Sif iwg china_in_africa_sin_co_20100518.ppt

Sinclair & Company LLC The Leading ESG Investment Architect in Emerging Markets sinclairconsult.com ©2010

SIF IWG 2010 18 May 2010

The Role of China in AfricaSnapshots from the Edge

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REGULATORY INFORMATIONNo part of this proposal suggests or should understood to suggest endorsement or advice on any investment approach, strategy or offering.The rights and obligations of the investor are set out in the relevant policy contract. Market fluctuations and changes in rates of exchange ortaxation may have an effect on the value, price or income of investments. Since the performance of financial markets fluctuates, an investormay not get back the full amount invested. Past performance is not necessarily a guide to future investment performance.

Graham SinclairPrincipal

ESG Investment [email protected]

SinCosinclairconsult.com


African opportunity

“Together, we can partner on behalf of our planet and prosperity and helpcountries increase access to power while skipping - leapfrogging - the dirtier phaseof [invest]ment”. - Barack Obama, 44th president of USA address to parliament, Accra, Ghana, 11 July 2009

“Sustainable economic growth and development is an imperative, and …the creation of aclimate in which business, big and small, can thrive”. -address by Nelson Mandela, President of Republic ofSouth Africa to FICCI, CII and JBC, Delhi, India, 26 January1995

Sinclair & Company LLC The Leading ESG Investment Architect in Emerging Markets sinclairconsult.com ©2010 3

Nonetheless… Africa is not a country, but continent – a patchwork of risk South Africa is in Africa Over the past 15 years conflict has declined significantly Increasingly, African peace-keeping forces are playing a leading role in

maintaining peace Economic gains of the recent past are threatened by the global

economic meltdown: Commodity price boom since 2002 Best in a generation economic growth and inflation rates High, but falling external debt burdens Booming FDI inflows Less volatile currency cross rates

Negative perceptions of …• Dictatorial regimes

• Political instability

• Civil strife

• Absence of rule of law

• Economic mismanagement

• Corruption

• Economic depression

• Starvation

• Deadly diseases

• Trivia …• 54 countries/territories• 2nd largest continent, 30m km2

• +/- 1 billion souls• +/- 2,000 languages• Business in: English, French,

Portuguese, Spanish

Challenges: Africa perceptions and challenges …

Source: The IDC: Doing business on the continent, Thokoane Tsolo, Head: Africa Unit, presentation to Legae - African Markets RoundtableDiscussions, 5 November 2009


Challenges: doing business in Africa today

Source: Standard Bank Economics, Presentation to IDC/Legae African Investment Rountable, IDC Sandton, StandardBank Africa, Wilhelm Levin, 5 November 2009

Sinclair & Company LLC The Leading ESG Investment Architect in Emerging Markets sinclairconsult.com ©2010 5

Source: IMF, WTO cited in THE AFRICAN PRIVATE EQUITY LANDSCAPE Cape Town Masterclass 10th February 2010, Matthew Hunt, South Suez Capital Limited, Medine Mews,Chaussee Street, Port Louis, MAURITIUS

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Opportunities: globalization of investors

BRICs now rate as Africa’s top trading partner; ZAF ranks as 10th largest


BRIC trade with Africa; share of each country's GDP

1980BRIC trade with Africa; share of each country's GDP

2008

Source: Standard Bank Economics, Presentation to IDC/Legae African Investment Rountable, IDC Sandton, StandardBank Africa, Wilhelm Levin, 5 November 2009

Opportunities: new investors from emerging markets/South

Poverty transforms a free man into a slave. - Oji, West Africa


Source:African listed equities 2009, from mckinsey.com/mgi quoted in JSE Africa Board YOUR GATEWAY TO AFRICAN CAPITAL MARKETS presentation to CITI/SecuritiesAfrica AFRICA INVESTMENT CONFERENCE LONDON – 16 MARCH 2010, Maureen Dlamini, Executive Head, Africa Board, Johannesburg Stock Exchange

• Africa has led other frontier and emerging markets in developing ESG indexes. The JSE SRIXlaunched in 2004 as the first exchange-led SRI index and first in emerging markets. Egyptian SXlaunched the first MENA ESG index in 2009 in partnership with CRISIL, S&P and Hawkamah Institute.

Opportunities: understanding Africa’s capital markets


Opportunities: new investment marketplaces

Source: Investec Asset Management analysis, Bloomberg, April 2009

• Stock exchanges are a good proxy indicator of investment marketplaces. Sustainable developmentin Africa needs more SMMEs [small, medium, micro enterprises] to grow and succeed. Local stockexchanges can offer local businesses opportunities to raise the capital needed to grow. Stockexchanges - like the AfricaSIF network - are necessary investment infrastructure in Africa.


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Respondents (%)

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LPs’ Planned Changes to EM PE Investment Strategy Over the Next 2 Years

Source: EMPEA/Coller Capital Emerging Markets Private Equity Survey

Opportunities: attractiveness of market to foreign investors


22%

25%

31%

34%

44%

47%

50%

50%

56%

69%

44%

31%

28%

31%

22%

28%

22%

25%

16%

6%

34%

44%

41%

34%

34%

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Climate Change

Health Is s ues

Human Rights

E nvironmental Management

E mployee Relations

BE E and Gender E mpowerment Is s ues

HIV/Aids

Infras tructure Development

S us tainability

Corporate Governance

Very Important S omewhat Important Not Important

Marketplace: materiality of ESG issues – S.African pension funds, 2007

Q: Please indicate the extent to which you feel the following ESG issues are important inevaluating the likely performance of investments:

75% 25%

NOTES: telephone interview with pension fund trustees and principal officers H1 2007; n = 32.SOURCE State of responsible investment1 in South Africa in 2007? UNISA/UNEP Fi/NOAH Financial, Oct 2007.





Opportunities often arise from the structural characteristics

Macro Economic Growth Micro EconomicEnvironment

Stock MarketCharacteristics

InvestmentApproach Returns+ + + =

Opportunities: investment in Africa today

• African markets are:– under-penetrated & under-leveraged (on country, company and

consumer level)– have a fast growing demand for goods and services

• There are high barriers to entry for operators (for the timebeing)

– limited competition among leading corporate suppliers

– yielding both pricing power and volume growth

– thus faster than average profit growth and high return on equity

• And also high barriers to entry for investors (for the timebeing)

– Information, travel– Accommodation, visas

• African businesses benefit from long termprofessional and value adding investors

• African Markets are attractive to private equityinvestors

• Economic growth and barriers to entry

• Restricted access to capital

• Current market conditions allow for disciplinedinvestment strategy by long term private equityinvestors

SOURCES: Chris Dirksen, Investec Private Equity Africa presentation to PE Congress Masterclass 10 Feb 2010, Cape Town, S.Africa

• Investors in private, public and philanthropy sectors have roles to play in applying ESGfactors to investment across private equity, listed equity, debt and all assets classes.

• Sustainable investment better matches the need for longer term investment approachesbuilding businesses capacity to compete locally and regionally.


CONFIDENTIAL AND PROPRIETARYAny use of this material without specific permission is strictly prohibited.

Lee

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) 200

7 m

ahog

any

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zebr

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Thank you

Graham SinclairSinCo

[email protected]


Project team: about Graham Sinclair

• Graham Sinclair is a sustainable investment strategist, ESG architect and global projectleader at Sinclair & Company [SinCo]. Graham has eight years specialist experience insustainable investment globally after six years in pensions consulting and investmentbanking in Africa. Recent consulting engagements in sustainable investment include:

– Leading IFC-funded research into private equity and liquid equity ESG strategies in sub-SaharanAfrica in South Africa, Kenya and Nigeria to be published in Q2 2010.

– Developing innovative financing mechanisms strategy and ESG index architecture fordeveloped, emerging and frontier markets for a Swiss-based international organization.

– For a global institutional investment firm in New York with a USD 1 trillion AUM portfolio, designingESG architecture across private equity, liquid and global real estate portfolios coveringphilosophy and process innovations and investment strategies.

– As consultant to the UN, developed strategy for 25 emerging markets and launched PRI inEmerging Markets project in Q3 2007, creating a network infrastructure, building relationshipswith 108 investor stakeholders including in Africa through 2008.

– Lecturing on ESG in investment strategies at investment practitioner symposia and leadingbusiness schools in Europe, Africa and the US. Currently developing case studies on ESGinvestment in emerging markets for his forthcoming book.

• Before starting his eponymous investment advisory boutique SinCo in 2006, he wasProduct Manager at KLD Research & Analytics, Inc, based in Boston. He is a formercontributor to the CSR Initiative at Harvard Kennedy School, Distinguished Member ofNet Impact, alum of WWF One Planet Leaders programme and the Tallberg ForumNew Leaders Program. He holds diplomas in retirement funds and insurance law, andin 1998 he was one of the youngest ever dual-FILPAs. He currently leads the AfricaSIFProject building a not-for-profit Africa Sustainable Investment Forum network.

• Graham earned his MBA on scholarship at Villanova University USA where he co-managed the Arnone-Lerer SRI Fund equity portfolio in 2004. He holds a B.Com fromthe University of Natal and LL.B from its Howard College School of Law as well asnumerous industry specialist certifications.


Credentials: what people are saying about SinCo/Graham Sinclair

• “Graham is an exceptional professional in all that he does. His work is at the crossroads ofbusiness intelligence, finance and investments and sustainability. His ability to clarifyobjectives and execute on solutions has demonstrated the fruitful success of the businesscase for sustainability.”

– Director and Senior Investment Analyst, global institutional asset manager, New York City.

• Graham served as a strategic adviser to a large US Asset manager as we workedtogether on developing their sustainable investment strategy. He provided on-goingsupport to their internal team and served as a knowledgeable and helpful soundingboard as their staff tried to move sustainability forward

– - Senior Client Relationship Manager, Global ESG ratings and research provider, London

• Graham is a very focused, passionate and results driven promoter and believer in thechange role that a shift to of Responsible Investments can and will effect in ourglobalising world. He is comfortable with holding a strong opinion yet cable of being aconsensus builder

– - Portfolio Manager, Responsible Investment equity portfolio, Cape Town.

• "For many investors, getting to grips with ESG issues in emerging markets is a top priority.[He] was crucial in encouraging new partnerships in diverse markets..."

– Clean tech private equity fund manager and former Executive Director, ASRIA, Hong Kong.

• Graham has shown a fantastic drive and commitment to the PRI initiative. He clearlyhelped promote the ESG thematic to the top of our priorities.

– - Chief Risk Officer, hedge fund-of-funds investment house, Zurich.

• “Graham is a hard-working, dedicated investment professional. He approaches his workwith a creative pragmatism and is committed to promoting the importance ofResponsible Investment thoughout the value chain.

– - Project team member, Principles for Responsible Investment, Geneva.


Credentials: what people are saying about SinCo/Graham Sinclair

• “Graham was instrumental in the planning, kick-off and growth stages of AIG Investments'multi-phased strategy of factoring ESG analysis into the investment decision process. Hisdeep knowledge of sustainability issues, business strategy, risk assessment, andstakeholder engagement helped to form the basis for a highly successful integration ofrobust environmental, social and governance analysis. Graham quickly mastered ourinternal needs and requirements, understood our culture, and made broad contributionsin equities, fixed income, real estate and alternatives. He was generous in sharing hisideas and stepping up when we needed his expertise, which was transferable acrosssectors and asset classes.”

– Vice President, Asset Management for major global institutional investor, New York.

• “Graham has one of the most fantastic international networks that I've ever encountered.His understanding of, and passion for, responsible investment makes him one of the mostknowledgeable in the field. I've always been impressed with his delivery and focus.”

– - Head of Governance and Sustainability, pan-African banking group & UNEP FI member, Sandton.

• "Graham was extremely helpful in helping get up the curve on our sustainability initiative.Graham was very knowledgeable and insightful and allowed us to quickly get up thecurve on Sustainability."

– Chief Administrative Officer, Global Real Estate, trillion-dollar global institutional investor, New York.

• "Graham is one of our leading thinkers on SRI. The work that Graham is doing will transformSRI and take it to the next level."

– Managing Director, equity investment manager, Boston.

• "Graham Sinclair's work is excellent."– Executive Diretor, billion-dollar global foundation, Philadelphia.


SinCo helps: leading clients tackle some of the toughest challenges

• Developed strategy for assessing innovative financing mechanisms to attractnew capital in new ways. Designed global ESG index architecture fordeveloped, emerging and frontier markets covering nutrition sector.

• Developed strategy for 25 emerging markets in 2007 and launched EM projectfor sustainable investment by institutional investors. Created networkinfrastructure, stakeholder relationships and built PRI in EM through 2008.

• Conducted seminal study of sustainable investment in sub-Saharan Africa[S.Africa, Nigeria, Kenya] across PE and listed equities in 2010 in partnership withRisCura; conducting primary research interviewing over 50 investors.

• Designed sustainable investment ESG architecture across trillion-dollar AUM, 200analyst private equity, equity, fixed income and global real estate asset classes.

• Provided peer benchmarking for ESG strategy and developed changemanagement program for multi-office, multi-region ESG roll-out.

• Developed sustainable investment masterclass for seminar at leading MBAprograms from 2006; currently teaching in US and Europe.

• Lead responsible investment prescribed assets working group exploring positiverole for economic development regulations for investment industry in S.Africa.

• Supported stakeholder engagement connecting investors, analysts andcompanies assessing practice of investment valuation globally.

AfricaSIF

• Prepared strategy and lead the Africa Sustainable Investment Forum (AfricaSIF)project team developing pan-African network for investment stakeholders.

Sif iwg china_in_africa_sin_co_20100518.ppt

Business

africa share

africa perceptions

africa unit

standardbank africa

africa todaysource

investment approach

standard bank africa

west africa source