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HOWTOFUNDANINCLUSIVEBUSINESSSEPTEMBER 2013
1The views expressed in this presentation are the views of the authors and do not necessarily reflect the views or policies of the Asian Development Bank (ADB), or its Board ofGovernors, or the governments they represent. ADB does not guarantee the accuracy of the data included in this paper and accepts no responsibility for any consequence of their
use. The countries listed in this paper do not imply any view on ADB's part as to sovereignty or independent status or necessarily conform to ADB's terminology.
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Agenda
1 Introduction To Unitus Capital
2 How UC helps companies grow
3 Client Examples: Janalakshmi Financial Services/ENCASH
5 Conclusion
4 Equity investments in Inclusive Businesses
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Institutional Investors Impact Funds Family Offices /
Foundations High Net Worth
Individuals
GovernmentInstitutions
GlobalInvestors
Debt & Equity CapitalMarkets
Structured Products Private Placements Mergers & Acquisitions Buy-side Advisory
Work
Microfinance Microinsurance Technology Renewable Energy Healthcare Education
Water & wastemanagement
Agriculture
SocialBusinesses
UNITUS CAPITAL
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Unitus Capital connects social businesses with the global capital markets
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Demonstrated ability to deliverinnovativetransaction structures and increase ourclients access to capital and attractive
investment opportunities
Raised ~$900 mn for 40 clients across emerging sectors likemicrofinance/rural banks, healthcare, education, renewable energy
Expansive geographic presence focused onhigh growth and emerging economies
Mandates in India, the Philippines, Pakistan, Singapore andChina
Mandates in Philippines, USA, Africa, China, India, Pakistan andAustralia
Strong pipeline of significant transactions Current pipeline of signed mandates totals over$250 mn
for ~20 clients
Strong investor relationships with a uniquemix of mainstream and social investors
Coverage of over 500 institutional investor groups
Talented core team of 18 professionals withstrong credentials
Alma mater includes leading institutions like Harvard BusinessSchool, MIT, Oxford, Duke University, ESCP-EAP, IIM
Ahmedabad, ISB, IIM Bangalore, MDI, IIT Kanpur, IIT Guwahati
Top tierinvestment banking and private equityexpertise
Talent pool from TVS Capital, World Bank, Acumen Fund, MorganStanley, Citigroup, UBS, Nomura, Lehman Brothers, KPMG,
Deloitte, SBI Capital Markets and Kotak
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UNITUS CAPITAL
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1. Establish short list and approach
2. Drive development of marketing documentation
Co-ordinate information requirements and arrange
site visits.
4. Manage due diligence
Co-ordinate closely with lawyers on all commercial
issues, and push through key contractual wish list.
5. Assist negotiation and final documentation
Negotiate, agree and outline terms subject to duediligence, investors internal approval and final
documentation
3. Determine heads of terms
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Throughout the process, UC commits to ensuring that the client has complete and up-to-date decision making information
A TRUE PARTNERSHIP THROUGHTHE ENTIRE TRANSACTION
Geoff WoolleyCo-Chairman
Narayan RamachandranCo-Chairman
Senior advisory panel
Core transaction team
Equity placement expertise + Execution support
Execution Management
Eric SavageCo-Founder and
PresidentAbhijit Ray
Co-Founder and MD
Project Lead
Gauravjeet SinghDirector
Amit Kumar RathiVice President
CLIENT
Develop marketing documentation in collaborationwith the client, including teaser document,information memorandum, managementpresentation, process letter, etc.
Establish formal dialogue with a willing investorcandidates
Kylie CharltonCo-Founder & MD
Ann ShortChief OperatingOfficer
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82,161
193,150
300,847
695,974
12 34
65
177
-
20
40
60
80
100
120
140
160
180
200
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
2010 2011 2012 2013
Borrowers Gross Portfolio outstanding (in USD million)
CLIENT PROFILEJANALAKSHMI FINANCIAL SERVICES
UC has helped Janalakshmi Financial Services, a Bangalore based microfinance institution,raise $90 mm in equity and $80 mm in debt over the last four years.
Janalakshmi provides savings, loans, pensions, insurance and other critical products totheir clients in urban India.
UC took an early bet on a very promising MFI with a visionary founder, strong technology and great management.
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CAGR: 114%
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CLIENT PROFILE ENCASH
Headquarter Manila, Philippines
Business
Provides retail ATMs, ATM process outsourcing and software services to
Philippine thrift, cooperative and rural banks. Enables them to provide their rural customers access to a wider range offinancial products and services.
Equity Raised USD 3 million (February 2012)
Investors Incofin Investment Management, ResponsAbility
Impact
The funds raised helped ENCASH to substantially increase their ATM network byapproximately 850 ATMs to about 1200 ATMs.Provided much needed financial services to an estimated additional 2.5 mm rural
Filipinos.First equity transaction in the Philippines for Incofin.
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Equity Vs. Debt Financing
Advantages: Frees up working capital, pristine
financial history not needed, access to investorsnetworks, typically doesnt have rigidly definedrepayment amount or interest payments
Disadvantages: Investors entitled to a share of theprofits, and can have a say in companymanagement, therefore finding the right investor iskey
Equity Financing:
Selling a portionof your business
to investorsthrough a share
offering
Advantages: Retain ownership of business, buildsbusiness credit, interest payments are tax deductible
Disadvantages: Monthly payments drain workingcapital, putting assets up as collateral, credit ratingsuffers if payment obligations arent kept, high debt =high risk to investors for future equity raises
Debt Financing:
Getting a loanfrom a financialinstitution
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Key components of a business plan
Executive Summary Essentials about the company in 1-2
pages
Company Description Management Overview & Products andServices
Industry Overview Defining the addressable market andcompetitors
Strategy & Roadmap Marketing, sales, expansion plans, andtargets and benchmarks
Competition Overview of the competitive dynamics ofthe business
Financials Income Statement, Balance Sheet,Cash Flow, Projections to showprofitability
Funding How Equity/Debt funds will be allocated
Annexure Supporting Documents, charts, etc.
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EQUITY INVESTMENTSIN INCLUSIVE BUSINNESSWhat Investor are looking for:
Growth Investors are seeking capital appreciation through growth
Transparency High Level of transparency provides greater confidence to the investor community. Governance- Good governance is essential for the benefit of all stakeholders, especially investors.
Founder/s and senior management team A reputed promoter group and a seasoned management team
Profitability: A company that is profitable or has a clear path to profitability will have considerable leverage overinvestors
Technology: The level of technological symbiosis with the business is an important factor, as it directly relates tothe efficiency of the business.
Potential Investors in the Inclusive Business space:
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Social and financial performance metrics
Equity Internal Rate of Return (IRR) Gross Margin EBITDA PAT Valuation Metrics
Price/Earnings Ratio Price/Book Ratio Price/Revenue Ratio
Financial Metrics
Social MetricsA Consensus is still forming
Counting something and making it count IRIS Double/Triple Bottom Line PPI (Grameen Foundation)
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UNITUS CAPITAL (UC) IS THE WORLDS LEADING SOCIAL INVESTMENT BANK
Named as the #1 investment bank in Asia in 2012 by social investment deal volume.
Unitus Capital is a highly trusted advisory in the social impact space.
We have a world class team with deep experience in PE, VC and banking.
Ourmission is to act as a catalyst between the investors and the social enterprises.
UC would be happy to explore helping any inclusive business that isconsidering accessing foreign equity.
UNITUS CAPITAL
Unitus Capitals main focus is the BoP population
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THANK YOU