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01 Jul SEAF at the 2019 SuperReturn Emerging Markets Conference
The SuperReturn Emerging Markets Conference is an annual forum uniting private equity investors in emerging economies. The three-day long event serves as a platform where leading GPs in emerging and growth markets connect with international commercial LPs and DFIs looking to invest. Two of SEAF’s Managing Directors, David Mathewson, and Jan Cherim, were invited to participate in the conference this year in Amsterdam.
One of the conference’s greatest draws this year was its new Impact Investing Workshop and SEAF Managing Director Jan Cherim was asked to participate in the GP session. In this workshop, attendees learned how impact is defined today, compared the latest measurement and implementation techniques, and analyzed real-life examples of where impact investing has succeeded and failed. The conference’s interactive structure drew more attention from attendees by utilizing proprietary data and market analyses, real-life case studies and group discussions.
The first two panels focused on defining impact investing and comparing methods that are used to implement and report on targeted impact. Jan then joined Oscar Silva of Davos International Advisory in leading a panel discussion on “Implementing and Scaling Impact.” Here, Jan and Oscar partnered with Barthout van Slingelandt of XSML Capital and Berg de Bleecker of Goodwell Investments to share their experiences and comparing methods that are used to implement impact. Other topics explored with the help of audience members included, “how is technology improving the options available?” and “what is the best way to replicate and scale impact, and which sectors best support this?”
Participants included development finance institutions, some NGO investors, and some representatives of particularly active family offices and foundations. There was a lively discussion around the issues of how to make SME private equity businesses more scalable and thereby more accessible to a wider range of institutions and interested investors. SEAF, as the longest-established of the participating investment firms, had much experience to share and Jan explained some of the new initiatives SEAF has developed to address a wider audience, including establishing funds to address the SDGs.
On June 25, the following day, SEAF Senior Managing Director David Mathewson served as a panelist for “Investing in SMEs, the Power Engine of Emerging Markets.” Joining David on the panel were Barthout van Slingelandt of XSML, Natalie Shriber of Triple Jump, Mark Joenje of Capital 4 Development Partners and moderator Vivina Berla of Vimine Holding. Panelists addressed the following questions: “what are the parameters for defining SMEs? What opportunities exist, how are they sourced and what volume of deals are getting done? What can be done to enhance returns and instill greater confidence in LPs?”
The panelists agreed that SMEs remain an interesting and important market segment for investment. Growth starts at the SME level, particularly given the rapid deployment of digital technology through all business sectors which provides entrepreneurs with new ways to innovate. The panelist also agreed that SME investments require a greater level of structuring than investment in more developed and perhaps financial stable companies. For example, many SME investments are structured via a mix of debt and equity, or convertible debt with warrants or similar structures that provide some protection in downside scenarios. Also, debt provides more influence in a restructuring with a partner or entrepreneur than a simple equity stake. Sourcing SME deals requires local presence and sourcing networks, as opportunities will not be delivered to funds in nice packages from bankers in London or New York.
David noted after the session, “SEAF’s long history of SME-focused investing, 30 years with over 400 investments completed, really highlights all of the points made during today’s panel – that SME’s with capital and value-added support are capable of fast growth, however, care needs to be taken to structure investments appropriately for the country and the company situation. Further, an investor needs to be locally based and locally involved to really source and attract the best opportunities in a targeted market.” David added, “Actually, that’s what SEAF is all about.”