% of the world’s arable land is in Africa, Sub-Saharan Africa accounting for xx%of the total arable land in Africa. By making agriculture the mainstay of theeconomy, there exists a huge potential to tap into this sector and position Sub-Saharan Africa as a global agri hub

Sub-Saharan Market SpaceSub Saharan Africa – The Growth Story

9

58.3

38.4

30.124.4

14.512.912.4

0

10

20

30

40

50

60

70

2000 2001 2002 2003 2004 2005 2006

($bn)

5,323

2,8512,268

1,581855957635

9.1%

7.4%7.5%6.5%

5.9%

7.7%

4.9%

0

1,000

2,000

3,000

4,000

5,000

6,000

0%

2%

4%

6%

8%

10%

2000 2001 2002 2003 2004 2005 2006

Market Turnover as a % of Market Capitalisation

($m)

522522520508491478460456

109109867160413534

0

100

200

300

400

500

600

700

2001 2002 2003 2004 2005 2006 2007

490 495 519551 579 606 631 631

Number of Listed equities Equities Capped at> 100m

Oil and GasMetals and MiningOthers

TMTIndustrial and Manufacturing

Construction and Real Estate

Retail and Consumer

Financials48%

18%

10%

6%4%

9%1%4%

Sub-Saharan Africa: Market Capitalisation Sub-Saharan Africa: Market Turnover

Sub-Saharan Markets: Sector Split Sub-Saharan Africa: Number of listed stocks

Sub Saharan Africa – The Growth StorySub-Saharan Market Space

10

Sub Saharan Africa – The Growth StorySub-Saharan Market Space

(7%

)

(6%

)

(5%

)

(5%

)

(4%

)

(4%

)

(3%

)

(3%

)

(3%

)

(3%

)

(2%

)

(2%

)

(2%

)

0%0%1%2%3%4%

10%

(15%)

(5%)

5%

15%

Nig

eria

Cam

eroo

n

Leso

tho

Nam

ibia

Rw

anda

Bots

wan

a

Sout

h Af

rica

Mal

i

Moz

ambi

que

Uga

nda

Beni

n

Seyc

helle

s

Mal

awi

Burk

ina

Faso

Keny

a

Gha

na

Mad

agas

car

Gam

bia

Sene

gal

Cap

Ver

de8%8%9%

11%

11%

12%14

%15%

15%

16%17

%

18%

0%

5%

10%

15%

20%

25%

Tanz

ania

5yr

s

Mal

awi 2

73da

ys

Moz

ambi

que

1yr

Zam

bia

5yrs

Gha

na 5

yrs

Uga

nda

5yrs

Bots

wan

a 5y

rs

Keny

a 5y

rs

Mau

ritiu

s 5y

rs

Nig

eria

5yr

s

Nam

ibia

1yr

Sout

h Af

rica

8yrs

Average: 13%

25%20%

60%

110% 40%40%

80%100%

0%

20%

40%

60%

80%

100%

120%

0%

20%

40%

60%

80%

100%

120%

2005 2006 2007 2008

Debt Outstanding as a % of GDP Debt Service as a % of Exports

BB+

BB-BB

Baa2A-

AAA+

AAA

0

2

4

6

8

10

Sing

apor

e

Sout

hAf

rica

Bots

wan

a

Thai

land

Rus

sia

Mau

ritiu

s

Ukr

aine

Nig

eria

Gha

na

Uga

nda

Fiscal balance as a% of 2006 GDP

Cost of Capital is Fair Across Nations Debt Servicing Capacity Improving

Fiscal Balance positive for many nations Credit Ratings Improving

The Investment Case for Nigeria

12

• Most populous country in Africa and 8th Most populous in the world withpopulation of over 140million people – over 50% of the population is under theage of eighteen (18)

• 32nd largest country in the world• Natural resources include; natural gas, petroleum, tin, zinc, bitumen, limestone• Underexploited natural resources include; coal, bauxite, gold and limestone

• Achieved relative political stability with the successfultransition between democratically elected governments

• Improved human rights record• Competing ethnic groups contributes to occasional tension in

the polity• Reforms in all sectors are in progress and the outlook for the

polity is stable

• An emerging market with the 2nd largest stockexchange in Africa

• Average real GDP growth of 6% over the past fiveyears

• Increase of foreign reserves from US$5.4billion in1999 to over US$52.74 billion as at December 2008

• High crude oil prices has led to a excess crudesavings

• Naira is the currency to hold with a stable outlook• Positive outlook despite Capital market slowdown

• Increased transparency in budget approval and allocation process• Increased Due Process enforcement by the presidency• Present administration has a strong focus on the Rule of Law• Corruption is being successfully combated by The Economic and

Financial Crimes Commission (EFCC)

Eco

nom

ic

Pol

itic

al

Gov

erna

nce

Geo

grap

hic

A leading frontier market…The Investment Case for Nigeria

13

…with significant economic potentials despite the global crunch…The Investment Case for Nigeria

Nigeria, like many other emerging markets is not immune to the Global Financial Crises. TheNigerian capital market has witnessed a significant drop in value. Also, the decline in global oil priceshas affected the country’s foreign exchange earnings owing to its significant dependence on oil.However, the fundamentals of the economy and financial system are strong and well grounded…

Government is taking steps to

increase confidence in the

stock market

Government is continually working on diversification of

the economy

11.40%

65.80%

17.71%

0.88%

37.80%

74.86%

-46.31%-60.00%

-40.00%

-20.00%

0.00%

20.00%

40.00%

60.00%

80.00%

100.00%

2002 2003 2004 2005 2006 2007 2008

NSE Index Returns, 2002 to Date

Source: Nigerian Stock Exchange

14

… a positive macroeconomic outlook…The Investment Case for Nigeria

With Nigeria currently saving about US$4 billion on annual debt service payments since 2006,increased competitiveness in the financial system following the (2004/05) banking consolidation,a robust and well managed external reserve by CBN, a liberalised and private sector-ledeconomy, an active capital market as well as better fiscal and monetary policy regimes; Nigeriahas great opportunities to scale the hurdles posed by the global economic crisis.

GDP growth rate of between 4-5% is stillpossible and expected in 2009 despite theeconomic crisis.

Nigeria will continue to attract FDIs, particularlyin the oil and gas sector and portfolio inflowsdue to high returns to investment

The oil industry is expected to post a "swift andviolent rebound" in energy prices in the secondhalf of 2009

Lower world prices will benefit Nigeria becauseof her large imports. The country is set totarget strategic capital investment in sectorswhere input prices are depressed globally withlower freight costs

CBN is committed to stable exchange rateregime and monitor developments in the capitalmarket as a stable exchange rate wouldcontinue to be a major shock absorber for theeconomy to maintain its internal and externalbalance

Key Economic Indicators 2009 2010 2011 2012 2013Real GDP growth (%) 4.6 5.4 6.0 6.2 6.0Consumer price inflation (av; %) 10.3 9.2 8.3 7.7 7.4

Commercial banks' prime rate (av; %) 15.8 15.0 13.7 11.5 12.3

Forex Rates ($ to N)

Source: Economist Intelligence Unit, 2009

4.6%

3.5%4.0%

6.5%5.9%

5.0%

6.2%6.8%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

2001 2002 2003 2004 2005 2006 2007 2008

Nigerian Stock Exchange, 2009

GDP Growth Rate (%), 2002 to Date

15

Apart from boasting the largest population in the African Continent, estimated at 140million, the current

infrastructure inadequacy present significant opportunities for investors.

Country Return in Local Currency (%)

Return in US$ (%)

Egypt 51.2 56.4

Morocco 35.1 47.2

Nigeria 71.3 91.3Kenya -3.6 5.5

Tunisia 21.1 28.4

Botswana 35.9 34.1

Mauritius 80.6 110.9

Ghana 31.8 26.9

Zambia -7.9 8.8

Source: Securities Africa

Country Returns on Investment (2007)

Emerging Market

Stable and Favourable

Govt Support

Strong Market Fundamentals

and Markets with Superior Returns

NIGERIA An Investment Haven

+ +

=

…and favourable & attractive investment climateThe Investment Case for Nigeria

Merrill Lynch, in a recent report named Nigeria as the least vulnerable economy in the world largely owing to consistent

and sustained improvement in the nation’s fiscal management.

Nigeria has maintained a heavily low externalindebtedness, and consequently significantly reducedthe nation’s level of risk. The Government has alsoinstituted supportive polices to woo investors… Up to 5 years tax holiday – Pioneer Status Capital Allowances: Research & Development – use of local inputs – 140% Investment in infrastructure 20% of costs Minimum local raw materials utilization – 20% for 5 years

Very low VAT regime of 5%

Key Sector/ Industry Opportunities

17

Where are the opportunities in Nigeria?Key Sector/ Industry Opportunities

AGRICULTURE

OIL AND GAS

TOURISM & HOSPITALITY

TELECOMS

SOLID MINERALS

PHYSICAL INFRASTRUCTURE

18

Largest contributor to Nigeria’s GDP (40% of total GDP)

World’s largest producer of cassava (19% total production – over 40m tons)

Sub-optimal activity in the sector as most of the farming is subsistent

73% of the country’s land area consists of arable land

Implementation of commercial agriculture programmes to boost local production and increase export capacity

• Processing plants• Warehousing/ Agro-conditioning centres• Dairy Production• Tractor Assembly Plant

Based on importation figures, demand gap is estimated to be over $500m annually.

Construction of dams and irrigation infrastructure development and rehabilitation to increase cropping hectarage and productivity.


Under-exploited sector despite large mineral base – bitumen, coal, limestone, etc

Solid minerals development now a Government priority with new investor friendly minerals extraction policy

Commercial deposits of bitumen - 2nd largest bitumen deposit in the world estimated at 42 billion metric tons

Exploration and Mechanized Coal/Lignite Production (reserves estimated at 15 billion barrels

Mining of highly viable Barytes and Bentonite for the Oil Industry and Gypsum for the Cement Industry

Exploration and Development of Phosphate Resources for the Fertilizer Industry

Commercial exploitation of Bitumen in Nigeria – estimated to be a $2billion/ annum industry (based on imports)

OPPORTUNITIESSECTOR OVERVIEWAGRICULTURE

SOLID MINERALS

19

Nigeria is currently ranked 5th in Africa by tourist arrivals

The country has 5 National parks & several tourism destinations with suboptimal development

Presence of a few of international hotel brands, all of which are 100% booked all year round

Development of world class hotels (international brands) with multiple star ratings particularly in Abuja, the Nations capital

Establishment of resorts near waterfalls, springs etc Beach Tourism potentials in boating and sport fishing facilities

offers attractive investment Heritage/Cultural Tourism Resources Development of slave trade

relics Wildlife Tourism – development of game parks with accompanying

tourist lodges


Heavy strain on existing infrastructure –80% of existing infrastructure capacity in enjoyed by 15% of the population

Significant physical infrastructure gap –transport, power etc (requires $100bn over the next 6 yrs)

Government has undertaken significant reforms to encourage private sector participation

PPP of Major Highways on Design, Build, Maintain, Operate and Transfer (DBMOT) of major economical viable routes

Privatization/ Concessioning of electricity generation & distribution companies

Completion of NIPP Projects: Transmission, Generation, Distribution & Gas Pipelines estimated at $3billion

Right of Way Concession and new track Construction on BOT basis for rail development

Greenfield port development and port infrastructure expansion and renewal

OPPORTUNITIESSECTOR OVERVIEW

TOURISM & HOSPITALITY

INFRASTRUCTURE

20

9th largest producer of oil and the 7th largest gas reservoir in the world

Government is going ahead with extensive reforms of the sector to improve private sector participation

Government plans to achieve Oil Reserves of 40 billion Barrels & a production capacity of 4.5 mbpd by 2010

Restructuring of the National Oil Corporation (NNPC) leading to privatisation of viable subsidiaries

Implementation of the Nation’s gas masterplan offers investment opportunities in Central Processing Facilities as well as pipeline infrastructure for LNG, GTL, feedstock for IPPs, etc.

Joint venture with marginal field operators – 24 licenses have been granted but only 3 are operational as others require funding and management improvements

An injection of an estimated $100billion required over the next 5 years


Largest non-oil growth sector over the last 7 years

Industry is worth several billion of dollars attracting significant FDI in last 6 years

Large market – only 60m lines in operation within a population of 140m

4 GSM operators – Recording Average Annual Revenues of $1.5billion/ year

Ample opportunities for additional operators in both GSM and Fixed Wireless telephony

Manufacture of GSM and Fixed Wireless telephones (currently not been produced in the country)

Local manufacture of inputs and other transmission equipment –over 80% of inputs are currently imported

Development of facilities to implement co-location and infrastructure consolidation

OPPORTUNITIESSECTOR OVERVIEW

OIL & GAS

TELECOMMUNICATIONS

21

Nigeria is a promising country for investment, and it becomes even more promising if you know that a lot of other people are going to be

investing there as well

“This historic agreement consolidates Dubai World’s strategy of tapping new business sectors, leveraging the expertise of the group’s various companies to make sound, strategic, long-term investments

in the field of energy and natural resources. Nigeria is a land of considerable opportunity and it is entirely appropriate that Dubai

World will partner with the Government of Nigeria to help harness this enormous potential over time”

Sultan Ahmed bin SulayemChairman, Dubai World

Nigeria:Infrastructure – FG Signs $16 Billion Investment Pact With Dubai World (UAE)

“We are tasked with building a diversified portfolio of investments in companies and assets related to natural resources located in

developing markets. It is extremely exciting that we will be involved directly in the oil and gas aspects of this landmark cooperation

agreement. DNRW looks forwards with excitement to contributing to the Nigerian growth story”

Abdul Wahid Al UlamaVice Chairman, Dubai World

Dubai World Chairman, His Excellency Sultan Ahmed bin Sulayem (right), shakes hands with the Attorney General of the Federal Republic of Nigeria and Minister of Justice, Hon. Chief Michael Kaase Aondoakaa (SAN), during the

signing ceremony in Abuja.

ABOUT BGL

23

Corporate Finance Public Sector Advisory Structured Finance Principal Investments Investment Research

Equity Trading Fixed Income Trading Propriety Trading Strategic Acquisitions and Advisory

Private Wealth Management Fund Management and Advisory Specialty Asset Management and Advisory Institutional Asset Management and

Advisory

Private Equity Funds Real Estate Investments Long-term/ Strategic Investments Business Incubation/ Investment Monitoring

Plc

Securities Limited

Asset Management

Private Equity

About BGL

We are one of Africa’s leading Investment Banking,Securities Trading, Private Equity, Asset Managementand Private Wealth Management Groups. Head-quartered in Lagos-Nigeria, we provide world classservice and products to clients that includeGovernment, Corporations, Financial Institutions andHigh Net Worth Individuals.

From our inception in 1993, we have expanded ourInvestment Banking business to become one ofNigeria’s most successful Financial Institutions andemerged a very influential member of the NigerianStock Exchange.

We have participated in several landmark transactionsand won industry awards across all our businessareas. We are respected for our strong fundamentalresearch and product innovation; our ability to executeInvestment Banking Mandates; our Securities TradingPlatform and our unrivalled distribution capabilities.

With Shareholders Funds in excess of N47bn (USD300MM) and a presence in 28 locations with over 250staff throughout Nigeria, BGL is uniquely positioned toprovide an unrivalled Investment Banking andInvestment Management service.

24

About BGLKey Contacts

HEAD OFFICE ABUJA OFFICE PORT HARCOURT OFFICE

Millennium House12A Catholic Mission Street,Lagos IslandLagos

Plot 417 Tigris CrescentOff Aguiyi Ironsi StreetOpp. FCT High CourtMaitama, Abuja

59B King Perekule StreetGRA Phase II,Port HarcourtRivers State

Tel: 01-2645224; 4622602-3URL: www.bglltd.com

Tel: 09-7817731; 7817729 Tel: 084-462359; 576552; 240009

NAME DESIGNATION CONTACT DETAILS

Albert Okumagba Group Managing Director, BGL Plc [email protected]

Chibundu Edozie Group Executive Director, BGL Plc [email protected]

Babajide O. Ewuoso Divisional Head, Public Sector Advisory [email protected]

Mahesh Pagarani Head, International Strategy [email protected]

BGL Contact Details

Key Contact Persons

25

Thank You

swf presentation final

Documents