PRI Private Equity event

PRI Private Equity event in Cape Town: The growing importance of ESG in African private equity

This event, held post-PRI in Person 2013, was organised in partnership with the African Venture Capital Association (AVCA), the South African Venture Capital and Private Equity Association (SAVCA) and hosted by Old Mutual Investment Group.

This event brought together Limited Partners, General Partners and other stakeholders to tackle the environmental, social and governance (ESG) topics that are relevant to Africa. Please see below for event takeaways, details and agenda.

Event takeaways

Two panels at the PRI private equity (PE) event on 3 October 2013 brought over 50 investors together to discuss the growing importance of integrating ESG issues into African PE investments. The first panel examined the current state of the African investment environment and the practicalities of integrating ESG into investment decision-making. The second panel continued the discussion on practicalities by presenting two investor case studies: Actis spoke about their Garden City and One Airport Square real estate investments, and FMO spoke about their Cookhouse wind farm investment in South Africa. These case studies set the scene for an in-depth dialogue about how ESG can be used to drive business value.

The starting point of these discussions was to first define exactly what is meant by ESG. One panellist described ESG as  “having different flavours and focus depending on the investment”, while another panellist highlighted that “in South Africa, discussions about ESG are centred on topics such as social impact and Black Economic Empowerment”. ESG is also a tool to help investors understand the spectrum of levers that can drive return, and the CDC, FMO and IFC provide toolkits on how to understand and assess ESG issues. With this understanding of ESG, it’s obvious that when dealing with challenges of conflicting environmental, social and financial factors, considering a spectrum of return drivers can help investors find innovative solutions overcome trade-offs.

The panellists were in agreement that Africa PE investors are ahead of the ESG implementation curve compared to other emerging market investors. Many African GPs have established ESG policies and systems for implementing these policies. DFIs and local pension funds such as ESKOM and GEPF have played a key role in embedding ESG in African investments. The challenge remains to progress investors beyond using ESG as a box-ticking exercise towards having a constructive dialogue between LPs, GPs, companies and advisors. International collaborative initiatives such as the ESG disclosure framework for PE and the PRI’s new Reporting Framework can help investors frame this constructive dialogue.

How does an investor approach investing in Africa?

Governance, corruption and challenges in understanding the intricacies of Africa’s 54 countries are all cited as entry barriers to investing in Africa. Panellists emphasised the importance of understanding the underlying investment – the company’s business model, company management, and sector and regional characteristics. One of the speakers indicated “while an investor can put all the checks and balances in place to prevent corruption, if a company or individual wants to commit fraud, they will find a way to do so”. Hence, investors should avoid investments that they don’t understand and should conduct independent checks on management and work with local partners that have visibility and access to the underlying investment on the ground. 

As one event participant pointed out, the practicalities of fully understanding an investment can be daunting. In response, the speakers offered the following advice: understand your investment objectives; understand the four African regions (north, east, south and west African regions rather than 54 countries); learn from, work with or co-invest with local partners; and use local consultants.

PRI would like to thank our event partners: the African Venture Capital Association (AVCA), the South African Venture Capital and Private Equity Association (SAVCA), our event host, Old Mutual Investment Group and all the event speakers.

Speakers:

  • Berit Lauridsen, Global Product Specialist – Sustainable Investing, International Finance Corporation
  • Dara Owoyemi, Chief Operating Officer, AVCA
  • Erika van der Merwe, CEO, SAVCA
  • Farhad Khan, Investment Associate, Old Mutual Investment Group
  • Patricia M. Dinneen, Managing Director, Siguler Guff & Company
  • Ritu Kumar, Director, Actis 
  • Sibusiso Luthuli, Chief Executive and Principal, Eskom Pension and Provident Fund
  • Walter van Helvoirt, Environmental & Social Specialist Private Equity, Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden N.V. (FMO)
  • Dr. James Gifford, Executive Director, PRI
  • Xolisa Dhlamini, Southern Africa Network Manager, PRI
 
 

Date: Thursday, 3 October 2013
Time: 8.30am – 1pm
Hosted by: Old Mutual Investment Group, Old Mutual House, 33 Klaassens Road, Constantia, Cape Town 7806

Agenda 

8.30 – 9.00 Registration 

9.00 – 9.15 Welcoming remarks 

Paul Boynton, Head of Alternative Investments, Old Mutual Investment Group

9.15 – 10.15 Panel I: ESG in Africa
 

Come and hear some of the world’s leading private equity (PE) investors explain how ESG practices differ between developed and developing markets, how they are responding to Africa’s ESG-related regulatory changes and how to better measure & track the performance attribution of ESG factors.

Moderated by Dara Owoyemi, Chief Operating Officer, AVCA
Patricia M. Dinneen, Managing Director, Siguler Guff & Company
Sibusiso Luthuli, Chief Executive and Principal, Eskom Pension and Provident Fund
Farhad Khan, Investment Associate, Old Mutual Investment Group

10.15 – 10.45 Coffee break 

10.45 – 11.45 Panel II: Creating value through ESG, what are PE investors doing?

Leading PE investors will provide examples of value creation beyond risk and compliance. They will discuss the different social / environmental trends driving investment opportunities and what key ESG risks they need to consider.

Moderated by Erika van der Merwe, CEO, SAVCA
Berit Lauridsen, Global Product Specialist – Sustainable Investing, International Finance Corporation 
Ritu Kumar, Director, Actis 
Walter van Helvoirt, Environmental & Social Specialist Private Equity, Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden N.V. (FMO)

11.45 – 12.00 Closing remarks

Dr. James Gifford, Executive Director, PRI

12.00 – 13.00 Finger buffet lunch

This event has been designed for a senior decision-making audience. Delegates are invited from leading private equity firms, their investors and advisors, as well as portfolio company c-suite executives responsible for ESG delivery. 

Registrations are closed as the event has now reached full capacity. If you have any queries please email hubevents@unpri.org