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Nimai Africa Financial Services Fund NIMAI AFRICA FINANCIAL SERVICES FUND NEWSLETTER – MAY’20 KEY HIGHLIGHTS NIMAI NEWSLETTER COVID has emerged as one of the biggest Nimai Capital believes the short-term impact of challenges globally & investment manager COVID & downgrade of Kenya by Moody’s will be expects situation to stabilize & improve in severe on Financial Services Companies in East FYH20 Africa, higher NPLs & lower liquidity but higher demand for credit Nimai Africa Fund is progressing well with its Nimai Capital sees an opportunity to invest in Fund raise & has raised $25 Mn in hard & soft healthy Banks, NBFIs & Fintechs as they come out commitments from investors globally to raise capital to shore up their Balance Sheets & capture market vacated by weaker players Nimai Africa Fund is targeting First Close at Manish Parmar, Director Business Development, $35-40 Mn from Investors in Africa, Middle Victoria Commercial Bank & Sam Wanjohi, CEO & East & India between September – Founder, Popote Pay have also shared their views December’20 on the current situation of FS space in East Africa East Africa has been active from Fund raising for Nimai Capital sees faster adoption of digital Funds & New deal activities between Sept’19 & modes for Financial services globally & expects May’20. 5 Funds raised capital from international significant opportunities & demand for Fintech LPs & 9 Companies raised capital from several Companies local & global Funds. Fintechs raised $125 Mn across 6 deals Nimai’s Investment Team represented the Listed Kenyan Banks, Insurance & Financial Fund on speaking sessions held in Kenya, Saudi Services Companies performed better than global Arabia & Sri Lanka on Fund raising in times on peers, average 20% correction see in Banking Covid & Private Equity simplified stocks compared to 30-35% corrections across other emerging markets We are pleased to share with you that we have initiated a knowledge series where we will invite industry participants to share their views on various aspect of Private Equity & Venture Capital Industry. Our first event for “Nimai Knowledge Conclave” is being scheduled for 13th June’20 at 2.30 pm GST & our topic for discussion will be “How will Private Equity evolve in a post COVID scenario & Potential Investment themes for Investors” Dear Investors & Friends, As we all know, over the past 90 days, there has been a significant global disruption due to the outbreak of Coronavirus across countries. The COVID 2019 pandemic has emerged as one of the biggest global challenges in recent times. Government Agencies, Markets, Corporations, Individuals are globally working on a war footing to contain the spread of this virus through various measures of containment such as completely restricting inbound & outbound travel, closing offices and schools & encouraging work from home & social distancing, cancelling visas for all non-citizens & non-residents as well as setting up hospitals, quarantine facilities, airport check-ups, testing centers & ensuring sufficient supply of medicines, kits and facilities for everyone. Even though some of the governments globally have taken necessary steps to gradually open the economies since beginning of May, we believe the path to recovery & completely normalcy will be slow & can take upto Q4 CY 20. These are un-precedent times for all of us. We wish you & your family & your employees to be safe & healthy during these testing times & hope we all are contributing towards the containment of this virus. We stand by all our investors & friends & are available to them in every way to overcome this challenge. As we had informed earlier, Nimai Fund had made some good progress on the fund raising side in the last 6 months & had garnered hard & soft commitments of roughly around $25 Mn from potential investors including Victoria Commercial Bank, its relationships & Nimai Capital relationships from Africa, UAE & India & that the fund was targeting a first close by May/June of this year at $35-40 Mn. However, given the recent globally pandemic situation & travel restrictions, the conversations with investors have slowed down and now we expect to have the first close of the Fund between Sept – Dec quarter. In the meanwhile, we have increased our outreach to more investors to reach our target first close. We have started actively reaching out to Banks in 35+ countries, who have an Overseas presence but not in Africa yet or do not have a presence in East Africa, to become a strategic investor in the Fund & become an exclusive Bi-Lateral partner for our Portfolio Banks & Financial Institutions from their respective country. We have also similarly started reaching out to Wealth Management platforms in India to be a strategic investor in the Fund & become an exclusive partner of our Portfolio Banks & Financial Institutions to offer plug & play wealth management services in Africa given that there is a huge presence of Indian Diaspora in Africa (generally with higher per capita income). We believe the above two route will not only bring capital to the Fund but will also add significant value to our Portfolio Banks & Financial Institutions by bringing in new clients & also generating substantial revenue/fee income by offering multiple products & services in partnerships with other Financial Institutions thus making our “Value Oriented” approach towards investing even more stronger. We continue to believe that the pandemic situation globally should stabilize by June/July & that the businesses should be able to look for a better period post September quarter. We are mindful of the fact that the new business norms globally won’t be same for sure & physical meetings will be less & less required. It will be interesting to see how the PE industry evolves in the midst of this which has historically relied on meeting in person both on the fund-raising side as well as deal making side. OPPORTUNITY TY We at Nimai Capital believe that COVID will be a watershed moment for the tech & non-tech Financial Services business. As people resort to online to conduct their day to day business, the demand for completing their financial services transactions will also move online. We are seeing an increasing trend towards online for spending, saving, insuring, transacting, investing, incurring expenses, making payments & borrowing online with limited human interaction expected during the process. People prefer paper less, presence less & cash less mode for accessing their financial services requirements. This will pave the way for Digital Financial Services Companies in a big way in the coming decades. Banks & Financial Institutions will also have to adopt a proper digital strategy to compete with new age business. They will have to increase budgets & set-up a dedicated business unit focussing on transition to digital way of acquiring & serving consumers. Insurance space especially will witness the biggest & the fastest growth globally over the next decade as people increasingly realise the need to have a proper cover for themselves & for their families. Traditional Banks & NBFCs will also have to roll up their sleeves to sail through the COVID situation. Balance sheets will be affected in the short to medium term & liquidity will be tight, however, well capitalised institutions will sail through the crisis well & the industry will witness widespread consolidation or collapse of smaller in-efficient players. Lastly, Empirical studies prove that every crisis presents an excellent opportunity for private equity fund managers to buy assets at even attractive valuations. As per studies conducted by private equity consulting groups such as Cambridge Associates & Preqin, first time private equity funds established during the global financial crisis have generally outperformed the established private equity funds by 400-500 bps. Moreover, first time private equity funds in general have outperformed traditional established private equity Funds by 300-400 bps. TeamTEAM Update: UPDATE The Investment Manager has identified six investment professionals to be on boarded on the Fund platform with prior experience in private equity investments in East Africa. The investment team has prior experience of working with top DFIs, Big 4 Audit firms, established private equity firms & investment banks in East Africa. Together with both the Managing Partners, the Investment Team now has 63 years of cumulative experience between them of investments, operations, asset management & fund raising. THOUGHT LEADERSHIP The Investment Manager & the Sponsor have participated in various thought leadership events globally as speakers, panelists & moderators. Forum Agenda Participants from NIMAI Key Industry Participants ICAI East African Effects on Covid 19 on CA Adinarayana Balcha, Chairman, Pankaj Mundra Chapters Business Elements Kampala Chapter CA Atul Gupta, President, ICAI, India CA Aman Vohra, Chief Controller, Bakhresa Group, Tanzania CA R. Sathyamoorthy, Chairman, Nairobi, Chapter CA Rajesh Chaplot, Pravasi Bhartiya Awardee, Uganda CA Manoj Mehta, Head of IT at Ramco, Kenya CA Sumit Shekhar, EXIM Bank, Tanzania Pankaj Mundra IMAI & ICAI Saudi Fund Raising & Private CA Vijay Soni, President IMA, Saudi Sagar Agarvwal Arabia Chapters Equity Simplified Arabia James Mudie Finance in Times of Crisis Acclivity, Sri Pankaj Mundra & Private Equity Saminda Weerasinghe, CFA, Director Lanka Nisarg Dugad Simplified PIPELINE The Investment Manager has started actively building its pipeline for the Fund. Please see below some key transactions that the Investment Manager
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