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Investment Supply for SMEs

Investment Supply for SMEs. Ana Marr and Charles Chiwara June 2011. Content. Investment Size. Commercial bank debt. Private Equity. (US$). $2M. “Missing middle” – debt and equity. Family & friends. Money lenders. $25K. Micro-finance. “Missing middle”.

JasminFlorian
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Investment Supply for SMEs

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  1. Investment Supply for SMEs Ana Marr and Charles Chiwara June 2011

  2. Content

  3. Investment Size Commercial bank debt Private Equity (US$) $2M “Missing middle” – debt and equity Family & friends Money lenders $25K Micro-finance “Missing middle”

  4. Perpetual Barriers to Financing SMEs in Africa • Perceived risks • Institutional barriers • Policy and regulations • Skills and training needs

  5. Global Investment Funds

  6. Innovative Financing Models • Acumen Fund • Grofin • E+Co • Root Capital

  7. Private Equity • Definition • Seed Capital • Valley Of Death • FFFs • Venture Capital/Early Stage • Buyouts/Later Stage

  8. Investment Banks, Merchant Banks or other Financial Institutions REVENUE Secondary Offerings VCs, Acquisitions/Mergers & Strategic Alliances Angels FFF INVESTMENT Later Stage Public Market or Private Equity Early Stage Seed Capital IPO/ M&A Mezzanine C Break Even Public / Private Company B Emerging Growth Company A Valley of death New venture financing cycle

  9. Commitments By limited partners (multiple closings) Commitments By limited partners (multiple closings) Commitments By limited partners (multiple closings) Liquidation FUNDRAISING INVESTMENT PERIOD REALIZATION PERIOD POTENTIAL EXTENSION 1 year 4-5 years 4-6 years 2 years Private Equity Life Cycle

  10. Private Equity Investment Process

  11. Defining Impact Investing

  12. Credit Guarantee Schemes • Definition • Proponents • Critics • Operation of CGS

  13. Islamic Banking • Rationale • Emerging • Significant population in Africa • Principles • Prohibition of usury • Profit sharing • Certainty of contracts • Ethical • Examples • Mudarabah - VC • Marabaha - Asset Finance / HP • Musharaka - FRL, mortgage finance

  14. Current Funding Sources • Guarantees – AGF , MIGA • Private Equity : • SMEs • Buyouts • DFI’s :- • African, Regional, International • Tools • Debt • Equity • Guarantees • Grants

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