and Emerging Markets TBN Annual Conference - London, 25 May 2012 This presentation does not constitute an offer to sell, or a solicitation to buy, any interest. Any such offer or solicitation will be made to qualified investors only by means of a final offering memorandum and only in those jurisdictions where permitted by law
“Interests”) in Sarona Frontier Markets Fund 2 LP (the “Fund”) will be offered pursuant to exemptions from the prospectus and registration requirements of applicable securities laws in the United States. As a result, the Interests in the Fund will be subject to restrictions on their transfer under applicable securities laws. In addition, the terms of the Fund’s limited partnership agreement will also contain restrictions on the transfer of these Interests. All of the statements made and information contained herein concerning the Interests are qualified in their entirety by reference to the final offering memorandum and limited partnership agreement for the Fund. In making an investment decision, investors must rely on their own examination of the Fund and the terms of the offering, including the merits and risks involved. The securities offered hereby have not been recommended by any federal, state or provincial securities commission or regulatory authority. Furthermore, the foregoing authorities have not confirmed the accuracy or determined the adequacy of this document. Any representation to the contrary is a criminal offense. The Interests in the Fund are subject to restrictions on transferability and resale and may not be transferred or resold except as permitted under the United States Securities Act of 1933, as amended, and applicable state securities laws, pursuant to registration or exemption therefrom. Investors should be aware that they will be required to bear the financial risks of this investment for an indefinite period of time. Investment objectives stated herein are goals based on historical results of Sarona’s funds and their typical gross and net exposures. There is no guarantee that Sarona’s funds actually will, or are likely to, achieve these objectives. This summary is for illustration and discussion purposes only and is not intended to be, nor should it be construed or used as, financial, legal, tax or investment advice or an offer to sell, or a solicitation of any offer to buy, an interest in any fund. Sarona Asset Management, Inc. (“Sarona”) acts as investment manager to the Fund. Any offer or solicitation of an investment in any fund managed by Sarona may be made only by delivery of a fund’s Confidential Offering Memorandum to qualified prospective investors. This presentation is provided to you on a confidential basis. This presentation may not be reproduced in whole or in part, nor may its contents be disclosed to any other person without the prior written consent of Sarona.
1975 1985 1995 2005 THE WORLD IS CHANGING Sarona at TBN Annual Conference, London 25 May 2012 GDP Growth Rates are Diverging Source: World Bank (2011) Frontier & Emerging Markets Developed Markets Confidential
Developed Countries Russia & China Sarona Target Regions Source: World Bank (2012), OECD (2012) 31% 30% 39% THE WORLD IS CHANGING Sarona at TBN Annual Conference, London 25 May 2012 Confidential
mean creating the equivalent of one new city of one million people every week to 2050”* • In 2010, 33% of the urban population in developing regions lived in slums** - Sub-Saharan Africa 62%=200 million people - Southern Asia 35% =190 million people Sarona at TBN Annual Conference, London 25 May 2012 The Phenomenon of Urbanization *The Anthropocene Journal, March 2012 ** UN HABITAT State of the World’s Cities 2010/2011 Confidential
25 May 2012 0 10 20 30 40 50 60 70 80 1500 1600 1700 1820 1913 1950 1980 2005 2025 Middle Class as % of Global Population The Rising Middle Class : An Engine for Growth Source Chart 1: Surjit S. Bhalla, “Second Among Equals: The Middle Class Kingdoms of India and China”, May 2007 Confidential
Income Countries Middle Income Countries High Income Countries Informal SME Remaining 9 SME contributions to GDP Source Chart 2: Small and Medium Enterprises Across the Globe: A new Database, Ayyagari, Beck & Demirguc-Kunt, the World Bank Development Research Group, August 2003: "Venture Capital for Development" Patricof & Sunderland, August 2005 THE WORLD IS CHANGING Sarona at TBN Annual Conference, London 25 May 2012 Confidential
NOT ‘THE’ SOLUTION Sarona at TBN Annual Conference, London 25 May 2012 Source: ECIPE Analysis of World Development Indicators Online Aid/GNI % Growth/GDP per capita % Confidential
London 25 May 2012 The American – Journal of the American Enterprise Institute 3 July 2007 $300 billion to Africa since 1970: “….there is little to show for it in terms of economic growth and human development” Paul Kagame President of Rwanda (Brendhurst Foundation Discussion Paper 2007) Confidential
London 25 May 2012 • Fosters dependency • Distorts markets • Does not increase tax base • Misaligns incentives • Is characterized by fickle capital flows • Rarely yields scalable, sustainable impact • Undermines accountability between government and its citizens • Encourages the best and brightest in “recipient” countries to work for government or international NGOs Confidential
Conference, London 25 May 2012 Development of Private Equity Industry in Emerging Economies • Started in mid-90s • Managers seek international business experience… then come home • Capitalized by Development Finance Institutions • Strong emphasis on ESG criteria and positive outcomes • More than just capital Confidential
and Sustainability • Bridge between private capital and entrepreneurial growth in Frontier and Emerging Markets • Geographic and sector focus on positive change, for all stakeholders, where it is most likely to occur, given the appropriate inputs • Alignment of interests • Focus on positive outcomes valuable to “them”, not us • Benefiting from long experience and an expanding network of partners and supporters (OPIC deserves a special mention) Sarona at TBN Annual Conference, London 25 May 2012 Confidential
is formed to invest in Sarona Dairies 1997: Co-founded Latin America Challenge Investment Fund 2002: Co-founded MicroVest Capital Management 2009/10: Sarona Frontier Markets Fund 1 LP 1993: Sarona Risk Capital Fund (under various names) 1999: Sarona Global Investment Fund 2007: Sarona Risk Capital Fund 1 LP 2012 : Sarona Frontier Markets Fund 2 LP 2011: Sarona Asset Management Inc. spins out of MEDA • Six decades of investing in Frontier and Emerging markets under the banner of “Business Solutions to Poverty” • Migrating from a direct investment portfolio to a more scalable, sustainable, and ‘safer’ model for investors and investees: Private Equity Fund of Funds portfolios Sarona at TBN Annual Conference, London 25 May 2012 Confidential
and proximity post-deal • Experience and thoughtfulness at all times Risk Mitigation 18 WHAT WE LOOK FOR IN OUR GPS…AND WE LOOK HARD! • Local presence, knowledge, experience: an ‘edge’ • Narrow focus on a strong geography and/or sector • Active value-add approach, relevant to frontier markets Frontier Market Focus • Target profitable deals in growth stage companies • Value-add: Transform companies to world class excellence • Move companies from low to higher liquidity market Profit Focus • Transparent and recognized valuation practices • High quality legal documents • Strong governance; alignment of interests ILPA Adherence • Explicitly driven by progressive values • Small/mid-market companies; internal demand of mid-class • Leaders in implementing ESG criteria Positive Outcome Focus Sarona at TBN Annual Conference, London 25 May 2012 Confidential
Peru Mexico Thailand Indonesia Morocco Philippines Other (32 countries) Portfolio Exposure by Country Agribusiness Info/Communication Tech Consumer Goods Clean energy Financial Services Light Manufacturing Health Education Affordable Housing Professional Services Sustainable Forestry Water Portfolio Exposure by Sector Sarona at TBN Annual Conference, London 25 May 2012 Latin America/Caribbean Africa South Asia East Asia Portfolio Exposure by Region
25 May 2012 41 countries 3 continents 15,156,215 - Clients Served 19,100 - Permanent Employees 198.5 - Renewable Energy Megawatts 11 funds 54 Companies 12 sectors Investible Universe China and Russia Developed Markets Confidential
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