An introduction to FACRA · March 2015 . 2 Privado e Confidencial / Private and Confidencial ......
Transcript of An introduction to FACRA · March 2015 . 2 Privado e Confidencial / Private and Confidencial ......
Privado e Confidencial / Private and Confidencial
An introduction to FACRA
March 2015
Privado e Confidencial / Private and Confidencial 2
What is Venture Capital
FACRA □ The First Active Venture Capital Fund in Angola
□ Vision, Mission and Values
□ Fundamental Objectives and Principles
□ Strategic Priorities
□ Organizational Structure
□ Positioning
Investment Stages
Investment Criteria
Strategic Focus Sectors
FACRA as an Equity Partner
Today’s Presentation
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Venture Capital is financial capital provided to early-stage, high-potential
growth companies, in the form of equity capital.
A Venture Capital Fund earns money by owning equity in the companies it
invests in, which usually has a new technology or business model involving
innovation, generating a return through a realization event at the end of the
investment period (typically an IPO or a trade sale of the company).
Venture Capital is attractive for new companies with limited operating history
that are too small to raise capital in the public markets and have not reached
the point where they are able to secure a bank loan or have access to capital
markets.
In exchange for the high risk that it assumes, the Venture Capital Fund
usually gets significant control over company decisions, in addition to a
significant portion of the company’s ownership and value.
What is a Venture Capital
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Established in 2012 by Presidential degree 108/12 of 7 June, FACRA is one
of Africa’s largest venture capital funds with assets equivalent to USD 250
million.
Supported by the Government of Angola, FACRA offers long-term capital to
enable MSME’s (Micro, Small and Medium Enterprises) and their
entrepreneurs to realize their business development potential.
FACRA - The First Active VC Fund in Angola
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Vision FACRA’s vision is to spur economic growth and qualified job creation in
Angola by fostering innovation and entrepreneurship, assisting the growth of
existing businesses and the creation of new ones
Mission FACRA’s mission is to support the development of a strong, diverse and
dynamic MSME sector in Angola by providing access to equity capital and
active management
Values FACRA understands the value of innovation in a growing economy.
Supporting innovation and enterprise provides opportunities for personal
growth and for qualified job creation.
FACRA: Vision, Mission & Values
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Fundamental Objectives □ Building competencies, innovation and technological capabilities in Angolan private businesses
(together with Angolan entrepreneurs)
• Stimulate the growth of MSMEs
• Diversify the economy outside the sectors of activities of natural resources
• Promote the substitution of importations
• Support the creation of jobs in Angola
• Create competencies in management and entrepreneurial responsibility
• Foster the internationalization of Angolan enterprises
• Improve the quality of products and services offered by Angolan companies
Principles □ Economically/financially viable business, high growth potential, job creation, development catalyst
□ FACRA as a minority shareholder (no control)
□ Participation of FACRA in governing bodies (gatekeeper of good corporate governance)
□ MSME with a majority of Angolan capital
□ No investments in entities of the mining sector, nor in entities in which the fund manager or its board
members hold participations
FACRA: Fundamental Objectives & Principles
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Larger businesses, covering a vast market, with a high growth rate
Management teams with proven track record
Investments with potential to quickly hamper competition through differentiation,
branding, patent protection, important contracts, know-how or market dominance
Innovative businesses that find different or unique solutions, products or services □ Innovate, or
□ Transform something that already exists, giving a radical solution, with a degree of differentiation that
defines its growth, and increases its value at the time of the exit
Tropicalization of a successful business abroad, together with an Angolan
entrepreneur
Exit attractiveness – the exit must be defined from the beginning, before the
investment is done
Sectorial clusters: focus on a set of clusters with high priority within the productive
sectors of the economy □ ICT (Information and Communication Technologies)
□ Food processing & transformation
□ Logistic solutions
□ Innovation in agriculture
FACRA: Strategic Priorities
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FACRA’s Organisational Structure
MINISTRY OF ECONOMY
LP (Limited Partner)
SUPERVISORY BOARD
3 members
- 2 LP
- 1 GP
AUDIT COMMITTEE
3 members
2 LP
1 GP
INVESTMENT
COMMITTEE
4 members
2 LP
2 GP
KGPE, SA
GP (General Partner)
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FACRA Positioning
FACRA acts as an investment catalyst to further spur
economic growth and employment by fostering
entrepreneurship and innovation in Angola today
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Business
Partner
Growth
Investor
Market
Partner
• Stimulate growth of
innovative MSME
companies
• Encourage entrepreneurs
to present their project
proposals
• Encourage international
technology & know-how
partners
• Backed by the Government
of Angola
• Goal to support over 40
projects in 10 years
• Provider of additional
financial benefits
• Unrivalled level of
experience in the local
Angolan market
• Help strengthen
companies’ management
teams & corporate
governance
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Positioning Continued: Fostering Growth in Angola
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FACRA is a pioneering initiative committed to supporting MSMEs and their entrepreneurs by
providing equity capital, helping them shape new business ideas into successful and
transformative businesses across Angola, while overcoming the inherent market challenges the
Angolan market presents
Realizing the Market Potential
• Distrust of external
financing
• Fear over loss of control
• Resistance to partnering
• Poor knowledge about VC
funds
• Lack of managerial skills
• Lack of innovation and
know-how
• Trust in long-term financing
options
• Confidence in future potential
• Willingness to accept new
opportunities
• Understanding of role of new
investors
• Strengthened skills through
access to greater knowledge
Market Challenges Market Potential
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Investment Stages
Seed Capital
Start-up
Growth Capital
Private Equity
M&A
Maturity
Decline
Early Stage
IPO
Business Angels
Technology
accelerators
FACRA focus on companies with
significantly value growth potential
Company’s
Revenues
Time
Scope
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Investment Criteria
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• Minority shareholdings or relative majority, which does not allow the control of the company
Geography • Investments in Angola or outside Angola if it fits the purpose of the fund
• 4 to 7 years
• Gross IRR of over 25%
Investment Size • USD 2 to 10 million
• Not allowed to invest in entities of the mining and oil & gas mineral extraction sectors
Stake
Target Returns
Holding Period
Excluded
Sectors
Company Type • Focussed on entrepreneurs and SME with a majority of Angolan capital, with high growth
potential, job creation and development catalyst
Project Stage • 30-40% Start-up
• 60-70% Early stage
• Innovative business with positive incidence to the Angolan economy
• 10-20% Primary sector (technology related to agriculture, fish breeding, livestock, poultry, etc.,)
• 30-40% Secondary sector (construction material, transformation industry, etc.)
• 40-60% Tertiary sector (healthcare, logistic services, IT, education, tourism, industrial services,
biotechnology, online services, other services with high innovation character
Investment
Priorities
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Strategic Focus Sectors S
ecto
rs o
f F
oc
us
in
A
ng
ola
n e
co
no
my
Primary sector
Agro livestock
(10 – 20%)
Live Stock - Cattle, pigs, goats and poultry
Technology related with agriculture (R&D, genetic
selection, irrigation technology etc.), Forestry
Fish breeding
Secondary sector
Processing and
industrial
production
(30 – 40%)
Construction materials
Food processing and production
- Canned and preserved foods
- Slaughterhouses, meat processing and production
- Water and bottled drinks
- Fruit processing and packaging
Production of consuming goods
- Personal Hygiene and cleaning products
- Chemical products (detergents, medicaments, etc.)
Tertiary Sector
Services
(40 – 60%)
Industrial services (maintenance, engineer, etc.)
Services, products and technology in health
Laboratories (mineral analysis, etc.)
Logistical solutions (optimization of internal market,
handling of perishable goods, call chain, etc.)
IT solutions (mobile banking, etc.)
Technical Assistance (automobile, etc.)
Communication technology (HW, SW e network)
Services and online commerce
Training (Technical training centers, etc.)
Tourism (services focus on internal tourism)
Focus segments of various sectors
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FACRA will be a minority shareholder and can provide stable long-term
equity funding to early stage innovative businesses, whether:
□ a business is a start-up; or
□ a business is already established but needs additional capital to grow.
The criteria must always be that the business has high-growth potential.
FACRA’s deep knowledge of the local marketplace means that it can help
MSMEs boosting the businesses of its portfolio companies by actively
participating in their strategic development (through active management).
FACRA’s equity capital investments into their portfolio companies will
strengthen their debt-to-equity ratio, allowing them to leverage their financial
needs through additional commercial credits with a lower risk profile and
therefore lower interest rate charges.
FACRA as an Equity Capital Partner
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In order to ensure its portfolio companies flourish, FACRA focuses upon,
firstly, ensuring businesses are built for growth and, secondly, expanding
business opportunities
FACRA provides active management advice and guidance to its portfolio
companies in meeting these objectives through the following:
Valuation of the investment idea
Evaluation of the investment plan and overall business strategy
Assessment of company management
Guidance on capital structure and business financing
Advice on company strategy, expansion and future growth
Marketing & branding expertise
Implementation and monitoring of good corporate governance principles
Supporting Ongoing Business Growth
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Roles in building a WIN – WIN partnership
• Established and leading
players in own market
• Range of products and
offerings that are valuable in
Angolan market
• Willing to invest for
diversifying into new markets
• State of the art technology,
know-how and brands
• Keen to reap the early mover
advantage
• Prepared to work with local
entrepreneurs and partners
• Active equity partner
• Helps forge local partnerships
• Helps hire management teams
• Support in project management
• Multiple rounds of funding
• Corporate Governance support
• Image building
• Businesses with other portfolio
companies
• Facilitating regulatory and
government interfacing (e.g.
ANIP, etc.)
US Investors
A strong strategic and cultural win/win alignment between FACRA and foreign partners
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Angolan companies / entrepreneurs seeking equity capital from FACRA
must present the following: □ A business plan of an innovative business (goods or services), with a 5-year financial plan that
shows high growth & earnings potential and Angolan job employment
□ CVs of the entrepreneur(s) and core management team
□ Capacity of the entrepreneur(s) to co-invest into the business/company
□ A certificate issued by INAPEM (National Institute of Support to MSMEs
www.portal.inapem.gov.ao/asistencia.aspx) that certifies that the company qualifies as a MSME
in accordance with Law no 30/2011 (Law on MSMEs)
□ Statement issued by the tax authorities that it has no unpaid past tax liabilities (“negative
certificate”)
Foreign companies / entrepreneurs seeking equity capital from FACRA
must present the following: □ Same as above
□ Present a local Angolan partner (i.e. an Angolan entrepreneur)
• FACRA can help foreign companies/entrepreneurs find a local Angolan partner
□ Foreign companies/entrepreneurs as a minority shareholder (<50%)
Partnering with FACRA
Strictly Confidential
Fundo Activo de Capital de Risco Angolano (FACRA)
150, Avenida Comandante Jika
Sagrada Família
Luanda
Angola
Tel: +244 (943) 257 858
[email protected] Social media:
www.facra-angola.com Twitter: @FACRA_Angola
Linkedin: FACRA