AFRICA OPPORTUNITY FUND February 2016 LSE: AOF Summary Africa - PowerPoint PPT Presentation

Confidential and Proprietary AFRICA OPPORTUNITY FUND February 2016 LSE: AOF

Summary Africa Opportunity Fund • Absolute return - oriented strategy solely focused on Africa • Listed closed-end fund that invests across asset classes and continent| Value driven Africa Opportunity Partners Track Record • 585% cumulative return investing in Africa since 2003, with three down years • Strong alignment with investors – managers have aggregate personal investment of $8 mm in AOF The African Investment Opportunity • Rising GDP with high real interest rates • Rising working population, middle class and disposable income • Rising productivity and efficiencies • Inadequate infrastructure and insufficient intra-African trade • Weakening currencies, declining exports, and rising budget deficits 2 LSE: AOF Confidential & Proprietary

Contents I. Summary II. Africa Opportunity Fund i. Investment Strategy and Universe ii. Track Record iii. Portfolio and Case Studies III. Appendix I: The African Investment Opportunity IV. Appendix II: AOF Reference Data i. Team ii. C Share iii. Monthly returns iv. References 3 LSE: AOF Confidential & Proprietary

Investment Strategy Absolute return-oriented strategy solely focused on Africa AOF’s closed -end structure gives manager flexibility to invest across asset classes and across the continent 1) Targets deep-value investments with a preference for companies generating high ROAs with low leverage and high earnings yields 2) Exploits structural mispricing of securities caused by cross-border market inefficiencies 3) Invests long and short allowing for both hedging and alpha generation 4) Seeks returns of 15% per annum* Strong alignment with fund investors – managers have aggregate personal investment of $8 mm in AOF * Investors should note that the target return of 15% net per annum is a target only and not a profits forecast. The existence of such a target should not be considered as an assurance or guarantee that it can or will be met. 4 LSE: AOF Confidential & Proprietary

African Universe Overview • Access to Africa via Equity and Fixed Income • 25 Exchanges represent a 33% increase over 10 years Africa-Related Number Size $ mm securities • Privatization, globalization and foremost the development of the African middle class has driven the Equities 1 185 936 888 increase in Africa focused public companies EuroBonds 40 42 556 • More than ever African listed companies reflect the Corp Bonds 609 36 625 domestic economy vs. the export economy Sov. Bonds 1 017 189 794 • Total 2 851 1 205 862 African capital markets, though still in their relative infancy, have experienced material growth and development over the last 10 years, i.e. short sales, options, and CDS Source: AOP and Bloomberg 5 LSE: AOF Confidential & Proprietary

Manager Track Record * Generated 585% cumulative net return investing in Africa since 2003 Investment Team Track Record * See Slide 26 for Investment Team Details Source: AOP and Bloomberg 6 LSE: AOF Confidential & Proprietary

Manager Track Record * Outperformed all indices over the past 12 years Source: AOP and Bloomberg 7 LSE: AOF Confidential & Proprietary

AOF Portfolio Breakdown Geography Sector Asset Class Source: AOF 30 June 2015 Report 8 LSE: AOF Confidential & Proprietary

AOF A Shares - Top Ten Positions Largest Holdings Description % of NAV Sonatel Fast growing mobile phone provider in Senegal and neighbouring countries 19.9% Enterprise Group Ltd Property and life insurance company in Ghana 19.6% IAM Gold - 6.75% 10/01/20 Medium sized gold producer with operations in West Africa 5.9% First priority debt issued by Tizir, an Eramet lead JV developing the Grande Cote Tizir - 9% 09/28/2017 Mineral Sands Project in Senegal with the Tyssedal Titanium smelter in Norway 4.5% providing collateral Tanzanzia Breweries Tanzania's largest beer producer and distributor of wines and spirits 4.4% Microfinance lender with operations in Botswana, Mozambique, Namibia, Letshego 4.4% Swaziland, Tanzania, Uganda and Zambia Standard Chartered Bank Ghana Leading retail and corporate banking provider in Ghana 3.7% Large South African food retailer operating over 1,700 stores in 16 countries across Shoprite Africa, while serving over 14 million shoppers annually (Size shown net of short 3.4% position in SA vs. long position in Zambia) Holding company with projects in natural resources, iron ore, manganese and Pallinghurst 3.2% precious stones Triton Class A Preferred 8% Underwater timber harvesting operation with license over Volta Lake in Ghana 2.7% TOTAL 71.7% Source: AOF 30 September 2015 Report 9 LSE: AOF Confidential & Proprietary

AOF C Shares - Top Ten Positions Largest Holdings Description % of NAV Nigerian listed reinsurer operating in 35 African countries, offering marine & Continental Reinsurance Ltd 9.0% aviation, bond, auto, engineering, general accident and life reinsurance services Kenya Power & Lighting Ltd Distributes and sells electricity to over 2.6 million Kenyan consumers 7.9% Stanbic Bank Uganda Ltd Leading retail and corporate banking provider in Uganda 7.3% Enterprise Group Ltd Property and life insurance company in Ghana 6.8% Mashonaland Holdings Property investment and development company in Zimbabwe 6.4% African Bank Investment Ltd 5% South African bank and financial services provider focused on microlending and 6.1% 08/28/18 the underserviced areas of the South African population Fully integrated Nigerian cement producer with operations in 14 other African Dangote Cement Plc 5.6% countries Microfinance lender with operations in Botswana, Mozambique, Namibia, Letshego Holdings Ltd 5.2% Swaziland, Tanzania, Uganda and Zambia First priority debt issued by Tizir, an Eramet lead JV developing the Grande Cote Tizir Ltd 9% 09/28/2017 Mineral Sands Project in Senegal with the Tyssedal Titanium smelter in Norway 4.5% providing collateral IAM Gold - 6.75% 10/01/20 Medium sized gold producer with operations in West Africa 3.8% TOTAL 62.4% Source: AOF 30 September 2015 Report 10 LSE: AOF Confidential & Proprietary

Sonatel – Case Study Public Equity – Value & Income • Dominant telecom company in West Africa with EBITDA of $820 mm for the 12 months ending June 2015 • EBITDA margin is 53%, Net Margin is 24%, ROA is 20%, and ROE is 41% • Current market capitalization is $4.0 bn, P/E is 11.7x, dividend yield is 6.0% • Strong balance sheet with net cash • Total subscribers reached 28 million in June 2015, an 8% increase since December 2014 • 42% France Telecom ownership, high dividend payout ratio • ARPU is currently $5 vs Verizon’s $71 - data growth should increase ARPU Source: Bloomberg and Sonatel FY2014 - Valuation Data as of Jan 2016 • Free cash flows have averaged 35% of revenues over the last 3 years versus Verizon’s 13% over the same period • Company with high real returns on assets 11 LSE: AOF Confidential & Proprietary

Tanzania Breweries – Case Study Public Equity – Value & Growth • Tanzania Breweries is a Tanzania based brewer, with an estimated market share of 75% • Consumption is 10 liters/capita versus 12 liters/capita for the African universe* • EBIT and Net income margins have averaged 29% and 19% over the past 8 years and ROE and ROA have averaged 46% and 28% • PE is 21x versus the peer universe of 32x and dividend yield is 2.0% versus a peer average of 2.8% • Market capitalization is $2 billion with little debt Source: Bloomberg, Tanzania Breweries reports * Source :BMI Research March 2015 12 LSE: AOF Confidential & Proprietary

Massmart Holdings – Case Study Public Equity – Short Position • Massmart distributes and retails general merchandise, food, and liquors in Southern Africa - South Africa makes up 92% of revenues • Walmart acquired 51% of Massmart in June 2011 • Weaker economic growth and strong competition in South Africa continue to pressure Massmart’s profitability • EBIT margin has declined from 6.1% in 2009 to 2.6% in 2015 whilst ROE decreased from 42% to 20% • During same period total debt to equity has climbed from 6% to 68% • PE multiple has fallen to 20x from an all-time high of 37x in 2012 • Market capitalization is $1.2 billion; Enterprise value is $1.7 billion; Current PE is 20x; Current EV/CFO 13x; and Dividend Source: Bloomberg Feb 2016, Massmart Holdings reports yield is 4.6% 13 LSE: AOF Confidential & Proprietary

Diamond Corp – Case Study Public Equity – Emerging growth • DiamondCorp is an emerging diamond producer established in 2005 to acquire 74% of the Lace Diamond Mine in South Africa • The Lace Mine was active from 1901 to 1931, and mothballed by DeBeers for over 60 years • Estimated to have 13mm carats of diamonds in M&I resources and 1.5 million in reserves • Currently producing 4k tons/month and targeting 30k tons/month by July 2016 • Management forecast 50%+ operating margins at full production • Current mkt cap is $50 million and EV is $69 million - ~65% of debt is ZAR denominated Source: Bloomberg, Diacmondcorp reports 14 LSE: AOF Confidential & Proprietary