The document discusses an agricultural investment fund in Uganda called the African Agricultural Capital Fund (AACF). It provides background on Pearl Capital Partners, the investment manager of AACF, including that it was established in 2010 and has made investments totaling $8 million and manages the $12 million African Seed Investment Fund. The AACF is a $25 million fund focused on equity investments between $250,000-2.5 million in agriculture in Uganda, Kenya and Tanzania. It aims to provide smallholder farmers access to capital and technical assistance while achieving competitive returns for investors. Three initial investments are described including one in a horticulture company and another in an agriculture company in Northern Uganda expanding commercial farming and contract growing.

1. Agricultural investment in Uganda
April 2013

2. Introduction
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AACF
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Timeline
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
Background
Team

3. The Manager: Pearl Capital Partners background and history
 2004 -2005: AAC is founded by Gatsby Charitable Foundation and Rockefeller Foundation and starts
operations from offices in Kampala, Uganda
 2006 – 2009: AAC makes investments in 16 agriculture-related SMEs in East Africa, with deal sizes
ranging from $0.1 – 1.0 million., total value of about $8 million.
 2010: AAC establishes Pearl Capital Partners as its investment manager and Pearl is licensed by
Mauritius Financial Services Commission
 2010 -2011: Pearl begins management of the $12 million African Seed Investment Fund ( ASIF ),
specifically for investment in seed companies in East and Southern Africa
 2011: the AAC management team acquires AAC’s interests in Pearl and become employees of Pearl
 2011: Pearl Capital Partners’ subsidiary company, PCP Uganda Ltd, is licensed by the Capital Markets
Authority of Uganda
 2011: AAC reports a profit > $1 million for year ended 30 June 2011
 2011: Pearl Capital Partners raises the new African Agricultural Capital Fund
 2012: Make first investments through AACF (c$ 4 million) .
 2013: ASIF is fully invested.

4. Background: our new Fund
 Fund Structure: a $25 million closed-end investment fund, domiciled in Mauritius,
focusing on making equity investments in the agriculture sector in Kenya, Uganda
and Tanzania of up to $2.5 million per transaction. Managed by Pearl Capital
Partners, governed by an independent board of directors, investment and impact
committees.
 Fund Mission: To invest risk capital into agricultural supply chains in East Africa in
order to support smallholder farmers and leverage additional financial and human
capital into the agricultural sector in the region, while achieving competitive
financial returns
 Goals:
 Financial:
Minimum 15% gross annual rate of return (USD)
 Social:
Positively affect the lives of at least 250,000 smallholder
farmer households over the life of the fund
 Sector Growth: Encourage the growth of the agricultural business sector by
providing risk capital to early stage companies that are then able
to attract other sources of finance

5. Background: Investment Parameters
 Investment range $250,000 - $2.5 million
 Minimum of 75% of the fund to be invested in Uganda, Tanzania and Kenya
 Financial instruments appropriate to the needs of the individual investee
 Expected hold period between 5 and 7 years
 Significant personal investment by sponsors and/or management
 Alignment of interests among shareholders, investors and managers
 Investee access to $1.5m technical assistance facility financed by USAID

6. Governance
 AACF Board of Directors
 The ultimate decision-maker for the Fund
 Comprised of four members nominated by the Manager
 Independent Investment Committee
 Reviews the Manager’s investment recommendations to ensure that the
proposed investment has the potential to meet and exceed the Fund’s financial
return expectations
 Comprised of five independent members resident in the region
 Independent Impact Committee
 Reviews the Manager’s investment recommendations (prior to Investment
Committee review) to ensure that the proposals have the potential to meet and
exceed the Fund’s social and developmental impact requirements
 Comprised of three independent members resident in the region

7. AACF Investments
 Wilmar (Horticulture – Central Kenya)
 Quasi-equity $600,000
 Expansion of smallholder floriculture for export
 NUAC (Commercial and Seed Farming – Northern Uganda)
 Equity and debt $1,200,000
 Expansion of farming and contract farming operations
 Midlands (Staple crop storage, processing and distribution – Central Kenya)
 Equity and debt $2,250,000
 Expansion of existing potato storage and processing operations

8. NUAC case study
Northern Uganda Agricultural Centre, Amuru District
Commercial and seed farming operation
$1.2 million, debt and equity

9. NUAC: Anatomy of the deal
 Investment thesis
 Expansion
 Mechanisation & Contract Farming
 Location
 Management
 Crop diversification (seed maize, commercial maize, rice, soya)
 The deal
 Capital requirement of $1.2m
 Business valuation $1.5m
 “Partnership” approach: invest $0.5m for a 25% stake and invest $0.7m in a USD term loan
 Closed in June 2012
 Post-investment support through Corporate Governance support, staff recruitment,
networking with customers and suppliers, and building relationships with potential
future lenders

10. Pearl in Uganda
 Pearl has now made seven investments in Uganda through its different investment
funds
 Biyinzika Enterprises
2006 (exited)
 NASECO
2006
 Victoria Seeds
2007 (exited)
 Coetzee Natural Products
2007 (exited)
 Bee Natural Uganda
2008
 FICA Seeds
2010
 NUAC
2012

11. Thank you very much for your attention
For further details, please contact:
Tom Adlam (tom.adlam@pearlcapital.net)
Website: www.pearlcapital.net
April 2013