Conduits of Capital

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About FSD Africa: FSD Africa (www.fsdafrica.org) is a non-profit company, funded by the UK’s Department for International Development, which promotes financial sector development across Sub-Saharan Africa. It sees itself as a catalyst for change, working with partners to build financial markets that are robust, efficient and, above all, inclusive. It uses funding, research and technical expertise to identify market failures and strengthen the capacity of its partners to improve access to financial services and drive economic growth. FSD Africa believes that strong and responsive financial markets will be central to Africa’s emerging growth story and the prosperity of its people. About EMPEA: EMPEA (www.empea.org) is the global industry association for private capital in emerging markets. We are an independent non-profit organization. EMPEA has over 300 member firms, comprising institutional investors, fund managers and industry advisors, who together manage more than US$1 trillion of assets and have offices in more than 100 countries across the globe. Our members share EMPEA’s belief that private capital is a highly suited investment strategy in emerging markets, delivering attractive long-term investment returns and promoting the sustainable growth of companies and economies. We support our members through global authoritative intelligence, conferences, networking, education and advocacy. EMPEA Consulting Services provides high-quality, bespoke research on private capital in emerging markets. Through custom research, white papers, syndicated reports and case studies, EMPEA Consulting Services helps firms acquire actionable insights, communicate their stories and share their successes to grow their businesses. EMPEA Members receive priority service and discounted pricing. For more information, or to begin a project today, please contact consulting@empea.net. Acknowledgments: We are grateful for the generous support we received from EMPEA Members and industry participants in producing this publication. In particular, we would like to thank the numerous limited partners, fund managers and service providers active in Sub-Saharan African private equity who donated their time to participate in the survey. We would also like to thank Michael Fuchs, Bim Hundal (Lion’s Head Global Partners), Keith Jefferis (Econsult Botswana (Pty) Ltd), Mark Kenderdine-Davies (CDC Group plc), Josh Lerner (Harvard Business School / Bella Research Group), Michael Mainelli (Z/Yen Partners), Greg Clark (The Business of Cities) and Gail Warrander (DFID) for their expert insights, among several others who contributed at a Round Table discussion in London on 25 February 2015. This publication also benefited greatly from the wisdom shared by a number of industry experts, including David Ashiagbor (Making Finance Work for Africa, African Development Bank Group), Hany Assaad (Avanz Capital), Craig Beney (Convergence Partners), Carolyn Campbell (Emerging Capital Partners), Peter A. Furci (Debevoise & Plimpton LLP), Rafik Mzah (AfricInvest), Paul Owers (Actis), Rajan Rosick (Trident Trust Company (Mauritius) Limited) and Mara Topping (White & Case LLP). All rights reserved. Conduits of Capital – Onshore Financial Centres and Their Relevance to African Private Equity is a joint publication of FSD Africa and EMPEA. Neither this publication nor any part of it may be reproduced, stored in a retrieval system, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording or otherwise—without the prior permission of FSD Africa and EMPEA. DISCLAIMER: THIS INFORMATION IS INTENDED TO PROVIDE AN INDICATION OF INDUSTRY ACTIVITY BASED ON THE BEST INFORMATION AVAILABLE FROM PUBLIC AND PROPRIETARY SOURCES. EMPEA HAS TAKEN MEASURES TO VALIDATE THE INFORMATION PRESENTED HEREIN BUT CANNOT GUARANTEE THE ULTIMATE ACCURACY OR COMPLETENESS OF THE DATA AND INFORMATION PROVIDED. EMPEA IS NOT RESPONSIBLE FOR ANY DECISION MADE OR ACTION TAKEN BASED ON INFORMATION DRAWN FROM THIS REPORT. 2 |
TABLE OF CONTENTS I. FOREWORD ....................................................................... 4 II. INDUSTRY VIEWS: EMPEA 2015 AFRICAN FUND DOMICILE SURVEY ........................ 11 III. EXPERT PERSPECTIVES: ONSHORE FINANCIAL CENTRES – DEFINITIONS, CHALLENGES AND OPPORTUNITIES FOR DEVELOPMENT .................... 39 a. Synthesis Report prepared by Z/Yen Partners Limited ................................... 40 b. Bella Research Group: White Paper on Private Equity and Financial Hubs ................... 50 c. Econsult Botswana Ltd: The Potential of Onshore Financial Centres for Africa-focussed Investment Funds and Vehicles ....................................... 68 d. Michael J. Fuchs: Onshore Options for Africa-focussed Investment Funds and Vehicles ........ 85 e. Lion’s Head Global Partners: African Onshore Financial Centres .......................... 102 f. Z/Yen Partners Limited: Onshore Options for Africa-focussed Investment Funds and Vehicles ... 115 Conduits of Capital – Onshore Financial Centres and Their Relevance to African Private Equity | 3
Page 1: Conduits of Capital Onshore Financi
Page 5 and 6: predictable, legal systems that res
Page 7 and 8: works and that everyone loves.” D
Page 9 and 10: Because of the fragmented nature of
Page 11 and 12: Industry Views: EMPEA 2015 African
Page 13 and 14: EXECUTIVE SUMMARY In April 2015, FS
Page 15 and 16: INTRODUCTION Across the emerging ma
Page 17 and 18: As a general rule, GPs tend to foll
Page 19 and 20: “Offshore” refers to a jurisdic
Page 21 and 22: expressed by GPs). Over 61% of GP r
Page 23 and 24: “The industry has found a very sa
Page 25 and 26: INDUSTRY ATTITUDES TOWARD ONSHORE A
Page 27 and 28: A RANKING OF ONSHORE FUND DOMICILES
Page 29 and 30: Conduits of Capital - Onshore Finan
Page 31 and 32: WHAT COULD MAKE ONSHORE SUB-SAHARAN
Page 33 and 34: “Other” actions include: “rem
Page 35 and 36: “ STAKEHOLDER VIEWS ON THE RELATI
Page 37 and 38: APPENDIX 1 - DETAILS ON SURVEY PART
Page 39 and 40: Expert Perspectives: Onshore Financ
Page 41 and 42: Experts were asked to make recommen
Page 43 and 44: Table 2 - Prerequisites for a succe
Page 45 and 46: 3. FINDINGS 3.1 Evolution and Compa
Page 47 and 48: particular jurisdiction (communicat
Page 49 and 50: that it is obvious: a well-function
Page 51 and 52: • The development of an onshore f
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amined the impact that venture capi
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4.1. Where do Private Equity Fund M
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in absolute terms, or relative to t
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average. With respect to regulatory
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For future research, it is importan
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ENDNOTES 1 World Bank Enterprise Su
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33 African Development Bank. Maurit
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71 Unfortunately, the DTAAs lists b
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The financial activities carried in
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The OECD has reviewed over 100 juri
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Importance of Domestic Flows The re
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Rwanda is not included in any of th
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Other possible contenders may emerg
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APPENDIX 1: LISTING OF COUNTRIES IN
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Country / Territory Palau Listed by
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Country Mauritius Morocco 16 Nigeri
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Onshore Options for Africa-focussed
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Developing skills in these areas re
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2.2 Policy Issues Related to Onshor
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• Good accessibility. Good commun
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4. ROLE OF DONORS AND TECHNICAL ASS
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Thus, while some PE general partner
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management extends to monitoring co
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ANNEX 1: CATALOGUE OF FINANCIAL CEN
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Dublin Mauritius Dubai Botswana Cap
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To some extent, policymakers also n
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In administrative financial centres
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services industry. However, recent
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gains, even if it involves offshore
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ather than an onshore centre that i
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generally look to London or in some
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Onshore Options for Africa-focussed
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whether it is ‘Local,’ ‘Trans
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are suited to particular financial
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In GFCI 16, only three African cent
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The ‘stable’ centres in the bot
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GFCI 16 Investment Management Centr
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Professional service providers tend
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Busan and Doha have been advancing
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Zambia and Zimbabwe, the report not
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Get Connected - Ease Scaling Up In
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Financial centres are added to the
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The SVM then uses the data to predi
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Instrumental Factor Country or City
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Instrumental Factor CA* BU DO DU IS
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Open Government The World Justice P
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Securitisation TheCityUK http://www
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Human Capital Instrumental Factor S
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Global City Competitiveness EIU htt
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6.4 Appendix D - Group Respondent P
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Dubai Istanbul Conduits of Capital
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6.5 Appendix E - Country Summary Ov
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Uganda 26.086 33,800,000 772 Kampal
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