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


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


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


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


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


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


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)


FACRA Positioning

FACRA acts as an investment catalyst to further spur

economic growth and employment by fostering

entrepreneurship and innovation in Angola today

9

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


Positioning Continued: Fostering Growth in Angola

10

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


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

11


Investment Criteria

12

• 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


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

13


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


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


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

http://pt.wikipedia.org/wiki/Ficheiro:Flag_of_Angola.svg


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

http://www.portal.inapem.gov.ao/asistencia.aspx











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

mailto:[email protected]



http://www.facra-angola.com/



an introduction to facra · march 2015 . 2 privado e confidencial / private and confidencial ......

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