NIMAI AFRICA FINANCIAL SERVICES FUND

NEWSLETTER –

SEPTEMBER’20

KEY HIGHLIGHTS NIMAI NEWSLETTER

The global Pandemic situation is gradually abating & the sentiments have picked up positively over the last couple of weeks amongst governments, professionals,

individuals, family offices & businesses

Nimai Capital has built a healthy proprietary

pipeline of 15 transactions of fast growing & high-quality tech & non-tech FS Companies across Africa. One of the deals is being evaluated for

Warehousing purposes by the Fund

Nimai Capital’s increasing focus on technology investments in financial services space is being

well received by institutional & individual investors

Nimai Capital sees a strong opportunity to invest in Fintechs & Digital Banks in Africa as COVID has

accelerated the pace of digitalization across Financial Services space in Africa. Fintech space in

Africa has seen a lot of activity over the last 12 months, >$1.4 Bn of acquisitions were completed

by larger global players looking to enter Africa

Nimai Africa Fund continues to target the First Close at $25-30 Mn from Investors in Africa, Middle East & India between March – June

2021

Arun Mathur, ex CEO of I&M Bank, have shared his views on the current situation of FS space in

East Africa & pace of digitalization being observed on the ground

Nimai Capital is working towards Warehousing an investment as the first transaction for the

Nimai Africa Fund. Company is one of the leading the Payments & Remittances API

Infrastructure company in Africa

Africa has been very active from Fund raising for Funds & New deal activities between May’20 &

Sept’20. 5 Funds raised capital from international LPs & 8 Companies raised capital from several

local & global Funds

Nimai Capital has added a highly reputable & respectable financial services professional from Kenya, Arun Mathur, the ex-CEO of I&M Bank

Kenya as the Operating Partner on Nimai Capital Operating Partner Board

In one of the major developments in the African

PE space, Canada based FairFax Holdings acquired a majority stake in Helios Private Equity Managers, one of the most successful PE managers in Africa. Deal highlights the growing importance of African

PE amongst global investors

Dear Investors & Friends,

The global Pandemic situation is gradually abating & the sentiments have picked up positively over the last couple of

weeks amongst governments, professionals, individuals, family offices & businesses. The high frequency indicators (HFIs)

such as electricity consumption, employment levels, traffic movements, manufacturing index (PMI), freight index, retail

sales, two wheeler/three wheelers sales, ecommerce purchases are all pointing towards early signs of green shoots in the

global economies. Services sector which comprises of mainly business-to-business activities & business-to-consumer

activities, has also seen some stabilization but mostly on the financial services side than on trade, tourism, hotels and

restaurants space. We believe Africa will probably witness a U-shaped recovery as the African economies are still very

much dependent on external factors such as exports, oil prices, availability for foreign capital etc.

The more we talk to founders & entrepreneurs globally, the more we are convinced that global macro-economic situation

has improved over time. Even though there are second wave of infections in some places around the world which has

resulted in milder lockdowns, the strain of virus seems much weaker & the intensity of the lockdowns is not as severe.

We believe that the world is moving towards a new normal where masks, gloves, social distancing, need based travel will

become a fact of life & this only will subside over the next couple of years.

We at Nimai Capital have been focused on effectively utilizing our time in building our platform. We have spent

considerable amount of time reaching out to new investors in the Fund, onboarding more Operating Partners to the

platform, identifying the Third Partner of the fund who will be based in Nairobi, building a solid pipeline of transactions &

working towards warehousing of the first deal of the Fund.

First an update on the fund raising, Nimai Fund has been actively reaching out to new investors for the fund & have had

various levels of discussions with individual & institutional investors globally including DFIs, Fund of Funds, Family offices

& Banks. Institutional Investors have given a strong positive feedback to the strategy of the fund & wants to engage further

to allocate money to the fund post the first close of the fund. Individual Investors including HNIs & Ultra HNIs have also

shown positive interest in committing to the platform given the increased focus of Nimai Fund on Fintech Investments in

Africa.

Operating Partners: Nimai Capital is very pleased & grateful to share that Arun Mathur, ex CEO of I&M Bank, Kenya has

agreed to join the Operating Partner Board of Nimai Capital. Arun Mathur is one of the most respectable names in the

Banking & Financial Services space in Africa having built I&M Bank from $100 Mn Balance Sheet to more than $2.0 Bn &

with presence in more than 7 countries of Africa during his tenure at I&M Bank. Arun has more than 45 years of rich

experience in the Banking & Financial Services space in Africa (30 years) & India (15 years).

We believe having Arun on Board will provide our portfolio Companies with an incredible opportunity to learn from his

vast experience of building a successful & pristine financial institution in Africa while maintaining an extremely high

standards of Corporate Governance.

Arun’s experience will further complement our richly experienced Operating Partners Board. Adding Arun will also bolster

Nimai Capital’s ability to source high quality transactions in our target markets, gain on the ground relationships &

intelligence, bring substantial value add to our portfolio companies & create impact at scale on the ground in Africa. Now

we have richly experienced professionals from diverse segments like Cards, Payments, Remittances, Insurance on our

platform as Operating Partners.

Additional Partner: We are also in advanced discussions with a couple of senior professionals from Africa to join the Fund

platform as a Partner. We are discussing with professionals with history of relationship with Nimai, deep investment

expertise in Africa, Financial Services experience in Africa & at least 15 years of experience of working with Big 4, DFIs and

or Private Equity firms. We are confident that we will be soon finalizing the third partner in the fund.

Pipeline of transaction: We have shared a detailed summary of pipeline of transactions in the subsequent sections.

Deal under Consideration: From the pipeline of transactions that we have built, we are in advanced stages of evaluating a transaction in Payments & Remittance space in Africa. Companies solves one of the major problems between Mobile Wallets in Africa, interoperability of mobile money wallets. Company, founded in 2010, by an Ex Telecom professional is one of the fastest growing company in API infrastructure space, grown >100% over the last 3 years in transaction value & net revenues. The Company is backed by Marquee institutional fintech investors, esteemed HNIs & Family offices & is currently raising $40 Mn Series C round. Nimai Capital is working towards warehousing the transaction with some of the existing investors of the Fund along with some new investors as co-investors.

With the onset of COVID, the Business World & the Markets have been cast into a scenario never experienced before leading to a change in mindset, behaviour and decision making of consumer & businesses. Countries & Companies were slowly & gradually waking up to the need of moving businesses remote & offering products & services online leading to new technological era “Tech Revolution 3.0”. Digital platforms which were becoming gradually popular and in-demand experienced exponential growth from consumers & businesses working from home & thus compressing 5 years of forecasted growth into 6 months. COVID turned out to be a watershed moment & turning point for online businesses. Traditional businesses also had to shed their inertia towards technology & digitalise their products and services at a breakneck speed. Due to the restrictions in movement and access to facilities the demand for e-services & products grew exponentially. Consumers and businesses turned to various online platforms & remote solutions to conduct their day to day business. Some of the key segments where online demand has increased significantly are borrowing, investing, utility payments, remittances, groceries, health & life insurance, education, gaming, entertainment, healthcare, enterprise SAAS etc. Not only did consumers & businesses preferred to use mobile & cashless modes of payments, it also caused consumers/companies to realise the potential of online products and services. Private Equity Groups also opted to invest in pandemic resilient businesses such as Fintech’s, Ecommerce, Gaming, Edtech, Entertainment etc to diversify their investment portfolios & mitigate downside risk arising from such natural disasters.

CURRENT OPPORTUNITIES

The Investment Manager is excited to share and welcome Mr. Arun Mathur, ex I&M Bank on our Board as our Operating

Partner for Nimai Capital. He one of the most respectable names in the Banking & Financial Services space in Africa having

built I&M Bank from $100 Mn Balance Sheet to more than $2.0 Bn & presence in more than 7 countries of Africa during

his tenure at I&M Bank. Arun has more than 45 years of rich experience in the Banking & Financial Services space in Africa

(30 years) & India (15 years).

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

The Forum of Indian Professionals

Exploring the Unexplored Territories

Pankaj Mundra

CA Vijay Gupta, CA Viraj Shah, CA Hari Arora, CA Hansraj Chugh

Nimai Knowledge Conclave

Discover the Leader Inside You

Pankaj Mundra Nisarg Dugad

Sagar Agarvwal Dr. Anil Khandelwal

The Investment Manager has started actively building its pipeline for the Fund. We are working on creating a healthy

portfolio mix of tech & non-tech financial institutions. We are targeting Companies with already existing institutional

backing at early stages, solid management teams, large addressable markets, fast growing companies & potential for Pan

Africa expansion. We are looking at transactions where the Nimai Fund can participate with $5-10 Mn per transaction in

the current round, acquire significant minority stakes & scope for significant value add. Please see below some key

transactions that the Investment Manager is currently evaluating:

Company Description Deal Size Country Source

Company A One of the Leading Digital Payments & Remittances Hubs

in the Africa continent $5-10Mn

South Africa

Proprietary

Company B One of the leading Hire purchase & leasing NBFC in Africa focused on commercial vehicle & equipment

financing $5-10 Mn Kenya Proprietary

Company C One of leading fintech company with a SAAS platform for

managing expenses, payments, AR/AP & accounting management for MSMEs

$2-3 Mn Kenya Proprietary

Company D One of the leading API infrastructure Company allowing

start-ups & businesses to tap into its API network & create customized payment solutions

$5-7 Mn Nigeria Proprietary

Company E

One of the leading B2B platform connecting Merchants with Suppliers directly & facilitating bulk

orders, payments, accounting & logistics $5-7 Mn Kenya Proprietary

Company F One of the leading Neo Banks offering mobile payment

& wallets to unbanked & underbanked. Providing $5-7 Mn Ghana Big 4

TEAM UPDATE

THOUGHT LEADERSHIP

PIPELINE

financial services for >5 yrs by connecting banks & wallets through bilateral arrangements globally

Company G Development and expansion of one of the newest

Securities Exchange, Headquarter at Mauritius. Licensed by FSC and having state of the art technology

$5-7 Mn Mauritius Proprietary

Company H Leading off-grid solar solutions Company that designs, distributes and finances solar home energy kits with

consumer durable products $5-15 Mn India Proprietary

Company I

A company using mobile technology to provide insurance and health services to emerging markets. The company is ranked #10 in the Post, Insuretech Top 100

firms

$5-15 Mn UK Proprietary

Company J A fintech startup bridging the gap between institutional

debt investors and high growth alternative lenders in Africa

$5-15 Mn Kenya Proprietary

Company K

A company that helps small shops and businesses access essential goods & services through the digital economy.

This is done by using unique proprietary mobile data-collection tools, enables informal retailers to order

products at any time via SMS or mobile app and receive free same-day delivery to their store

$5-15 Mn Kenya Proprietary

COMMENTARY ON AFRICA FINANCIAL SERVICES SPACE

Several African countries have introduced various fiscal & monetary measures such as wage subsidies, tax suspensions,

loan schemes, social contributions, support for SME’s, loan payment deferrals, etc. to help minimize the impact of the

pandemic on consumers & businesses in Africa. Majority of the impact is expected to be in the agriculture & informal

segments of the economy which typically comprises of more than 50 Mn businesses & employs more than 80% of the

workforce in Africa.

Small and Micro business have experienced a larger decline in business in comparison to medium and large businesses. It

has been noticed that many such small businesses are unable to sustain without the support of additional resources from

Governments & Banks.

For instance, the government of Uganda has already sought and received a $500 Mn loan from the International Monetary

Fund to provide stimulus measures in the economy. The government is also seeking debt repayment rescheduling, which

would free up to $2 billion for such purposes. Similar efforts are being made by majority of the African governments &

Central Banks.

As a result, the yield curve across Africa for the government debt has ventured in precipitous terrains. The cost of

borrowing has risen significantly against the backdrop of an increase in financial needs of Governments, Banks & Financial

Institutions. Central Banks have been attempting to strategize their actions with the government fiscal support while

preserving their credit ratings & their inflation targets.

Given the frailty of the African economies to external debt requirements and their dependency on international trade and

supply chains, we expect the economies to only gradually recover over time with the support from Multilateral Banks &

International Development Financial Institutions.

BANKS & FINANCIAL INSTITUTIONS

Across the continent, the number of Banks & Financial Institutions are reducing, driven by tightening regulations,

increasing capitalizations requirements, mergers and acquisitions, liquidations and collapses. In Nigeria, only 27 FIs remain

out of 89 that existed back in 2004. Kenya has seen 10 completed M&A transactions in the Banking space and two collapses

since 2016.

In COVID times, Banks & Financial Institutions have taken a back seat in terms of lending to businesses & consumers & are

following an extremely cautious approach towards lending to existing & new customers. On the other hand, Banks &

Financial Institutions in Africa have seen strong increases in Deposits due to reduced consumer spending leading to a

negative charge on net interest margins of the Banks.

Majority of the institutions have parked capital in government Bonds & securities thus reducing the overall Return on

Assets on the Banks portfolio. Since Central Banks in Africa have forced moratoriums on the Banks, the gross NPA situation

currently seems under control, however, the actual underperformance & write off on the Books will only be visible by the

end of the moratorium period. We expect Banks & Financial Institutions to tread cautiously till the first quarter of 2021.

The need for social distancing and cash less transactions has even forced traditional Banks and other Financial Institutions to digitalise products & services in an effort to retain customers, improve consumer experiences, remain relevant and adapt to the onset of the changes in circumstances. Businesses that were investing in strategic, operational and financial digitalisation are better positioned to respond, recover or sustain in the current scenario.

Insurance Sector in sub-Saharan Africa has also been impacted due to COVID, however, given that the Insurance

penetration in Africa is considerably low, the impact at scale in comparison to the economy is relatively lesser.

Insurance companies are registering decline in both top line and bottom line largely due to traditional modes of

distribution, higher health & business claims & low investment incomes. The rising number of health insurance claims is

also leading to increase in premiums and forcing insurance companies to tighten their belt to sail through the storm.

On the investment side, Insurance companies in Africa have opted for a more conservative capital protection investment

opportunities as compared to global insurance companies that actively invest in various asset classes & diversify their

balance sheet globally.

Digitalization, sachetisation, pay as you go models & disintermediation of the broking industry are creating opportunities

for newer players to take market share from existing traditional players. Insuretech companies are using Mobile, AI, ML &

IOT to source customers directly, underwrite & price policies better, create consumer focused & need based sachet

products & automate claim settlement processes.

Given that there is a large untapped potential in the insurance tech space in Africa & big insurance players in the EU market

have set their eyes on either expanding, partnering, acquiring or merging with these smaller/local insurance or reinsurance

companies in Africa thus creating opportunities for Private equity funds to exit their existing insurance investments.

Africa has become one of the most important fintech markets in the world today. It has increasingly become the focus for

most of the large global Fintech players in the world & they are on an acquisition spree in Africa. With four major

acquisitions in the last 12 months totaling to the north of $1.4 Bn+ puts Africa ahead of most emerging Fintech markets

in the world in terms of Mergers & Acquisitions, Stripe from US recently acquired Paystack (Domestic Payments API

Company from Nigeria) for $200 Mn+, World Remit from London acquired SendWave (Money remittance player from pan-

Africa) at $500 Mn, Network International from UAE acquired DPO (Domestic Merchant acquiring payments platform from

Kenya) for $288 Mn & MasterCard from US acquired HomeSend (Interoperability Payments & Remittances API from

Belgium) for approximately $376 Mn.

INSURANCE PLAYERS

FINTECH PLAYERS

This bodes well for most early stage Fintech companies, Entrepreneurs & the early backers (PE & VC Funds) of these

Fintech Companies. The entrepreneurs who are building solutions in payments space, remittances space, lending,

insurance, investment & savings etc now have a clear option to build large companies & eventually exit them to right long-

term partners.

Fintech has become a very attractive sector today globally & an important allocation for most funds, banks & institutional

investors as a vast majority of consumers are still unbanked, under banked & underserved due to factors such as lack or

service, inertia towards technology, accessibility, affordability, user experience, user classification, etc. This has created a

unique space for fintech players to take advantage in stepping up and addressing the key issues faced by business &

customers alike & provide solutions which solve their problems & also create significant value in the ecosystem in the

process.

Growing smartphone usage and demand for cashless transactions is creating a perfect recipe for Fintech’s to thrive in

Africa.

Arun Mathur – Ex CEO of I&M Bank. He is one of the most respectable names in the Banking & Financial Services space in Africa having built I&M Bank from $100 Mn Balance Sheet to more than $2.0 Bn & presence in more than 7 countries of Africa during his tenure at I&M Bank. Arun has more than 45 years of rich experience in the Banking & Financial Services space in Africa (30 years) & India (15 years). We believe having Arun on Board will provide our portfolio Companies with this incredible opportunity to learn from this vast experience of building a successful & pristine financial institution in Africa while maintaining a very high standards of Corporate Governance. “Being the perennial optimist, I would like to start off by saying that the way people have adopted the new normal in most

countries in Africa has been really commendable. And, there lies our strength in being able to adapt to new technology

and the ever-increasing tech companies that are providing a very valuable service across all sectors. In countries such as

Kenya Rwanda Uganda and many others, families are making huge sacrifices in ensuring children have access to remote

learning. Within the confines of curfews and area wise lock downs corporates are rotating staff to keep essential services

going and trying their level best to avoid layoffs to the extent possible. As the pandemic enters the 6th month horticulture

exports are showing encouraging trends. In the absence of foreign tourists’ local tourism has taken off and growth in

digital banking has shown an increase of up to 30%. While it is still difficult to predict when we will see the light at the end

of this long tunnel, I am sure the Almighty must be very pleased how his flock on the continent has faced up to this latest

challenge.”

INDUSTRY FEEDBACK ON AFRICAN FINANCIAL SERVICES

INVESTMENT ACTIVITY & KEY DEVELOPMENTS IN PRIVATE EQUITY &

VENTURE CAPITAL IN AFRICA

Fund Group Description

African Rainbow Capital Sanlam is due to sell 25% stake in its new black-owned asset management company to

Patrice Motsepe’s African Rainbow Capital (ARC)

Kuramo Capital Kuramo Capital has committed to further invest $5 million in the third-party fund

manager

Novostar Ventures The Nairobi and Lagos-based investment group announced it has closed $108 million in new commitments to launch its Africa Fund II, which brings Novastar’s total capital to

$200 million

Sanari Capital Sanari Capital’s backed by 27four, has made its first investment of $1.5 Mn into

LightWare

Secha Capital Secha Capital closed Fund 2 with $30 Mn in commitments from investors globally

Company Description Deal Size

Syked An e-health startup company based in South Africa has raised an undisclosed seed

funding round to scale operations across the country and expand its offering Undisclosed

Yellow

Solar Energy Start up pay-as-you-go (PAYG) has raised $3.3 Mn Series A funding round to expand it services to over 100,000 customers in Malawi and Uganda. it also plans to look at broader opportunities its digital distribution platform offers, in consumer items

and financial services

$3.3 Mn

Valenture Institute

A tech-enabled high school launched by Getsmarter co-founder Rob Paddock in South has secured US$7 million in funding for growth globally

$7.0 Mn

TradeSafe South African based online escrow platform startup, has raised an undisclosed amount

of funding from Standard Bank in return for a 35 per cent equity stake Undisclosed

VALR One of South Africa’s leading cryptocurrency exchanges has raised $3.4 Mn to advance the adoption of cryptocurrencies. The Series A equity round of funding was led by 100x

Ventures, 4DiCapital, FNB CEO Michael Jordan and US-based company Bittrex $3.4 Mn

ProfitShare Partners

Intech SME capital provider, ProfitShare Partners has secured $5 Mn from the SA SME Fund. With this funding, the company looks to partner with small and medium

businesses to help accelerate growth for SMEs $5.0 Mn

Okra Nigerian Fintech platform Okra “Super Connector” secured $1Mn pre-seed fundraise

from TLcom Capital. With the first API in Africa to retrieve Realtime financial data from a bank account to any web or mobile App

$1.0 Mn

Chipper Cash

African cross-border fintech startup Chipper Cash has closed a $13.8 Mn Series A funding round led by Deciens Capital. Chipper Cash offers its mobile-based, no fee, P2P

payment services in seven countries: Ghana, Uganda, Nigeria, Tanzania, Rwanda, South Africa and Kenya

$13.8 Mn

INVESTMENT IN AFRICAN PRIVATE EQUITY FUNDS (May’20-September’20)

KEY INVESTMENTS INTO COMPANIES (May’20 – September’20)

Company Update

Helios Fairfax Partners

Fairfax Africa has entered into a definitive agreement to merge its complementary Private Equity businesses with Helios Private Equity. The company would be renamed Helios Fairfax

Partners Corp. upon deal closing which is expected to occur in Q3

OPay Opera Payment wallet (OPay) teams up with WorldRemit to extend its mobile money transfer

services to over 50+ countries

iWire Technologies

iWire Technologies a Digital Transformation company based in the UAE has partnered with Capturs Systems – GPS Tracking system company to expand their services across Middle East,

Asia and Africa regions

Network International

Dubai-based digital payments group operating across the Middle East and Africa has announced that it will be acquiring Nairobi-based DPO Group for $288 Mn

WorldRemit WorldRemit a global cross – border payment company has announced its agreement to acquire

Sendwave - a rapidly growing app-based remittance company in a cash and stock transaction that is expected to close by Q4 2020

KEY COMPANY UPDATES (May’20 – September’20)

PERFORMANCE OF LISTED FINANCIAL SERVICE COMPANIES IN GHANA

Market Cap (GH

Mn)

CMP (KS)

3 months Price

Change (%)

1 Yr Price Change

(%) NIM

Current P/B

Current P/E

ROE

Banks

GCB Bank Limited 955 3.60 -19.6% -27.3% 5% 0.46 2.98 23.0%

Ecobank Ghana 2190 6.78 -8.9% -19.7% 4.7% 0.92 4.22 25.0%

CAL Bank Limited 401 0.64 -8.5% -36.0% 7.5% 1.72 2.44 14.4%

Standard Chartered Bank (Ghana) Limited

2020 15.00 -11.7% -21.0% 7.8% 1.56 6.50 25.6%

Agricultural Development Bank

1520 5.06 N/A N/A 6.6% 1.43 33.16 4.3%

Trust Bank (Gambia) Limited

68 0.34 N/A +54.5% 5.4% 0.83 5.59 15.0%

Société Générale Ghana Ltd

445 0.63 -3.0% -13.7% 22.2% 0.56 3.50 17.0%

Ecobank Transnational Incorporated

1680 0.07 N/A -22.2% 4.7% 0.18 1.31 13.0%

Access Bank Ghana 764 4.39 N/A +46.3% 3.9% 0.95 4.40 24.2%

Republic Bank Ghana Limited

340 0.40 -18.0% -38.4% 10% 2.07 20.58 10.7%

Mean -7.0% -8.0% 7.78% 1.07 8.46 17.0%

Insurance

Enterprise Insurance company

238 1.40 -6.0% -12.5% N/A 0.89 6.76 14.2%

State Insurance Company 20 0.10 N/A N/A N/A 0.60 9.63 6.4%

Mean -3.0% -6.0% N/A 0.70 8.19 10.0%

Other FSC

Mega African Capital Limited

60 5.98 N/A N/A N/A N/A N/A N/A

Stanchart Preferential Shares

15 0.87 N/A +1.15% N/A 1.60 6.15 7.8%

Mean N/A 1.0% N/A 0.80 3.08 4.0%

Note:

The data above is derived from various sources ranging from 2019-2020 data.

Data calculated above are based on assumptions and estimation and may/may not match actual figures.

Data mentioned has been calculated from unaudited sources.

CMP is as of 30th September’20.

DISCLAIMER

This Newsletter is prepared for information purposes only & does not constitute an offer. The market data in the

presentation has been taken from sources we believe to be reliable; we do not guarantee its accuracy or completeness.

Unless otherwise stated, all statements, figures, graphs & other information included in this presentation are as of the

date & subject to change. The information contained herein shall not form the basis of any contract or invitation.

Recipient should not construe any of the contents herein as an advice relating to business, financial, legal, taxation or

investment matters & are advised to consult their own business, financial, legal, taxation and other advisors.

THANK YOU

NIMAI CAPITAL

PANKAJ MUNDRA, CEO & MD, NIMAI CAPITAL

(pankaj.mundra@nimaicapital.com)

SAGAR AGARVWAL, CIO & MD, NIMAI CAPITAL

(sagargarvwal@nimaicapital.com)