Overseas Private Investment Corporation Investment Funds Call for Proposals

African Social Development Fund

Call for Proposals

Questionnaire

In preparing your response to the African Social Development Fund Call for Proposals, please include as much of the information requested by this Questionnaire as possible and is relevant to your Fund’s particular strategy. This information will be helpful to OPIC in evaluating your request for funding. It is not necessary, however, to limit your responses to the questions contained herein or the matters identified .

General Information
1. Name, address, telephone number, fax number, and email address of the Fund manager and, if different, the persons/entities sponsoring the formation of the Fund. (Please specify primary contact(s) for obtaining additional information.)
2. Identify the proposed legal structure and jurisdiction of organization of the Fund. Please also include the legal structure and jurisdiction of any parent or affiliated fund that you manage, if relevant, which may invest in the Fund.
Investment Strategy
1. Overview
  1. What is the Fund’s target size, including the proposed OPIC financing? Please indicate if there is a maximum size (i.e., “hard cap”). What is the minimum size at which the Fund would be viable?
  2. Describe the proposed investment strategy for the Fund. Why is this strategy compelling for investors? How does it meet the “Purpose of the Call” as outlined in the Call for Proposals posted on OPIC’s website (www.opic.gov). Discuss the strategy, including (but not limited to), the following factors, noting where relevant any Fund allocation guidelines/targets/ranges: (i) Fund geographic focus within Africa; (ii) transaction size (e.g. average, minimum, maximum); (iii) projected Fund ownership stakes in transactions; and, (iv) the supply/demand imbalance. Please include the appropriate values (and ranges) for the Fund’s expected number of investments and investment pace. If the Fund is expected to be a special purpose vehicle within or related to another existing fund that you manage, please describe the investment strategy for that fund as well .
  3. Discuss how any of the above factors differ from your historical investment focus. Has there been an evolution in your investment strategy, and if so, describe the reason for the changes.
  4. Discuss the competitive environment in the Fund’s area(s) of investment focus, including a review of the investment firms you view as competitors. Describe your competitive advantages. With which of these investors would you co-invest, if any? Which of these investors have you co-invested with in the past?
  5. Please describe the approach to leverage at the total portfolio level by the Fund and, if relevant, any other funds managed by your organization that might invest through the proposed Fund.
2. Deal Sourcing
  1. Discuss the approach to sourcing investment opportunities for the Fund and deal pipeline.
  2. Provide a summary of your current deal pipeline, if any, for the Fund. Please include the following information for each opportunity: (i) geographic location; (ii) enterprise value; (iii) type of seller/issuer (family, entrepreneur, corporation, state-owned enterprise, financial institution); (iv) expected investment amount; (v) structure of investment (including expected ownership percentage, if any); (vi) investment thesis (e.g., expansion, cost reduction, restructuring/refinancing, roll-up, or some combination thereof); (vii) leverage as a percentage of the capital structure; and (viii) proposed exit strategy.
3. Investment Process
  1. Describe the Fund’s investment selection/due diligence process, including the social and economic impact of such selection. Provide a description of the steps involved in reviewing and executing a transaction.
  2. Describe the Fund’s procedures and practices for preventing the Fund from investing in companies being used for money laundering, corruption, and terrorism financing.
  3. Indicate the percentage of transactions that were successfully closed vs. the total number of opportunities that were reviewed in previous funds.
  4. Describe the extent to which outside consultants/specialists are to be used in the Fund’s investment selection/due diligence process.
4. Risk Mitigation
  1. Discuss the risks involved with investing in your targeted region within Africa, including political, currency, liquidity, debt/equity capital markets and other cross-border investment risks, and the proposed methods for mitigating these risks in the Fund.
  2. Discuss any legal, tax, regulatory and other issues associated with the Fund’s proposed investments in your targeted region, including examples where appropriate.
  3. How are Fund investments expected to be structured to realize tax efficiencies? Are there any existing, or foreseen, legal and/or regulatory barriers to repatriate proceeds back to the Fund manager and the LPs?
5. Value Add
  1. Identify your key principles for building the value of the Fund's portfolio.
  2. Discuss the specific role(s) the Fund will typically play in its portfolio companies post-investment. Provide examples of how funds you have previously managed have played these roles.
  3. Discuss how the value add activities of the Fund may deliver further social and economic impact, including any additional provision of technical assistance beyond traditional fund management activities (i.e. training, capacity building).
6. Exits
  1. Discuss the current environment for exiting investments and otherwise achieving investment liquidity, and any changes expected that may impact the Fund. Please provide an indication of capitalization levels necessary for a public offering within your expected target markets, if relevant to your strategy.
  2. Discuss the Fund's possible exit strategies. Which strategy(s) is expected to be the most feasible in each country’s market environment, and why?
Social and Economic Development Strategy
1. Please describe the social and economic objectives of the Fund. In particular, explain how the Fund plans to further its impact on one or more of the following social dimensions through its investment and technical assistance activities. (See FAQs for more detail)
  1. Enterprise Development (especially SME's).
  2. Specific Social Sectors described in (a) under "Purpose of Call."
  3. Underserved Markets.
2. Describe the metrics / benchmarks the Fund is contemplating to assess the social and economic impact of its activities and the mechanisms it intends to use to measure its performance against those metrics / benchmarks.
Team

Overview
1. Describe how the firm and the team were initially formed, and how they have evolved to date. Provide a current organizational chart.
2. What is the total number of employees?
3. Please provide a breakdown of your firm’s staff into the following categories:
  1. Fund/Portfolio Management
  2. Research
  3. Investor relations
  4. Operations
  5. Administration
4. Provide the names, dates of birth, nationality, year and month of joining the firm, and foreign language abilities for each of the key principals involved with the Fund. Please include a description of the experience of each key principal in financing or operating relevant investment entities in Africa specifically and in emerging markets or elsewhere more generally.
5. Identify the proportions of time each of the key principals involved with the Fund are expected to spend (% time allocation to each) on: (i) managing the firm/firm strategy/administration; (ii) deal sourcing; (iii) due diligence; (iv) investment management; (v) exiting portfolio companies, and (vi) managing other investment vehicles for your firm. Identify separately the proportions of time each of the key principals are expected to spend on the ground in Africa.
6. Identify the location and describe the role of each office in your organization (e.g., deal sourcing, investment monitoring, operations, main office, marketing) and the distribution of key personnel among those offices. Which offices are central to the implementation of the investment strategy identified for the Fund? Will you open additional offices in connection with the Fund? How important is “on-the-ground” presence to the execution of your strategy?
7. Discuss any plans to expand the investment management team. Discuss potential candidate profiles, if relevant.
8. Please describe the Fund’s investor relations process: structure within the firm; staffing; how it is implemented; how often investors are kept apprised of Fund, portfolio company and country- or region-specific developments.
Team Stability and Incentives
1. Discuss staff turnover, and provide names, current e-mail addresses, and phone numbers for the professionals who have left the firm.
2. Describe the firm’s compensation structure (e.g., salary, bonus, carried interest, other). How was the carried interest split among the management team in previous funds, and who made the decision and how? How will the carried interest be split among the management team in this Fund? What are the vesting provisions for the carried interest?
3. How much capital (in dollar terms and as a percentage of the fund) will your firm, its partners or its affiliates commit to the Fund? How is this commitment allocated among the team, and how will it be funded (e.g., cash, loans)? Will any other affiliates co-invest with the Fund and if so, how much (amount, percentage) and on what conditions (if any)?
4. Describe the ownership of the firm/fund manager.
Governance Structure
1. Outline the Fund's investment approval process, and identify the Fund's investment committee members.
2. Describe any other governing/advisory body that will impact the management or investment activity of the Fund (e.g., strategic investor, operating committee, management affiliate).
3. Outline the role and structure of the Fund’s Advisory Board, if relevant. Whom do you plan to have on the Advisory Board (i.e., occupations/industries represented, and individuals, if known)?
4. Do you plan to have other Board or key committees in the Fund's governing structure?
Potential Conflicts

Identify the extent to which any of the Fund's investment professionals will be spending time on other active investment vehicles. List any outside business activities or board seats of each investment professional.
Will any parties other than members of the Fund manager/general partner have a role in the Fund's investment decisions?
Does the Fund sponsor/manager/general partner have a parent or other affiliated institution? If so, describe any economic sharing arrangements. Identify any existing or contemplated contractual arrangements between the Fund sponsor/manager/general partner and third parties (including parents or affiliates) and describe the terms thereof.
If the Fund plans to co-invest in any transactions with another investment vehicle, please provide an explanation of the process for sharing investments. Are there any restrictions against investing in a portfolio company from a previous fund?
Please describe any other potential conflicts of which you may be aware. How do you plan to resolve potential conflicts of interest within the Fund, or with other investment vehicles managed by your organization or its affiliates?

Track Record
1. Fund and Portfolio Company Cash Flow Data: Provide detailed cash flow information for each deal previously completed by the general partner/fund sponsor. In addition, provide limited partner, management fee and carried interest cash flows. Discuss any under-performing, written down or written off investments. Please see Appendix 1 for the proper format for the above request.
2. Portfolio Company Summary Sheets: Provide a summary of each deal, both realized and unrealized, previously completed by the principals. For each of these transactions, please provide the following data in the format listed in Appendix 2.
Fundraising, OPIC Financing and Structure of the Fund
1. Fundraising
  1. Describe the Fund’s fundraising strategy, including the types of equity investors to be targeted and the means for targeting each such investor type.
  2. Describe the limited partners/investors in the current or most recent funds managed/sponsored by your firm, and the percentage breakdown of those limited partners/investors into the following categories: (i) private institutional investors; (ii) foundations/endowment/charity; (iii) high net worth individuals; (iv) socially-oriented investors; (v) development financial institutions (including multi-lateral and bi-lateral institutions) and other government or government-affiliated institutions; and (vi) other investors pools. Please identify your largest/key investors, to the degree that they allow themselves to be identified. If you already have commitments for a portion of the Fund’s capital, please provide this information.
  3. Describe any other potential sources of Fund investment capital (other than the OPIC financing) including technical assistance, grant money, etc.
  4. Describe the extent to which you may use intermediaries to assist in raising capital for the Fund. What is your history with them in previous funds?
  5. Please describe your firm’s overall plans with respect to asset growth or the opening of other new investment products/funds over the next several years.
  6. Describe the Fund’s procedures and practices for preventing the Fund from being used for money laundering or financing of terrorism.
2. OPIC Financing and Structure of the Fund
  1. Describe (by use of diagram if necessary) the proposed structure for the Fund.
  2. Describe the proposed financial structure of the fund including OPIC financing and the overall target financial performance of the Fund.
Other
1. Please provide at least twenty (20) reference contacts including, current limited partners/investors, portfolio company executives, lenders, industry participants, former employees and co-investors involved in prior deals who are familiar with your firm, your investment experience (including previous African and/or emerging markets investments), and the team members that will be responsible for managing and investing the Fund.
2. Provide a copy of the most recent interim financial statement and year-end financial statement (with management letter or commentary, if available) for the existing fund(s) sponsored/managed by your firm.
3. Provide a summary of the terms and conditions of the Fund’s partnership agreements and subscription agreements.
4. Please provide details on any substantive litigation or regulatory actions brought against the manager or its principals. In addition, please provide the same for any portfolio companies.
Please include the following attachments with your proposal:
1. Private placement memorandum (if available), and one from your most recent previous fund (if appropriate).
2. Any side letters or special agreements established with investors in the Fund.
3. Provide a three-year operating budget outlining Fund expenses.
4. Provide biographical summaries for each of the key principals/employees of the General Partner, including education and employment history.
5. Provide a hard-copy sample (and electronic copy, if available) of a complete due diligence report on a relatively recent investment, and one on an investment that has not met expectations.