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April 2013

Agricultural investment in Uganda. April 2013. Introduction. Background AACF Timeline Team. 2004 -2005: AAC is founded by Gatsby Charitable Foundation and Rockefeller Foundation and starts operations from offices in Kampala, Uganda

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April 2013

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  1. Agricultural investment in Uganda April 2013

  2. Introduction • Background • AACF • Timeline • Team

  3. 2004 -2005: AAC is founded by Gatsby Charitable Foundation and Rockefeller Foundation and starts operations from offices in Kampala, Uganda 2006 – 2009: AAC makes investments in 16 agriculture-related SMEs in East Africa, with deal sizes ranging from $0.1 – 1.0 million., total value of about $8 million. 2010: AAC establishes Pearl Capital Partners as its investment manager and Pearl is licensed by Mauritius Financial Services Commission 2010 -2011: Pearl begins management of the $12 million African Seed Investment Fund ( ASIF ), specifically for investment in seed companies in East and Southern Africa 2011: the AAC management team acquires AAC’s interests in Pearl and become employees of Pearl 2011: Pearl Capital Partners’ subsidiary company, PCP Uganda Ltd, is licensed by the Capital Markets Authority of Uganda 2011: AAC reports a profit > $1 million for year ended 30 June 2011 2011: Pearl Capital Partners raises the new African Agricultural Capital Fund 2012: Make first investments through AACF (c$ 4 million) . 2013: ASIF is fully invested. The Manager: Pearl Capital Partners background and history

  4. Fund Structure: a $25 million closed-end investment fund, domiciled in Mauritius, focusing on making equity investments in the agriculture sector in Kenya, Uganda and Tanzania of up to $2.5 million per transaction. Managed by Pearl Capital Partners, governed by an independent board of directors, investment and impact committees. Fund Mission: To invest risk capital into agricultural supply chains in East Africa in order to support smallholder farmers and leverage additional financial and human capital into the agricultural sector in the region, while achieving competitive financial returns Goals: Financial: Minimum 15% gross annual rate of return (USD) Social: Positively affect the lives of at least 250,000 smallholder farmer households over the life of the fund Sector Growth: Encourage the growth of the agricultural business sector by providing risk capital to early stage companies that are then able to attract other sources of finance Background: our new Fund

  5. Investment range $250,000 - $2.5 million Minimum of 75% of the fund to be invested in Uganda, Tanzania and Kenya Financial instruments appropriate to the needs of the individual investee Expected hold period between 5 and 7 years Significant personal investment by sponsors and/or management Alignment of interests among shareholders, investors and managers Investee access to $1.5m technical assistance facility financed by USAID Background: Investment Parameters

  6. AACF Board of Directors The ultimate decision-maker for the Fund Comprised of four members nominated by the Manager Independent Investment Committee Reviews the Manager’s investment recommendations to ensure that the proposed investment has the potential to meet and exceed the Fund’s financial return expectations Comprised of five independent members resident in the region Independent Impact Committee Reviews the Manager’s investment recommendations (prior to Investment Committee review) to ensure that the proposals have the potential to meet and exceed the Fund’s social and developmental impact requirements Comprised of three independent members resident in the region Governance

  7. Wilmar (Horticulture – Central Kenya) Quasi-equity $600,000 Expansion of smallholder floriculture for export NUAC (Commercial and Seed Farming – Northern Uganda) Equity and debt $1,200,000 Expansion of farming and contract farming operations Midlands (Staple crop storage, processing and distribution – Central Kenya) Equity and debt $2,250,000 Expansion of existing potato storage and processing operations AACF Investments

  8. NUAC case study Northern Uganda Agricultural Centre, Amuru District Commercial and seed farming operation $1.2 million, debt and equity

  9. NUAC: Anatomy of the deal • Investment thesis • Expansion • Mechanisation & Contract Farming • Location • Management • Crop diversification (seed maize, commercial maize, rice, soya) • The deal • Capital requirement of $1.2m • Business valuation $1.5m • “Partnership” approach: invest $0.5m for a 25% stake and invest $0.7m in a USD term loan • Closed in June 2012 • Post-investment support through Corporate Governance support, staff recruitment, networking with customers and suppliers, and building relationships with potential future lenders

  10. Pearl in Uganda • Pearl has now made seven investments in Uganda through its different investment funds • Biyinzika Enterprises 2006 (exited) • NASECO 2006 • Victoria Seeds 2007 (exited) • Coetzee Natural Products 2007 (exited) • Bee Natural Uganda 2008 • FICA Seeds 2010 • NUAC 2012

  11. Thank you very much for your attention For further details, please contact: Tom Adlam (tom.adlam@pearlcapital.net) Website: www.pearlcapital.net April 2013

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