ESTABLISHMENT OF A NEW
RENEWABLE ENERGY,
WATER, INFRASTRUCTURE
HUMANITARIAN FUND
PREPARED BY D. MAGUA 15TH MARCH 2010
INDEX
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BACKGROUND
INVESTMENT PROPOSAL
PARTIES
FUND STRUCTURE
FUND DESCRIPTION
FUND MANAGER
FUND DETAILS
FUND PROJECTS
ROI CONSIDERATIONS
EXIT STRATEGY
BACKGROUND
The African and South African markets are experiencing shortages of supply of
electricity, basic infrastructure and water. The sectors of the population most
affected by this are the poorer sector as the costs for supply have risen dramatically
due to these shortages.
The need for power and clean water is a basic Humanitarian right.
We have identified various projects within South Africa and Southern Africa where we
can assist in developing clean power and water supply for the benefit of the poor.
By funding these Humanitarian Projects we will ease the living conditions of millions
of Africans, create employment and improve their over all lifestyle and life span.
INVESTMENT PROPOSAL
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There is a current opportunity to create a private fund of USD 5 Billion to cater for
humanitarian projects
The proposed fund will be established in Mauritius and will be utilised to fund Renewable
Energy, Water and Infrastructure projects that can be defined/described as Humanitarian in
nature.
This document sets out the structure and operation of the proposed fund
The investor will receive equity returns
This document seeks to set out the proposed fund structure for consideration and approval
by both Serendipity by Design LLC and their Investor Party (“the Investor”)
PARTIES
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The parties to the proposed fund will be as follows:
NEWCO
Fund
Manager
Investor
(Overseer
of Fund)
NEWCO
Renewable
Energy, Water and
Infrastructure
Humanitarian
Fund
Parties
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The NEWCO shareholding for the Fund Management Company
will be held 50:50 by Serendipity by Design LLC and a Mauritian
Company comprising the operational management team of the
Fund. (It is envisaged at this stage that both Desmond Magua and
John Coetzee of Thuthuka Group will be part of the new
Mauritian Company and will both operate predominantly out of
Mauritius to enable the Fund to operate independently). The
NEWCO Fund Manager (“NFM”) will have a 20% shareholding in
the NEWCO Renewable Energy, Water and Infrastructure
Humanitarian Fund (“NF”) and the remaining 80% shareholding
will belong to the Investor.
The NF will in turn be the vehicle in which the funds are invested
and which will hold the investments and loans to projects.
FUND STRUCTURE
Investor
Banks and
Financial
Institutions
1.
2.
3.
NF
Investor issues Banks with a Bank Guarantee
Banks make facilities available to NF
Various
Project
NF makes investments and loans
Companies
FUND DESCRIPTION
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The Fund will be established in Mauritius.
The Fund will make both Equity and Debt investments into projects over a
maximum 20 year period per transaction.
The Fund will only invest into Renewable Energy, Water, Infrastructure and
Humanitarian projects in Africa, South Africa and the Indian Ocean Islands.
The Fund will be a US Dollar denominated fund and all returns will be
domiciled in US Dollars.
The focus of the fund will be to uplift communities in Africa, the alleviation
of poverty, the creation of jobs and basic services.
FUND MANAGER
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The FM will be a newly established business.
The directors will be 2 members from Serendipity by Design LLC, representing
the Investor and 2 members from a newly formed company comprising the
management team and represented by Desmond Magua and John Coetzee.
The FM team will also incorporate appropriately qualified staff including but not
limited to a Chartered Accountant, Attorney, Actuary and Investment Officer.
The FM team will prepare all schedules and management information including all
project analysis for the Investment Committee to approve.
The FM will invest all unutilised amounts in risk free vehicles until all funds have
been drawn down and the fund closed.
The FM will receive fund management fees of 0,5% per annum on any unutilised
amounts and 2% on all amounts drawn down to fund the various projects.
All costs associated with the day to day running of the fund will be accounted for
out of the proposed fees above.
FUND DETAILS
DESCRIPTION
DETAIL
Amount
US Dollars Five Billion
Term
10-20 year funding periods
Stage of Investment
Feasibility Stage to completion
Investment Instrument
Acceptable Bank Guarantee for USD 5 Billion
Start Date
May/June 2010
Jurisdiction
Mauritius
FUND PROJECTS
The following projects will be incorporated in the fund as soon as the Investment Committee is
established. Detailed investment sheets are available for the following projects.
PROJECT NAME
USD AMOUNTS
Amakhosi Biomass
360 million
Rondolog Biomass
1,305 million
Caledon Wind
950 million
Promethium Wind
950 million
Gingingluvu Water
500 million
Tandjiesfontein Water
Mzima Water
70 million
150 million
Botswana Water
80 million
Eastern Cape Water
45 million
Cape Town water
115 million
FIS Biofuels
115 million
TOTAL
4.6 billion
ROI CONSIDERATIONS
Debt returns are expected to be in the range of 2-5%
 Equity returns are expected to be in the range of 10-15%
 This results in a blended rate in the range of 4%-8%
All the above calculations are based on the following
assumptions:
1.
All investments will be denominated in US Dollars
2.
All projects will have a Debt:Equity Ratio of 70:30
3.
The exchange differential to South African Rand is 7:1
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EXIT STRATEGY
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Any unutilised funds not invested in projects by 31st
December 2012 will be reviewed before agreeing to close the
fund.
All funds invested can be refinanced to allow for exit
mechanisms provided that the deal economics can sustain the
new rate of finance and availability of market for refinancing.
All refinancing exits to be subject to a minimum of
12
months notice by the Investors.
All prepayments of finance to also be subject to 12 months
notice and appropriate penalties.