- 1. Institutional Investment:A Catalyst for Africas Development
5 thAFRICAN VENTURE CAPITAL CONFERENCEMombasa, Kenya The Ethos
Experience STRICTLY PRIVATE &CONFIDENTIAL Copyright and all
other intellectual property contained herein rests in Ethos Private
Equity Limited (Ethos).This presentation may not be reproduced in
either whole or part without prior written consent of Ethos and the
information contained in this presentation may not be communicated
to any person without the prior written consent of Ethos.The
information contained in this presentation may only be used
forpurposes of evaluating the proposals contained herein and is for
illustrative purposes only. Andr Roux 7 November 2005
2. Whois Ethos? 3.
- 21 year track record, founded in 1984
- Focus is growing profitable companies
- Equity and subordinated debt financing
- Invested in 90 portfolio companies with 76 realisations
- Recognised by Price WaterhouseCoopers Survey as the leading
private equity firm in South Africa over last 5 survey periods
ETHOS OVERVIEW Ethos is a leading South African private equity
and venture capital firm 4. Ethos fund history We are currently in
the process of raising Fund V Buyout Fund V Buyout Fund I Buyout
Fund II Buyout Fund III Buyout Fund IV Tech Fund I Third PartyFunds
Captive Fund 5. Global and South African Investor Base
- California Public Employees Retirement System
- DLJ Private Equity Partners
- Harbourvest International
- State of New York Common Fund
- Teachers Insurance and Annuity Association of America
- Development Bank of Southern African
- First National Bank Pension Fund
- Investec Asset Management
- Metal Industries Benefit Funds
- Sanlam Investment Management
6. Ethos Organisation
- 18 Investment Professionals
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- 7 Principals / Associates
- One Office : Johannesburg
- 75% owned by Partners and Principals
7. Select Ethos investments Ethos has helped many private
companies become recognised leaders within their industry N.B.
Priced at initial enterprise value as of 31/10/2005 WACO $360
million Foodcorp $270 million iDwala $70 million Cobra $22 million
Delta $194 million Clickatell $4 million 8. Buildinga High
Performance Private Equity Firm 9. THE BUILDING BLOCKS - People
10. THE BUILDING BLOCKS Deal Flow Action steps Enablers Invest
in brand Be relentless with communication and profiling Brand Sell
success stories Be nice to work with Waste time with contact base
Own Network Continue to motivate Deal makers Past portfolio
management Industry experts Advisiory Boards Cold calling Database
creation Resources 11. BUILDING BLOCKS Pro-Active Portfolio
Management Source: Asset Alternatives research report 2001:
Strategies for successful buyout investing Evolving trends in the
source of portfolio added value Increase in operating value
(Company specific growth/improvements Multiple arbitrage
(deal-specific differences betweenpurchase and sale multiples)
Multiple expansion (industry wide growth or cyclical expansion)
Financial leverage (amplification of equity stakes in acquisitions)
} } } } 12. THE BUILDING BLOCKS Investor Relationships
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- Minimising conflicts of interest
13. OurInvestment Experiences 14. Some key investment rules of
the game we need to keep reminding ourselves about
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- But we are not always rational about this?
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- This is one of the most critical issues for us..but we dont
spend a lot of time analysing it (typical GP response)
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- We trend to fall in love with the management of companies we
back . and, as we know, not all love stories have a happy ending
(typical GP response)
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- Some questions we should ask?
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- Do we have the right management team
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- One year after investment:
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- Has the performance been up to expectation?
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- Is the business strategy aligned with the people
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- Did we back the right management team?
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- If not, what do we do about it
15. Rules of the game-continued
- Management should be owners not renters
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- Balance between short / long term rewards
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- Do aggressive due diligence early
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- Balance upsides and downsides
16. Rules of the game-continued
- Dont pay a full price for a fix upper
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- It's far better to buy a wonderful company at a fair price than
a fair company at a wonderful price." ~ Warren Buffett .
- Cross-border investing is not for tourists