TAKURA CAPITAL PARTNERS (“TAKURA”) EVIDENCE SUBMISSION FOR THE  IDC REVIEW OF BII

Takura is a Fund Manager that invests in small-to-medium size businesses in Zimbabwe and surrounding countries of Mozambique, Zambia and Malawi. BII is one of its investors, together with other European Developmental Finance Institutions (“DFIs“), as well as Zimbabwean financial institutions. It was established by CDC in 1997, but remained dormant from 2000 until 2012, when the current team resuscitated the organisation.

What due diligence does BII undertake prior to making investment decisions and how does this compare with best practice.

BII does an extensive and very thorough due diligence extending over several months before they make an investment decision. In Takura’s case, as a private equity fund manager, BII has committed capital to funds we manage. BII spent a great deal amount of time and resources to fully understand:

• Macro-economic landscape;
• Political environment;
• The reasons for the minimal commercial capital in the market, and, therefore, the need for their intervention;
• Takura’s key investment principals, their experience, record, visions, including taking references;
• The investment thesis and whether it was credible;
• The investment opportunities in the market;
• The promoters and/shareholders, as well as management of existing and potential investee companies; and
• The positive environment, social and governance impact of the funds’ investment programs, amongst other aspects.

Takura has other developmental finance institutions as investors , and BII’s due diligence is in line with best practice.

What current investments does BII hold?

BII is invested in Takura II and Takura III Funds

How effectively does BII manage funds following its initial investment.

BII is represented on the Advisory Committee of Takura through which it manages its investment in the Fund. As part of that Committee, BII representatives, together with other investor representatives, manage the Fund by attending scheduled and ad-hoc meetings, at least twice a year. One of those meetings is held in person, in Harare, and the BII representatives have always diligently attended such meetings. During those meetings, they visit portfolio companies in which Takura has invested so that they can see, firsthand, where BII’s money has been invested and its impact. BII representatives also receive quarterly and annual reports from Takura, detailing the performance of the Fund. These reports contain various KPIs, individual portfolio company performance as well as valuations. The reports give them a timely understanding of the direction the Fund is taking, thus enabling them to not just query such, but also offer advice.

BII has also built into its legal agreements very strong compliance protocols, particularly on the ESG front. For example, Takura must report all serious incidents resulting in death or injury to BII within 72 hours. This is followed by detailed reports after full investigations are complete. This way, BII can timely track any such incidents in its portfolio of investments.

Outside of formal meetings, there is frequent communication and interaction between BII representatives and Takura personnel, in particular the Senior Managing Partner, with whom they hold monthly update virtual meetings that are scheduled a year in advance. The latter also interacts with BII senior management, at least once a year, in London.

Overall, Takura believes that BII have put in place very effective mechanisms to manage their investments in Takura.

How does BII evaluate the impact of its investments.

BII evaluates the impact of its investments through a tool that is shared by Takura as part of the quarterly and annual ESG reports.

There are various aspects of impact measurement employed by BII, including employment growth, number of females employed and their positions, revenue growth, level of taxes paid, level of indigenous ownership, number of small-scale farmers supported, serious injuries, deaths or other incidents across the Fund’s investee company portfolio, adoption of new technologies and international accreditation. We believe the tools in place are effective in measuring such impact.

More recently BII has been engaging Takura about measurement of carbon emissions, as well as energy efficiency. These areas are being explored, together with poverty alleviation impact of its investments.