Upload
alaina-elinor-thompson
View
214
Download
0
Embed Size (px)
Citation preview
© 2007 Strategic Risk ManagementUNCTAD, Nairobi May 24, 2007
Strategic Risk ManagementStrategic Risk Management
Meeting the challenges of increased oil and gas revenues
Options to invest revenue windfalls and sustain future growth in Africa
Jean-François Casanova , CEO, Strategic Risk Management, France.
African Oil Conference - Nairobi, May 24African Oil Conference - Nairobi, May 24thth, 2007, 2007
DAY 2, Session 5, Room B, 8: 45 – 10:15
NOT AN OFFICIAL UNCTAD RECORD
© 2007 Strategic Risk ManagementUNCTAD, Nairobi May 24, 2007
“I really like the idea of making money and doing good and I am perfectly happy if it happens in that order”
James CameronChairman of Climate Change Capital
Making money while providing future development
© 2007 Strategic Risk ManagementUNCTAD, Nairobi May 24, 2007
Africa challenges of increased oil and gas revenues
Major imbalances within Africa
© 2007 Strategic Risk ManagementUNCTAD, Nairobi May 24, 2007
At least a light of hope
GDP over 6%
Africa energy leaders are taking off to gatherwith growth in line with the best
© 2007 Strategic Risk ManagementUNCTAD, Nairobi May 24, 2007
A barrel at USD 50 means an additional revenue of 300Bln per year
Estimated amount: more than USD 1.5 Trillion
© 2007 Strategic Risk ManagementUNCTAD, Nairobi May 24, 2007
Major Oil exporters are relatively risk adverse
© 2007 Strategic Risk ManagementUNCTAD, Nairobi May 24, 2007
But taking risk pays !
HFRI Distressed Securities Index
NAREIT-AllHFRI Fund Weighted Composite Index
CLO Equity Proxy
CSFB Leveraged Loan Index
CSFB HY Index
CSFB Conv Securities
U.S. Inflation Gold
MSCI EAFE
JPM Emerging Markets
DJ Wilshire 5000
S&P/BARRA 500 Value
S&P/BARRA 500 GrowthS&P 500
LB AAA CorpLB Aggregate Bd
ML Corp
ML ABS
ML MortgageU.S. LT Gvt
U.S. IT Gvt
U.S. 30 Day Tbill
Venture Capital*
Private Equity*
Buyout Mezz*
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% 35.00%
Annualized Return Volatility
An
nu
aliz
ed R
etu
rn
Illiquid Asset Outperformance over Traditional SML: 5.8%
S&P Incremental return vs. ML Corp: 286 bps
Source: CSFB, Ibbotson Associates, Venture Economics, Callan Associates
From a pure investment perspective, investing in Emerging market gives a substantial premium
© 2007 Strategic Risk ManagementUNCTAD, Nairobi May 24, 2007
Middle East exporters are less risk adverse…
© 2007 Strategic Risk ManagementUNCTAD, Nairobi May 24, 2007
… and meet more easily future development
• Gulf Cooperation Council experience– Saudi Arabia, Kuwait, UAE, Bahrain, Qatar, Oman– Seventh emerging market GDP USD 733 Bln– Close by it size to Mexico or South Korea
© 2007 Strategic Risk ManagementUNCTAD, Nairobi May 24, 2007
Non Oil GDP are higher and much less volatile !
© 2007 Strategic Risk ManagementUNCTAD, Nairobi May 24, 2007
As an additional benefit
Dependence on import & public expenditure declines years after years
© 2007 Strategic Risk ManagementUNCTAD, Nairobi May 24, 2007
And
Private investment increases as public expenditure gain room to expand
© 2007 Strategic Risk ManagementUNCTAD, Nairobi May 24, 2007
First conclusion
Create the environment and profitable investments opportunities will arise
© 2007 Strategic Risk ManagementUNCTAD, Nairobi May 24, 2007
These are from the originals from NASA
Clean carbon and making money: Bio-energy as an Entrepreneurial Solution for
African investors?
Policy & GovernmentPolicy & Government
Bio-fuels IndustryBio-fuels Industry
TransportationTransportation
Equipment ManufacturerEquipment Manufacturer
InvestorsInvestors
Agro-BusinessAgro-Business
AutomotiveAutomotive
EnergyEnergy
The tropics are the main area for biofuels production today!
© 2007 Strategic Risk ManagementUNCTAD, Nairobi May 24, 2007
Source: Ministry of Mines and Energy - Brazilian Energy Balance – 2006and Laura Tetti – USP – 2002
106 BEP FUEL DEMAND FOR LIGHT VEHICLES IN BRAZIL
0
20
40
60
80
100
120
140
160
180
1970 1975 1980 1985 1990 1995 2000 2005
YEAR
TOTAL DEMAND FOR LIGHT VEHICLES (GNV INCLUDED)
GASOLINE PRODUCTION
GASOLINE CONSUMPTION
TOTAL DEMAND FOR LIGHT VEHICLES (WITHOUT GNV)
This curve shows how much gasoline would be necessary to satisfy the fuel demand for light vehicles supposing the non-existence of the
Brazilian Ethanol Program
Total economy of 778 million boeor 15 months of the present Brazilian
petroleum production.
Accumulated economy of 7 years and 9 months of pure gasoline consumption.
US$ 61billions
IN THIS PERIOD, WITH THE ETHANOL USAGE, THE EMISSION OF 644 MILLION TONS OF CO2 WAS AVOIDED
+ US$ 16billions
One of our favourite option for meeting African future development
Ethanol Experience in Brazil: Oil economy and environmental benefits
© 2007 Strategic Risk ManagementUNCTAD, Nairobi May 24, 2007
A comprehensive development model for Africa
• Forward integration by farmers and backward integration by the many end users of Bio energy
• More acreage put into production, more income for farmers
• Creation of thousands of jobs in newly constructed plants
• Appreciation in farm and other real estate values
• Creation of ancillary industries and services in various sectors
• Supply chain and logistic companies to meet requirements by palm, oilseeds and ethanol producers
• Training and development firms to support managers and employees of ethanol plants and for related industry players
• R&D firms to advance the technology and discover new technologies
• Local population may get access to cheaper fuel
• Potential to bring in venture capital to provide these start-ups with capital required
• Higher number of local plant owners will yield a higher economic impact through tax receipts to local governments
© 2007 Strategic Risk ManagementUNCTAD, Nairobi May 24, 2007
Is this growth model suited for Africa, and how can it produce an attractive rate of return over time?
The Methodology for investing is about evaluating investment allocation
• Strategies and risks associated
– Is it really entrepreneurial? Free market or state control ?
– Within the Bio energy value chain: who will really make the money as power in the channel shifts over time
(growers, refiners, big energy companies, wholesale distributors, retail sellers)?
• Analysis goals
– Identify portfolio strategies
• Determine investment allocation guidelines
• Identify the level of risk capital available or the investment requirements for risk capital
– Assess the risk to the overall portfolio
• Earnings at risk and equity value implications
• Credit at risk and downgrade risk implications
• Iterative process
– Evaluate current “risk capital” available
– Ranking of the investment opportunities
– Structuring of investment scenarios among business units
© 2007 Strategic Risk ManagementUNCTAD, Nairobi May 24, 2007
Second conclusion
• Use petrodollars windfalls to develop Africa to a new Agricultural age for producing Energy
• Make money and do good in creating Value through a purchase transaction in which you buy or build asset at a bargain
• Be part of a Global Entrepreneurial Revolution
© 2007 Strategic Risk ManagementUNCTAD, Nairobi May 24, 2007
Don’t stay on the side line, be part of the African development
“Be the change you wish to see in the world.”
M. Gandhi
© 2007 Strategic Risk ManagementUNCTAD, Nairobi May 24, 2007
Strategic Risk ManagementStrategic Risk Management
Jean-François Casanova52, rue de Ponthieu 75008 Paris
Tel : +33 (0)1 45.62.16.64Mobile: +33 (0)6 15 38 64 08
E-mail : [email protected]
For any Question :For any Question :
21