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Investment Supply for SMEs. Ana Marr and Charles Chiwara June 2011. Content. Investment Size. Commercial bank debt. Private Equity. (US$). $2M. “Missing middle” – debt and equity. Family & friends. Money lenders. $25K. Micro-finance. “Missing middle”.

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Investment Supply for SMEs


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investment supply for smes
Investment Supply for SMEs

Ana Marr and Charles Chiwara

June 2011

missing middle

Investment

Size

Commercial bank debt

Private Equity

(US$)

$2M

“Missing middle” – debt and equity

Family & friends

Money lenders

$25K

Micro-finance

“Missing middle”
perpetual barriers to financing smes in africa
Perpetual Barriers to Financing SMEs in Africa
  • Perceived risks
  • Institutional barriers
  • Policy and regulations
  • Skills and training needs
innovative financing models
Innovative Financing Models
  • Acumen Fund
  • Grofin
  • E+Co
  • Root Capital
private equity
Private Equity
  • Definition
  • Seed Capital
    • Valley Of Death
    • FFFs
  • Venture Capital/Early Stage
  • Buyouts/Later Stage
new venture financing cycle

Investment Banks, Merchant Banks or other Financial Institutions

REVENUE

Secondary Offerings

VCs, Acquisitions/Mergers & Strategic Alliances

Angels FFF

INVESTMENT

Later Stage

Public Market or Private Equity

Early Stage

Seed Capital

IPO/

M&A

Mezzanine

C

Break Even

Public / Private Company

B

Emerging Growth

Company

A

Valley of death

New venture financing cycle
private equity life cycle

Commitments By limited partners (multiple closings)

Commitments By limited partners (multiple closings)

Commitments By limited partners (multiple closings)

Liquidation

FUNDRAISING

INVESTMENT PERIOD

REALIZATION PERIOD

POTENTIAL EXTENSION

1 year

4-5 years

4-6 years

2 years

Private Equity Life Cycle
credit guarantee schemes
Credit Guarantee Schemes
  • Definition
  • Proponents
  • Critics
  • Operation of CGS
islamic banking
Islamic Banking
  • Rationale
        • Emerging
        • Significant population in Africa
  • Principles
        • Prohibition of usury
        • Profit sharing
        • Certainty of contracts
        • Ethical
  • Examples
        • Mudarabah - VC
        • Marabaha - Asset Finance / HP
        • Musharaka - FRL, mortgage finance
current funding sources
Current Funding Sources
  • Guarantees – AGF , MIGA
  • Private Equity :
      • SMEs
      • Buyouts
  • DFI’s :-
      • African, Regional, International
      • Tools
        • Debt
        • Equity
        • Guarantees
        • Grants