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Avanz Growth Markets Limited
A GBL1 Company approved for listing on the Stock Exchange of Mauritius
Access Private Equity in Emerging Markets
New Delhi Hong Kong New York Washington LondonSingapore
January2018
Private and Confidential
An affiliate of I Squared Capital
Avanz Growth Markets Limited
Emerging markets private equity through a listed company in Mauritius
2
AvanzGrowthMarketsLimited
• TargetInvestmentSize US$100million
• InvestmentProgram - InitialinvestmentinAvanzEMPartnershipsFundII(AEMPFII)
o Investinginyear2of11yearsintothelifeofAEMPFII
o Visibleportfolioof6fundinvestments, 2co-investmentsand 1secondary
o Investorsbuyingintodayatcost,portfoliomarkedupapprox.120%
• Incorporated24July2017inMauritius• Holdsacategory1GlobalBusinessLicense• ApprovedforlistingonStockExchangeofMauritius20October2017
• SeekstoprovideinvestorsaccesstohigherreturnsinEmergingMarketsthroughstrategicprivateequityinvestments
• Diversifiedmid-marketprivateequity access• Consumer-ledsectors• Growthandbuyoutstrategiesinprimaryfunds,secondariesanddirectco-investments
• Managementincludesformerexecutives fromtheInternationalFinanceCorporation(IFC)• ExperiencedboardmembersofAGMbelievediversificationinherentlyreducesrisksand
exposuretoasinglecountry,regionorpoliticalevent
Africa
Latin America
Emerging Asia
Target Geographic Exposure
Healthcare23%
Consumer/Retail21%
CIT13%
Agribusiness12%
Financial Services12%
Education11%
Environment Services
8%
Sector Pipeline
Private and Confidential
An affiliate of I Squared Capital
Avanz Growth Markets Limited
Emerging markets private equity through a listed company in Mauritius
3
AvanzGrowthMarketsLimitedCompany SecretaryIntercontinental Trust LtdLevel 3, Alexander House35 Cybercity, Ebene, 72201
Independent Financial AdvisorBDO & Co10 Frère Félix de Valois StreetPort Louis
SEM Authorised Representative & Sponsor and Mauritian Transaction AdvisorPerigeum Capital LtdLevel 4, Alexander House35 Cybercity, Ebene, 72201
Mauritian bankerBarclays Bank Mauritius Limited 2nd Floor, Barclays House,68-68A Cybercity, Ebene, 72201
Legal advisor as to Mauritian lawUteem Chambers4th Floor, Les Jamalacs,Building Vieux Conseil Street, Port Louis
Legal advisor as to South African lawEdward Nathan Sonnebergs Incorporated1 North Wharf Square, Loop Street, Foreshore, Cape Town 8001
Independent AuditorPricewaterhouseCoopers18 Cybercity, Ebene, Reduit 72201
Mauritian Registrar and Transfer AgentIntercontinental Secretarial Services LtdLevel 3, Alexander House35 Cybercity, Ebene, 72201
Directors• HanyAssaad ExecutiveDirector• HaydeeCelaya Non-ExecutiveDirector• BeatriceLanKungWa Non-ExecutiveDirector• Smitha Algoo-Bissonauth Non-ExecutiveDirector
NameofcompanyAvanz GrowthMarketsLimited
Registrationnumber149016C1/GBL
Registeredaddressc/oIntercontinentalTrustLevel3,AlexanderHouse35,CybercityEbene 72201RepublicofMauritius
RegulatorybodiesFinancialServicesCommission(“FSC”)
Private and Confidential
An affiliate of I Squared Capital
1. Founders’ careers in EM started in the 1980s. 4. Please see track record slides 14-15 and Endnotes for important disclosures. 2. Inclusive of personnel from I Squared Capital who provide services by agreement with Avanz Capital. 5. Effective February 2016. 3. IFC. International Finance Corporation, private sector arm of the World Bank Group 6. Please see Appendix A and Endnotes a) and b).
Avanz Growth Markets Limited Investments
What are we investing in?
4
An Experienced Team
• Founders have over 30 years investing in EM with experience in over 100 countries(1)
• 37 professionals including 13 exclusive experts and advisors(2)
• Combination of direct investing in equity, debt with fund investing experience through multiple economic cycles
• Certain team members led the management of $3.2Bn in committed capital to 176 EM PE funds at IFC(3)
With A Strong TrackRecord
• Exemplary track record across the broad emerging markets• Avanz Fund II has a 50% gross IRR (24% net); Avanz Fund I has a 21% gross IRR (11% net) in each
case as of 30 Sept 2017(4)
On A Global Platform• An affiliate of I Squared Capital(5), a $10.6Bn AUM global alternative asset manager• Access to “on-the-ground” resources from I Squared Capital’s global platform with 6 offices, further
enhancing sourcing, diligence, risk management and monitoring capabilities
Diversified InvestmentStrategy
• Mid-market private equity, which has historically outperformed large-caps (1,262 vs 996 bps) relative to public markets in EM(6)
• Consumer-led sectors in Africa, Latin America and emerging Asia• Growth and buyout strategies in primary funds, secondaries and direct co-investments
Investment Process & Pipeline
• Proprietary scoring and ranking developed from in-depth analysis of past performance and lessons learned
• Pipeline of over $6.4Bn – 18 funds, 3 secondaries, 9 co-investments
The first investment planned by AGM is Avanz EM Partnerships Fund II
Private and Confidential
An affiliate of I Squared Capital
5
Avanz Capital and I Squared Capital
Washington DCNew York
London
HoustonNew Delhi
Singapore
Hong Kong
ü 7 offices globally
Johannesburg*
ü 100 professionals worldwide combined ü 3 EM focused engineering JVs
*To open in 2018GTD, Easen, VR Techniche are engineering joint venture partners of I Squared Capital
Avanz Presence
Additional I Squared office
Global presence with deep local relationships and network of expert advisors
Private and Confidential
An affiliate of I Squared Capital
37 professionals, incl. 13 experts and advisors(1)
Haydee Celaya, CEO & CIO
Hany Assaad, Chief Portfolio & Risk Officer
Investment Team
Finance & Operations
Legal & Compliance
Investor Relations
Experts(2)
6
• Dandan Liu, Managing Director
• Judy MacKay, Managing Director
• Jamie Foran, Director
• Kenneth Chin, Sr. Associate
• Ronald Schweizer, CFO
• Alfred Miranda, VP of Tax
• William Campbell, General Counsel
• Claude Vuillieme, Associate General Counsel
• Andreas Moon, Head of Investor Relations
• Naguib Taraboulsi, Vice President
• Henry Akona, Communications and Marketing Manager
• Mario Gobbo• Roy Karaoglan• Jean-Paul Pinard• Martyn Riddle• Peter Tropper• George Currie• John Myers• Mark Woodruff
Team Overview
1. Includes Avanz Capital staff (listed in the gold boxes), I Squared Capital staff that support Avanz Capital’s business (including junior professionals not named above) and advisors to Avanz Capital.2. Experts include former IFC colleagues accessible via formal agreements with Avanz Capital. I Squared Capital experts are accessible through the I Squared Capital platform.3. Available to Avanz Capital from the I Squared Capital platform.
• Walid Chammah• Iván Díaz-Molina• Thomas J.
Donohue Sr.• Ginger Lew• Lord Mark Malloch-
Brown
Advisors(3)
11 additional junior resources from the I Squared Capital platform are available to Avanz Capital
Private and Confidential
An affiliate of I Squared Capital
Judy MacKayManaging Director• +20 years of experience in EM
PE fund administration• CFO of investment advisory firm,
EMP Global’s seven private equity funds
Haydee CelayaCEO & CIO, co-founder• +30 years experience incl. 19 yrs
at IFC investing in funds, direct equity/debt in EM private sector
• Head of IFC’s Global PE Funds Group and Chair of the IC
• Head of IFC’s Africa Department• Manager for IFC’s Financial
Markets, Latin America Division
Hany AssaadChief Portfolio & Risk Officer, co-founder• +30 years experience incl. 24 yrs at IFC
investing in funds, direct equity/debt• CIO in IFC’s Global PE Funds Group• Head of IFC’s Financial Markets
Sustainability Group• Manager for IFC’s Financial Markets,
South & Southeast Asia Division
Dandan LiuManaging Director • +20 years experience investing in Asia
PE funds, secondaries and co-investments
• Chief Investment Officer of ING Pomona Asia
• Vice President & Responsible Officer of Pantheon Capital (Asia)
Jamie ForanDirector • 12 years of PE experience investing
in PE/VC funds and secondaries globally
• Formerly on SVB Capital’s Int’l FoF investment team
• Probitas Partners Fundraising Project Management
Kenneth ChinSenior Associate• 10 years of PE experience• Formerly in IFC’s Global PE
Funds Group • Corporate environment and
social policy used by IFC and the Equator Principles
Co-founders worked together for 20+ years
Avanz Capital Team
7
JohannesburgLondon
7 additional junior investment team resources from the I Squared Capital platform are available to Avanz Capital
Private and Confidential
An affiliate of I Squared Capital
Avanz Capital uses experts and additional resources from the ISQ platform to provide deep-dive assessment on sectors for due diligence.
The experts leverage their own active business networks to help Avanz Capital reference teams on the ground.
This deep bench of additional team resources enables Avanz Capital to transact quickly on direct co-investments.
George Currie*+30Y turnaround experience• Mr.Curriesuccessfully
turnedaroundmanagementofEMdistressedprojectsinSoutheast Asia
Mark Woodruff*+30Y management experience• Developedandimplemented
arefinedregionalgrowthstrategyforacorporation’sAsiaMiddleEastRegion
Industry, sector and regional experts
Mario Gobbo^+30Y healthcare & life sciences experience• Led equity and loan
deals in biotech/generic pharma cos in India, China, Central Europe, and Africa
Peter Tropper^+30Y emerging managers & impact investing experience• Portfoliomanagement
andinvestmentsinthefinancialsectorintheAfrica,Caribbean,Chile,andSouthAsia
Roy Karaoglan^+30Y international banking experience• Commercial banking
and credit risk mgmt in Africa, Russia, Turkey, E. Europe, Middle East
Jean-Paul Pinard^+30Y agri-business & energy experience• Structured finance and PE
in energy, agri-business and environmental issues globally, incl. Africa & Asia
Martyn Riddle^+30Y ESG experience• Environ. and social
risk mgmt and sustainable development in over 75 countries
8
^ Experts include former IFC colleagues accessible via formal agreements with Avanz Capital * Employees of I Squared Capital available to Avanz Capital via the I Squared Capital platform.
Avanz Capital Team
John Myers*+20Y operations experience• Transport investments,
ISQ operations, asset mgmt and analytics
• Former COO of Morgan Stanley Asia i-banking
Private and Confidential
An affiliate of I Squared Capital
Advisors with global insights on policy and regulation
Avanz Capital Team
9
Walid ChammahInternational Finance
• Former Chairman of Morgan Stanley International
• Former co-President of Morgan Stanley
Thomas J. Donohue, Sr. International Policy and Regulation
• President and CEO of the United States Chamber of Commerce
• 117 offices in 103 countries
Ginger Lew Economic Policy
• Former Senior Advisor to White House Economic Council Director Larry Summers
• COO of SBA, General Counsel at US Dept. of Commerce and Chief Counsel at DoE
Lord Mark Malloch-BrownGlobal Strategy and Environmental Policy
• Former number two in the United Nations as well as having served in the British Cabinet and Foreign Office
• Also former Administrator of UN Development Programme and a Vice-President at the World Bank
• Now Chairman of the Business Commission for Sustainable Development
The advisors are resources available to Avanz Capital from the I Squared Capital platform.
Iván Díaz-Molina Economic Policy
• Former CEO of companies in Peru and Brazil
• Professor of Innovation and Head of the Strategy Department at the ESE Business School in Santiago, Chile
Private and Confidential
An affiliate of I Squared Capital
Claude Vuillieme*Associate General Counsel
Ronald Schweizer*Chief Financial Officer
GLOBALFUNDADMINISTRATOR
External Fund Administrator / Auditors
Alfred Miranda*Vice President of Tax
Andreas Moon*Head of Investor Relations
Naguib Taraboulsi*Vice President, Investor Relations
Henry Akona*Communications and Marketing Manager, Investor Relations
Solid in-house investor relations, finance, and legal & compliance teams
GLOBALFUNDAUDITOR
10
COMPLIANCE
William Campbell*General Counsel
4 additional back-office resources from the I Squared Capital platform are available to Avanz Capital
Legal & ComplianceFinance & OperationsInvestor Relations
Avanz Capital Team
* Employees of I Squared Capital
SS&Cfka Citi Private Equity Services
PwC Global Relay
Private and Confidential
An affiliate of I Squared Capital
The case for investing in emerging markets
Why Invest in EM Now
• Historic long-term returns are attractive
• Superior economic growth when compared to Developed Markets (DM) i.e. the US,EU or Japan markets
• Robust long-term growth drivers such as growing population, rapid urbanization,better health, education and savings are expected to boostEM economies
• DM have excess capital while EM have excess opportunities
• EM offer attractive valuations across most asset classes
• Time horizon is key
11
Private and Confidential
An affiliate of I Squared Capital
6.0
18.1
27.7
11.6 12.0
-0.4
21.7 22.7
17.5
-2.2
8.9
-3.2
22.625.2
19.6
1.6
14.7
6.3
23.1
18.014.4
2.2
7.0
0.4
-10.0
0.0
10.0
20.0
30.0
EM PE/VC - Top Quartile US PE - Top Quartile Europe PE - Top Quartile MSCI Emerging Markets S&P 500 MSCI Europe
IRR
1-Year 3-Year 5-Year 10-Year
12
Why Invest in EM Now
1,224 1,262996
1,297
-
500
1,000
1,500
Basi
s po
ints
Mid-Market Private Equity Outperformance relative to Public Markets in EM
All Mid-Cap Large-Cap Avanz GP (1)
Top quartile IRRs in emerging markets PE have outperformed vs. US private equity and other public securities benchmarks over 10 years
Source: Preqin and Avanz Capital (Private Equity data), S&P Capital IQ (MSCI Indices). Data as of 30 September 2015, the latest available at the time of the Avanz Capital project. Please see Appendix A and Endnotes a) and b) for important disclosures, composition and methodology for this chart.
Mid-market PE outperformance across emerging markets
Source: Cambridge Associates LLC, EM PE/VC, US PE and Europe PE benchmarks of pooled end-to-end returns, net of fees, expenses and carried interest. Data as of 31 December 2016, the latest available.
1. Please see Endnote b).
Private and Confidential
An affiliate of I Squared Capital
Overview
Avanz Capital Track Record
13
Consistent strategy for Avanz Fund I and II
✔ Mid-market private equity strategies
✔ Targeted sectors driving growth across select geographies
✔ Diversified portfolios
✔ 10 PE funds, 2 co-investments, 1 secondary across both funds
Avanz EM Partnerships Fund IPortfolio Composition
Consumer HealthcareEducation
Fin. Svcs.
Primary Co-invest
Africa LatAm Em. Asia
2013 2014 2015
Mid-cap
0% 20% 40% 60% 80% 100%
Sector
Type
Geography
Vintage
Fund Size
Avanz EM Partnerships Fund IIExpected Portfolio Composition
Consumer Healthcare EducationFin. Svcs.
Primary Co-invest
Em. Asia
2015 2016
Mid-Cap
0% 20% 40% 60% 80% 100%
Sector
Type
Geography
Vintage
Fund Size
Africa LatAm
Secondaries
20172017
Private and Confidential
An affiliate of I Squared Capital
Avanz Capital Track Record
14
Avanz EM Partnerships Fund I ($45m, Vintage 2013)
IRR:21%gross,11%net(1)(c)
Investment Description(2) Sector Coverage
Investment Name(3)
No. of Portfolio
Companies /Exits
Size(US$m)
Avanz Commitment
(US$m)Coverage by Country
Cons
umer
Goo
ds
Fina
ncia
l Se
rvic
es
CIT
Hea
lthca
re
Envi
r.Se
rvic
es
Educ
atio
n
Agrib
usin
ess
China Healthcare Fund III 24 /1 209 7.5 China ✔
China Spin-out Fund 13 / 1 400 5.0 China ✔ ✔ ✔
Pan-Africa Fund II (Manager A) 6 295 5.0 Ethiopia, Kenya, Nigeria, South Africa, Zimbabwe
✔ ✔ ✔
India Fund II 5 229 2.5 India ✔ ✔ ✔
Brazil Fund III 2 205 9.7 Brazil ✔ ✔ ✔
Pan-Africa Mezz III (Manager B) 1 153 5.0 Ghana, Nigeria, Tanzania, Zambia, Ethiopia, Kenya
✔ ✔ ✔ ✔
PE Funds Subtotal 53 34.7
Co-Investment - Project Live 1 55 3.1(4)Argentina, Chile, Colombia, Ecuador, Mexico, Panama, Peru, Venezuela
✔ ✔
Co-Investment - Project Alboran 1 50 2.1(4) Morocco ✔ ✔ ✔
Direct Co-investments Subtotal 2 5.2(4)
Total Portfolio (to date) 55 39.9 ✔ ✔ ✔ ✔ ✔ ✔ ✔
Target Portfolio(5) 80-100 Africa, Latin America, Em. Asia ✔ ✔ ✔ ✔ ✔ ✔ ✔
1. As of 30 Sept 2017, see Endnotes. 2. The No. of Portfolio Companies/Exits and Avanz Commitment are as of the date of the presentation. 3. Name has been redacted due to confidentiality restrictions and are available upon request 4. Commitment in Euros at current exchange rates 5. There can be no assurance that the targets will be achieved.
Private and Confidential
An affiliate of I Squared Capital
Avanz EM Partnerships Fund II (target $250m, closed $42m, Vintage 2015)
15
1. As of 30 Sept 2017, see Endnotes. 2. The No. of Portfolio Companies/Exits and Avanz Commitment are as of the date of the presentation. 3. Name has been redacted due to confidentiality restrictions and are available upon request 4. Commitment in Euros at current exchange rates 5. AEMPF II expects to make an additional US$1m commitment to the fund in Q1 2018. 6. There can be no assurance that the targets will be achieved.
Avanz Capital Track Record
IRR:50%gross,24%net(1)(c)Investment Description(2) Sector Coverage
Investment Name(3)
No. of Portfolio
Companies /Exits
Size(US$m)
Avanz Commitment
(US$m)Coverage by Country
Cons
umer
Goo
ds
Fina
ncia
l Se
rvic
es
CIT
Hea
lthca
re
Envi
r.Se
rvic
es
Educ
atio
n
Agrib
usin
ess
Pan-Africa Fund III (Manager C) 6 286 5.7(4) Côte d’Ivoire, Ghana, Kenya, Nigeria,Tanzania, Uganda, North Africa ✔ ✔ ✔ ✔ ✔
India Fund II 5 229 5.0 India ✔ ✔ ✔
Pan-Africa Mezz III (Manager B) 1 153 5.0 Ethiopia, Kenya, Ghana, Nigeria,Tanzania, Zambia ✔ ✔ ✔ ✔
Latin America (ex-Brazil) Fund 1 379 5.0 Chile, Colombia, Mexico, Peru ✔ ✔ ✔ ✔ ✔ ✔ ✔
Latin America Agribusiness Fund II 3 370 5.0 Brazil, Argentina, Colombia, Chile, Peru ✔
China Spin-out Fund II 0 450 5.0(5) China ✔ ✔ ✔
PE Funds Subtotal 16 30.7
Co-Investment - Project Live 1 55 3.6(4) Argentina, Chile, Colombia, Ecuador, Mexico, Panama, Peru, Venezuela ✔ ✔
Co-Investment - Project Alboran 1 50 1.1(4) Morocco ✔ ✔ ✔
Direct Co-investments Subtotal 2 4.7(4)
China Spin-out Fund I secondary 13 400 4.0 China ✔ ✔ ✔
Secondaries Subtotal 13 4.0
Total Portfolio (to date) 31 39.4 ✔ ✔ ✔ ✔ ✔ ✔ ✔
Target Portfolio(6) 150-200 Africa, Latin America, Em. Asia ✔ ✔ ✔ ✔ ✔ ✔ ✔
Private and Confidential
An affiliate of I Squared Capital
Direct Co-investment: Road freight transportation and logistics services for goods moving between Morocco and Europe
16
Avanz Capital Experience
Company descriptionThe company’s core business provides conventional point-to-point transport services via road freight. It also provides logistics services and manages the transport, handling and storage of products for its customers through 11 logistics centers in Europe and North Africa.
Investment thesis“New” industries such as the automotive, aeronautics and pharmaceutical sectors are leading the country’s growth and beginning to shift the economy away from traditional sectors (textiles, tourism) to higher value-added industrial sectors.
Expected impactNorth Africa is at a relatively early stage of development, however its importance as a gateway to West Africa will be key to driving attention from global players.
Highest number of Gibraltar crossings
c.19,000 in 2015
Company offers a wide range of services to
16,000 customers
The fleet includes
450 trucks
776 trailers
Investment snapshot
Date March 2017
Avanz CapitalInvestment Holding
Avanz direct co-investment
GP + Avanz Ownership 100.0 percent
Private and Confidential
An affiliate of I Squared Capital
Portfolio Company: Managing sports activation events to promote health and wellness for 115,000+ children and 5,000+ adults in India each year
17
Avanz Capital Experience
Company descriptionThe company is India’s leading provider of integrated sports management services. It is an outsourced provider of sports classes and programs to K-12 schools and a consulting model to provide services supporting healthy working environments for corporations and governments.
Investment thesisChanging lifestyles and diets have increased health risks in India, yet a fitness curriculum is often not emphasized in public or private schools. The company has a strong brand with growth driven by its core business of full-service private schools, aided by government support and international expansion.
Expected impactIncrease fitness as part of the standard learning curriculum. Incorporate health and nutrition as a form of general health risk management.
Investment snapshot
Date September 2015
Avanz CapitalInvestment Holding
India Fund II Portfolio Co.
GP Ownership 57.3 percent
Total recipients of sports education
350,000+ students every week
Marquee chains served covering
500+ schools
Number of locations across India
85 locations
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Direct Co-investment: The largest e-commerce Spanish-speaking platform with sites in Mexico, Colombia and Peru
18
Avanz Capital Experience
Company descriptionThe company operates a fully integrated and purchase-to-delivery supply chain. Sellers list on the e-commerce platform, buyers make the purchase on the platform, and the Company receives the payments, arranges local deliveries and responds to any buyer difficulties.
Investment thesisTake advantage of the shifts towards online retail, estimated to grow 38% p.a., in largely untapped markets. Successful players are attractive IPO candidates and/or acquisition targets in an increasingly active M&Aenvironment.
Expected impactDelivering a seamless and simple online experience to markets with less than 2% online retail (compared to 10% in the U.S.).
Investment snapshot
Date February 2017
Avanz CapitalInvestment Holding
Avanz direct co-investment
GP + Avanz Ownership 33.1 percent
Business-to-Consumer (B2C) sales
14,000,000 SKUs
2,300,000 customers
27,000 sellers
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Certain team members led the management of $3.2bn, 176 EM PE funds at IFC(1)(d)
Africa28%
Em. Asia
31%
Latin America
16%
Em. Europe18%
Multi-region7%
1. Source: Publicly available IFC Annual Report 2010, https://openknowledge.worldbank.org/bitstream/handle/10986/4360/602380V20WBAR010Box358314B01PUBLIC1.pdf?sequence=1&isAllowed=y. $3.2 billion and 176 PE funds are Collective Investment Vehicles within the IFC Investment Portfolio as of the fiscal year end (June) 2010. Haydee Celaya and Hany Assaad were two of the three members who participated in the management of the entire portfolio.
19
$3.2bn Portfolio Summary by Geography
Avanz Capital Experience
0
100
200
300
400
500
600
700
800
900
1,000
1982 1986 1989 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Committed
Capita
lbyIFCpe
rFisc
alYear(US$m)
IFCFiscalYearEnd(June)
Global EM PE Funds Portfolio $3.2bn AUMMs. Celaya: Chair of IC, Head of Funds GroupMr. Assaad:CIO ‘08-’10
49
55
28
31
13
Percent shown by capital committed; number of deals shown inside the pie chart
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Thematically-driven investment strategy
1. Avanz Capital defines mid-sized companies by revenue in the context of the economies in which they operate.
20
Compelling attributes for emerging markets private equity investing:
MIDDLE MARKET PRIVATE EQUITY STRATEGIES
✔ Funds of $200 – $800 million
✔ Co-investment opportunities >$150 million
✔ Companies with revenues of $50 – 500(1) million
✔ Investing in growth and buyout strategies
TARGETED SECTORS DRIVING GROWTH ACROSS SELECT GEOGRAPHIES
✔ Latin America, Africa, and emerging Asia
✔ Consumer goods and services, financial services, healthcare, education, communication and information technology, environmental services and agri-business
TARGET PORTFOLIO CONSTRUCTION
✔ Primary investments 50%
✔ Secondaries 25%
✔ Direct co-investments 25%
RIGOROUS INVESTMENT PROCESS
Target Markets
Investment Strategy Overview
Private and Confidential
An affiliate of I Squared Capital
Primary Funds Co-InvestmentsSecondaries
• 10-15 funds• $5-25 MM ticket size
• Core of the strategy as it represents the largest deal flow
• Shorten the J-curve• Reduction of fees• Potential to boost risk-
adjusted returns in high conviction sectors
• 5-8 transactions• $2-15 MM ticket size
• Shorten the J-curve
• 2-3 transactions• $5-50 MM ticket size
• Avanz Capital believes it has identified the most attractive GPs coming to market during the investment period
• Avanz Capital proactively engages with GPs to source co-investment opportunities
• Avanz Capital has identified secondary opportunities, which may become available during the investment period
Rationale
Target
Status
50% 25% up to 25%Expected Avg. Allocation
Portfolio construction provides diversification and enhanced returns
21
Investment Strategy Overview
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Sectors AFRICA LATAM ASIA
Consumer Goods & Services High High High
Financial Services High Medium Medium
Communication & Information Technology High Medium Low
Healthcare Medium High High
Environmental Services Low Medium High
Education High High Medium
Agribusiness Medium High Low
Investment Strategy Overview
22
Targeted high-growth sectors in attractive geographies
Sect
ors
Private and Confidential
An affiliate of I Squared Capital
Fund
s un
der
Cons
ider
atio
nFu
nd M
anag
erIn
vest
men
t St
rate
gyRe
sults
Allo
catio
n
New Rank
Fund Manager
Fund Name
Est Final Close
Geographic Region
Target Fund Size
Team Track Record Score
Portfolio Track Record Score
Team Quality Score
Deal Access Score
Investment Strategy Score
Deal Pipeline Score
Structure Score
Fund Selected
Proposed Allocation in US$M
Size of Selected Fund in US$M
• Proprietary weighting of scores determined by a 10-year review of factors predicting successes and failures
• Lessons learned from top-tier development finance institutions thorough diligence process integrated into Avanz Capital “tool-kit”
• 25 quantitative and qualitative factors scored; 7 primary categories
• Weighted score >200 required for the Investment Committee to consider a fund for a subsequent “Early Review”
• Go/no-go decision for next “early review” due diligence stage
• Target commitment size discussion
• Focus on sectors, geography, and stage of investments, number and size of portfolio etc.
• Demonstrate comprehensive deal flow and discuss deals at various stages
• Proven and consistent track record as team/individuals consisting of investment, operational/industrial expertise
• Complementary skills, capabilities in sourcing and transacting, etc.
• Extensive database of >1,200 fund managers and >2,000 funds monitored
• Collection of information on funds that fall within Avanz strategic focus
• Includes early contact with fund managers
Scoring: 1-10
Total weighted score maximum: 300
Primary Categories Selected Considerations
Individual Fund Weighted Score
Relative Global Fund Score
Ranking of Funds
Proprietary ranking methodology for optimal manager selection
23
Investment Strategy Overview
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24
Fund II Mix of Committed Capital (to date)
Avanz Fund II
Sector
Geography
Africa30%
Latin America
35%
Emerging Asia36%
Type
PE Funds78%
Secondaries10%
Co-investments
12%
Consumer25%
FinancialServices13%
CIT
12% Healthcare
14%
Education7%
Envir.Services10%
Agribusiness19%
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An affiliate of I Squared Capital
25
Diversified pipeline of active opportunities
Avanz Fund II Pipeline
Healthcare23%
Consumer/ Retail21%
CIT13%
Agribusiness12%
Financial Services
12%
Education11%
Environment Services
8%
Sector
Geography
Africa46%
Emerging Asia35%
Latin America19% Type
PEFunds88%
Secondaires8%
Co-investments
4%
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An affiliate of I Squared Capital
26
Actionable Deal Pipeline(1)
1. There is no guarantee that Fund II will hold any of these pipeline deals or deals having similar characteristics.
Avanz Fund II Pipeline
Summary Country / Region Focus Stage Total Fund Size (US$M)
Pan-Africa growth capital IV Pan-Africa Early review 750
East Africa common market fund II East Africa Early review 200
Africa financial services fund II Pan-Africa Early review 650
North and West Africa fund III North, West Africa Early review 250
North Africa growth capital fund IV North Africa Early review 212
Nigeria growth capital fund III Nigeria Early review 150
Africa industrialization fund Pan-Africa Early review 400
China healthcare fund IV China Re-up 375
India mid-market growth capital fund II India Early review 400
India equity and mezzanine fund II India Early review 150
India operational turnaround fund India Early review 150
India growth capital fund III India Early review 200
India mid-market fund I India Early review 250
India growth capital fund I India Early review 250
Mexico consumer, TMT fund IV Mexico Early review 250
Brazil growth capital fund Brazil Due diligence 300
Brazil middle market control fund II Brazil Early review 250
Brazil buyout and growth capital fund II Brazil Early review 250
Total size of pipeline funds: $5,437M
Prim
arie
s
Private and Confidential
An affiliate of I Squared Capital
27
Actionable Deal Pipeline(1)
Avanz Fund II Pipeline
Portfolio of 10-15 Africa PE funds (strip sale #1) Pan-Africa Negotiating with seller 20
Portfolio of 10-15 Africa PE funds (strip sale #2) Pan-Africa Negotiating with seller 20
Local pension funds sell-down Latin America Early review 500
Chilean salmon Latin America Data gathering 140
Healthcare platform Latin America Due diligence 75
Truck and heavy equipment retailer Africa Data gathering 25
Specialized fertilizer Africa Data gathering 47
Flour-based foods manufacturing Africa Data gathering 8
Cold storage logistics Africa Data gathering 16
QSR restaurants Africa Data gathering 32
Baby products platform Emerging Asia Data gathering 38
Hard discount retailer Emerging Asia Data gathering 27
Total size of active secondaries and direct co-investment deals: US$948M
Summary Country / Region Focus Stage Total Deal Size (US$m)
Seco
ndar
ies
Dire
cts
1. There is no guarantee that Fund II will hold any of these pipeline deals or deals having similar characteristics.
Private and Confidential
An affiliate of I Squared Capital
Mid-Market Private Equity Outperformance relative to Public Markets in EM and the S&P
28
Appendix A
Private and Confidential
An affiliate of I Squared Capital
§ Calculation for the mid-market PE outperformance relative to public markets in emerging markets― Public market returns are computed using the Long Nickels Public Market(1) Equivalent (PME) methodology
― PE fund transactions include capital calls, distributions and terminal value aggregated to compute a single return using an Excel XIRR function
― To compute a like to like return for the PME, a synthetic portfolio is created where the PE funds transaction equivalents of calls, distributions and terminal NAVs are used to buy/sell the index on each transaction date; a transaction cost of 0.84% is used
― Terminal NAVs are also treated as distributions
― On the last transaction date across funds in the region, the remaining index shares in the synthetic portfolio are liquidated at the index price
§ The PME analysis has a start date of 23 Aug. 2005 and end date of 30 Sept. 2015
§ PE funds from Preqin data and Avanz Capital GP(2) data is comprised of vintage years 2005 to 2013, operating periods of 2005 to 2015 and were valued as of 30th September, 2015. Further, the PE funds criteria included those with an investment strategy with any of balanced, buyout, co-investment, early stage, start-ups, expansion/late stage, growth or venture (general)
Methodology
29
1. Long,AustinM.andCraigJ.Nickels(1996),APrivateInvestmentBenchmark.2. SeealsoEndnoteb).
Appendix A
Private and Confidential
An affiliate of I Squared Capital
47
25
20
57
20
7
17
0
5
10
15
20
25
30
2005 2006 2007 2008 2009 2010 2011 2012 2013Vintage Year
Break up of Funds by Vintage Years
Mid Cap Funds, 66
Large Cap Funds, 46
Break up of Funds by Size
Private Equity Data Set Composition
30
318
76
97
71
7
15
0
20
40
60
80
100
120
Africa Latin America Asia All Emerging Markets
Break up of Funds by Region
Preqin Data Avanz GP
Source: Preqin and Avanz Capital (Private Equity data), please see also Endnote a).
Growth, 41
Buyout, 49
Co-investment, 1
Early Stage, 2
Early Stage: Start-up, 2
Expansion / Late Stage, 3
Balanced, 3Venture (General), 11
Break up of Funds by Investment Strategy
Appendix A
Private and Confidential
An affiliate of I Squared Capital
a) All return figures are in USD. Private Equity cash flows used are net of management and other fees. MSCI EM indices are used to compute public market returns using Long Nickels method. MSCI EM indices used are total returns indices i.e. including capital gains as well as dividend yield. All funds in the dataset are vintage years between 2005-2013, operating periods between 2005-2015 and valuations as of 30th September, 2015. Total sample sizes are 10, 19 and 83 PE funds for Africa, Latin America and Asia respectively. Mid-cap funds are those with fund size < $800mn and large cap funds are those with fund size >= $800mn. Within the same sample, the number of Total Avanz GP, Mid-cap Funds and Large-cap funds are 15, 66 and 46 respectively. Detailed analysis methodology provided in Appendix A. This analysis is provided to support the investment strategy Avanz Capital aims to employ and is not representing a public market equivalent comparison for Avanz Fund I or Avanz Fund II.
b) Avanz GP dataset refers to the GPs that Avanz Capital has backed in Avanz Fund I and Fund II that matched the time frame of the analysis (vintage years 2005-2013). This comprises the Avanz GPs’ prior funds, with the exception of the China Healthcare Fund III whose vintage year is 2013 and was included in the dataset.
c) The Avanz EM Partnerships Fund, SPC and Avanz EM Partnerships Fund II, SPC IRR performance is presented as of 30 September 2017. The gross IRRs for the Avanz Fund I and Fund II are gross of Avanz Capital fees and expenses, whereas the net IRR is inclusive of all fees and expenses charged to the investors in the Avanz Fund I and Fund II.
d) The charts reflect the portfolio of the primary fund investments that Ms. Celaya and Mr. Assaad participated in the management of while at IFC and does not reflect any investments made by Fund I or Fund II. Although such information is presented from public sources (namely the IFC Annual Report for FY2010), IFC has not participated in the preparation of this presentation or any other materials used in connection with the offering of Fund II and expressly disclaims any responsibility for the content or accuracy of such information. Prospective investors should carefully consider the matters discussed in “Section IX – Certain Legal, Regulatory and Tax Considerations” of the Confidential Private Placement Memorandum of Fund II.
e) Limitations of Target Returns. Target returns are based on statistical analysis of historical information. There is no guarantee that targeted returns will be realized or achieved or that an investment strategy will be successful. Investors should keep in mind that the securities markets are volatile and unpredictable. There are no guarantees that the historical performance of an investment, portfolio, or asset class will have a direct correlation with its future performance. The information in this presentation, including statements concerning financial markets is based on current market conditions, which will fluctuate and may be superseded by subsequent market events or for other reasons.
Endnotes
31
Private and Confidential
An affiliate of I Squared Capital
Disclaimer
32
THIS DOCUMENT IS INTENDED FOR THE CONFIDENTIAL USE OF ONLY THOSE PERSONS TO WHOM IT HAS BEEN DELIVERED DIRECTLY BY AVANZ GROWTH MARKETS LIMITED(“AGM” OR THE COMPANY). THIS DOCUMENT MAY NOT BE COPIED OR DISTRIBUTED TO ANY THIRD PARTY, EITHER PHYSICALLY OR THROUGH ELECTRONIC MAIL, WITHOUTTHE PRIOR WRITTEN CONSENT OF AGM. IT MAY CONTAIN MATERIAL NON-PUBLIC INFORMATION AND BY THE ACCEPTANCE OF THIS DOCUMENT, EACH RECIPIENT SHALL BEDEEMED TO HAVE AGREED TO MAINTAIN THE CONFIDENTIALITY OF SUCH INFORMATION AND SHALL BE EXPECTED NOT TO USE IT IN VIOLATION OF APPLICABLE LAW.
THE COMPANY WAS INCORPORATED AND BEGAN OPERATING ON 24 JULY 2017 IN MAURITIUS AND HOLDS A CATEGORY 1 GLOBAL BUSINESS LICENSE IN ACCORDANCE WITHTHE MAURITIAN COMPANIES ACT 2001 AND THE FINANCIAL SERVICES ACT 2007 OF MAURITIUS. THE COMPANY’S REGISTERED OFFICE ADDRESS IS C/O INTERCONTINENTALTRUST LTD, LEVEL 3, ALEXANDER HOUSE, 35 CYBERCITY, EBENE 72201, MAURITIUS. THE COMPANY’S SHARES ARE NOT CURRENTLY LISTED ON ANY EXCHANGE. IT ISENVISAGED THAT THE COMPANY WILL LIST ITS SHARES ON THE OFFICIAL MARKET OF THE STOCK EXCHANGE OF MAURITIUS LTD (“SEM”).
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THE DOCUMENT IS INTENDED FOR DISCUSSION PURPOSES ONLY. IT IS NOT AN OFFER TO SELL, OR A SOLICITATION OF ANY OFFER TO BUY, ANY SECURITY, NOR DOES ITPURPORT TO BE A COMPLETE DESCRIPTION OF THE TERMS OF OR THE RISKS OR POTENTIAL CONFLICTS OF INTEREST INHERENT IN ANY ACTUAL OR PROPOSED SECURITY ORTRANSACTION DESCRIBED HEREIN. POTENTIAL INVESTORS SHOULD ENSURE THAT THEY FULLY UNDERSTAND ALL APPLICABLE RISKS. ANY TRANSACTION WOULD BE SUBJECTTO NEGOTIATION OF ALL RELEVANT COMMERCIAL TERMS, OBTAINING ALL NECESSARY REGULATORY, CORPORATE OR OTHER APPROVALS AND THE EXECUTION OF DEFINITIVEINVESTMENT DOCUMENTATION.
THIS DOCUMENT CONTAINS “FORWARD-LOOKING STATEMENTS” AS THE TERM IS DEFINED IN THE U.S. PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. WORDS SUCHAS “ANTICIPATE”, “ESTIMATE”, “EXPECTS”, “PROJECTS”, “INTENDS”, “PLANS”, “BELIEVES”, “WILL”, AND WORDS AND TERMS OF SIMILAR SUBSTANCE TYPICALLY INDICATEFORWARD-LOOKING STATEMENTS. ALL FORWARD-LOOKING STATEMENTS REPRESENT AGMʼS VIEWS AND EXPECTATIONS REGARDING FUTURE EVENTS AS OF THE DATEHEREOF, BASED ON INFORMATION THEN AVAILABLE (BUT NOT NECESSARILY ALL SUCH INFORMATION WHICH MIGHT BE REASONABLY AVAILABLE) AND ON CERTAINASSUMPTIONS AND ESTIMATES, AND ARE SUBJECT TO A NUMBER OF FACTORS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROMTHOSE DESCRIBED IN THE FORWARD-LOOKING ESTIMATES. ADDITIONAL INFORMATION, INCLUDING ADDITIONAL STATISTICAL DATA AND/OR FURTHER DESCRIPTIONS OFPROPOSED TRANSACTIONS, MAY BE PROVIDED SUBSEQUENTLY, BUT AGM DOES NOT UNDERTAKE TO UPDATE THE ENCLOSED INFORMATION OR ANY FORWARD-LOOKINGSTATEMENT MADE HEREIN, EXCEPT AS MAY BE REQUIRED BY ANY EXPRESS AGREEMENTS.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS AND THE INVESTOR MUST BE ABLE TO WITHSTAND A COMPLETE LOSS OF HIS OR HER INVESTMENT.
EACH PROSPECTIVE INVESTOR IS INVITED TO MEET WITH REPRESENTATIVES OF AGM AND TO DISCUSS WITH, ASK QUESTIONS OF AND RECEIVE ANSWERS FROM SUCHREPRESENTATIVES CONCERNING THIS DOCUMENT AND TERMS AND CONDITIONS OF THE OFFERING, AND TO OBTAIN ANY ADDITIONAL INFORMATION, TO THE EXTENT THATSUCH REPRESENTATIVES POSSESS SUCH INFORMATION OR CAN ACQUIRE IT WITHOUT UNREASONABLE EFFORT OR EXPENSE.
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