20110606 intro sin_co_f_poa.pptx

1

REGULATORY INFORMATION No part of this proposal suggests or should understood to suggest endorsement or advice on any investment approach, strategy or offering. The rights and obligations of the investor are set out in the relevant policy contract. Market fluctuations and changes in rates of exchange or taxation may have an effect on the value, price or income of investments. Since the performance of financial markets fluctuates, an investor may not get back the full amount invested. Past performance is not necessarily a guide to future investment performance.

Designing and developing world-class ESG architecture for institutional investment since 2006 | sincosinco.com ©2011

[email protected] twitter.com/esgarchitect

Sustainable Investment Consulting

Designing and developing world-class ESG architecture for institutional investment since 2006

SinCo | Sustainable Investment Consultants | ©2009-2011

16%

2%

17%

1%

0%

0%0%2%

8%14%0%

5%3%1%1%

2%

6%

2%

2%

11%

8%

MSCI Emerging Markets Index - Country Market Capitalizations[$ million at 31 December 2010; Total market capitlization: $3,918,577.24; Source: MSCI, May 2011]

BrazilChileChinaColombiaCzech RepublicEgyptHungaryIndonesiaIndiaKoreaMoroccoMexicoMalaysiaPeruPhilippinesPolandRussiaThailandTurkeyTaiwanSouth Africa

MSCI Emerging Markets Index

2

Source: SinCo analysis, MSCI May 2011.

DRAFT


African Stock Exchanges

3

Source: Adapted from Jens Shleuniger, Portfolio Manager, EM Equities, DWS Invest Africa, correspondence with authors May 2010.

Top 5 African Africa stock exchanges by market capitalization (above USD 10bn) Other Africa stock exchanges

DRAFT

SinCo | Sustainable Investment Consultants | ©2009-2011 5

DR

AFT

DR

AFT

DR

AFT

DR

AFT

DR

AFT

DR

AFT

Drivers: Performance Impact of ESG Factors 3-10 Years

DR

AFT

DR

AFT

DR

AFT

DR

AFT

DR

AFT

DR

AFT

6

6

8

12

13

16

17

18

21

21

24

29

31

44

9

12

12

13

24

21

15

16

22

27

17

20

32

37

15

11

5

18

23

8

12

16

17

31

15

16

37

34

0 20 40 60 80 100 120 140

Biodiversity.

Micro-f inance, micro-insurance.

Gender Diversity.

Emissions of greenhouse gases.

HIV/AIDS.

Broad-Based Black Economic Empowerment

Product Health, Safety and Nutrition Issues.

Human and Indigenous Peoples Rights.

Jobs creation [“decent paying” jobs].

Water scarcity or sanitation.

Environmental Management

Employee Relations, Safety and Worker Rights.

Inf rastructure Development.

Corporate Governance.

Performance impact of ESG Factors 3-10 Years [n= 97 investors (51 PE investors) + 46 stakeholders; forced ranking 14 answers, very/somewhat/marginally/not important;

Jan'10-Feb'11; SinCo analysis 2010-11]

Private Equity - Very Important

Investors (excluding PE) - Very Important

Stakeholders - Very Important

Survey results show governance as the ESG factor dominating performance impact – despite differences between investors and stakeholders for issues such as water scarcity of HIV/AIDS.

Source: SinCo+RisCura data; SinCo analysis 2011

DRAFT


Drivers: Making Sustainable Investment Attractive

Perceived Key Drivers to Sustainable Investing in Sub-Saharan Africa

open-ended; n= 41 asset owners & managers + 43 PE investors + 43 stakeholders; Jan'10-Jan'11; Interviews SinCo analysis 2010-11

Private Equity Asset Owners and Asset

Managers Stakeholders

Good Investment / Financial Returns

35% Good Investment / Financial Returns

44% Good Investment / Financial Returns

37%

More Information Available 28% Tangible ESG Benefits / Impact 22% = Tangible ESG Benefits / Impact = Incentives from governments, regulators

28%

Incentives from governments, regulators

21% Demand from clients; investor mandate; shareholder pressure

17% More information available 16%

Demand from clients; investor mandate; shareholder pressure

19% Incentives from governments, regulators

12% Proven risk reduction 14%

Explicit SI/ESG Impact 16% More information available 7% Demand from clients; investor mandate; shareholder pressure

9%

Investments return remain the key driver across all respondent categories. Impact importance varies


DRAFT


Market: Sustainable Investment in 2011

Market dominated by largest investment markets, Western Europe and North America.


Estimated total AUM in sustainability/ESG investment $billions

Sub-Saharan Africa, 2010

European Union, 2010

United States of America, 2010

Canada, 2008

Brazil, 2009

Middle East North Africa, 2010

Australasia, 2010

China, 2009

South Korea, 2009

India, 2009

DRAFT


Defining SI: Sustainable Investment Strategies and Methodologies

Sustainable investment strategies and methodologies: key terms by SinCo 2011

Investment Stage Theme/Strategy Description

Screening

1 Ethical/religious/ norms-based

Removing companies involved in “unethical” activities from the investment set, such as the manufacturing of armaments, tobacco, etc.

2 Positive/best-in-class Only investing in companies that lead their peer groups/industry/sector in ESG performance at a given time.

Ideas

3 Sustainability/ESG Thematic investing based on trends/risks/opportunities arising from the pursuit of sustainable development.

4 Sustainable finance

Investment enabling capital to be allocated to companies/projects that lead directly to sustainable development, new business models, new market segments. Includes community investing and impact investing.

Analysis 5 Integrated analysis Investment that includes ESG factors in valuations models. Applied to equity, fixed income, PE, and alternative asset classes.

Holding 6

Constructive engagement

Communication and collaboration between investors and management that encourages improvements to ESG performance.

7 Shareholder activism The use of shareholding to launch public campaigns against specific corporate practices.

Exit 8 Investment exit Go/no-go decision for continued holding of existing portfolio position or 0-100% weighting.

8

Source: Graham Sinclair/SinCo 2011; Informed by work of Julie Hudson/UBS 2005; Mike Tyrell et al Citigroup 2008 and others.

Decision

Optimal asset allocation

Expected returns and risks for asset

classes

Liability structure (replicating portfolio)

Economic valuation of assets

and liabilities

Risk tolerance, e.g. available risk

capital

ESG risks, opportunities

scenarios

Investment committee

ESG-integrated Optimal Active Asset Ownership

Asset universe bounded by investment parameters including legal/technical asymptotes

Active ownership

Investment policy

Buy Hold Sell Systemic influence

Promoting sustainable long-term investment performance

10

11

As the sustainable investment architect we consider sustainability – environmental, social and governance factors – are integrated in all investment decisions. Working with SinCo our clients have access to world-

class strategy and plans to solve the challenges in making sustainable investment work.

Sustainable investment consulting firm with global practice

•  SinCo at a Glance –  Bespoke investment advisory focused on

sustainable investment architecture –  Architect + analysts with support team

operating projects with partners in Geneva, Seattle, London, Nairobi, Washington DC, Cape Town, Istanbul

–  Word-of-mouth, below-the-radar approach

•  Philosophy –  SinCo is a boutique investment advisory firm

specializing as an ESG investment architect for sustainable investment in frontier and emerging markets.

–  SinCo helps clarify questions, design & develop answers, and project manages thinking into action.

–  SinCo promotes answers to sustainability emerging from talent in frontier and emerging markets, as well as developed countries.

•  Experienced –  Established boutique in Boston in Q4 2006 :

Inaugural engagement for Wall St proprietary and third party manager with USD 900bn AUM, 200 analysts, mutli-asset classes

–  Since 2006, SinCo has delivered sustainable investment architecture globally to pension funds, asset managers and international organizations integrating ESG factors into investment practice.

–  Public projects and confidential “dark” projects for proprietary clients in listed equity, hedge funds, investment product R&D, investment bank derivative instruments, ESG impact metrics.

•  Proven Project Leader –  Multi-year, multi-stakeholder, multi-country

projects –  Developed framework for 25 country rollout

by PRI in EM project

Credentials: testimonials for SinCo

12

•  “… is an exceptional professional in all that he does. His work is at the crossroads of business intelligence, finance and investments and sustainability. His ability to clarify objectives and execute on solutions has demonstrated the fruitful success of the business case for sustainability.”

–  Director and Senior Investment Analyst, global institutional asset manager, New York City.

•  … served as a strategic adviser to a large US Asset manager as we worked together on developing their sustainable investment strategy. He provided on-going support to their internal team and served as a knowledgeable and helpful sounding board as their staff tried to move sustainability forward

–  - Senior Client Relationship Manager, Global ESG ratings and research provider, London

•  "For many investors, getting to grips with ESG issues in emerging markets is a top priority. [He] was crucial in encouraging new partnerships in diverse markets..."

–  Clean tech private equity fund manager and former Executive Director, ASRIA, Hong Kong.

•  … has shown a fantastic drive and commitment to the PRI initiative. He clearly helped promote the ESG thematic to the top of our priorities.

–  - Chief Risk Officer, hedge fund-of-funds investment house, Zurich.

•  ”… is one of our leading thinkers on SRI. The work that Graham is doing will transform SRI and take it to the next level."

–  Managing Director, equity investment manager, Boston.

•  "Graham Sinclair's work is excellent." –  Executive Director, billion-dollar global foundation, Philadelphia.

13

About SinCo team

•  Graham Sinclair is a sustainable investment strategist, ESG architect and global project leader at SinCo. Graham has eight years specialist experience in sustainable investment globally after eight years in pensions consulting and investment banking in Africa. Recent consulting engagements in sustainable investment include:

–  Leading IFC-funded research into private equity and liquid equity ESG strategies in sub-Saharan Africa in South Africa, Kenya and Nigeria to be published in 2011.

–  Developing innovative financing mechanisms strategy and ESG index architecture for developed, emerging and frontier markets for a Swiss-based international organization.

–  For a global institutional investment firm in New York with a USD 1 trillion AUM portfolio, designing ESG architecture across private equity, liquid and global real estate portfolios covering philosophy and process innovations and investment strategies.

–  As consultant to the UN, developed strategy for 25 emerging markets and launched PRI in Emerging Markets project in Q3 2007 for UNEP FI, creating a network infrastructure, building relationships with 108 investor stakeholders including in Africa through 2008.

–  Lecturing on ESG in investment strategies at investment practitioner symposia and leading business schools in Europe, Africa and the US. Currently developing case studies on ESG investment in emerging markets for his forthcoming book.

•  Before starting his eponymous investment advisory boutique SinCo in 2006, he was Product Manager at KLD Research & Analytics, Inc, based in Boston. He is a former contributor to the CSR Initiative at Harvard Kennedy School, Distinguished Member of Net Impact, alum of WWF One Planet Leaders programme and the Tallberg Forum New Leaders Program. He holds diplomas in retirement funds and insurance law, and in 1998 he was one of the youngest ever dual-FILPAs. He currently leads the AfricaSIF Project building a not-for-profit Africa Sustainable Investment Forum network.

•  Graham earned his MBA on scholarship at Villanova University USA where he co-managed the Arnone-Lerer SRI Fund equity portfolio in 2004. He holds a B.Com from the University of Natal and LL.B from the Howard College School of Law as well as numerous industry specialist certifications.

14

About SinCo team

14

Cherie Vale is an [Intern] Creative at SinCo supporting the SinCo team with creative and graphic design projectwork. During her studies she has worked part time photographing Sports, with the main focus in Cycling. Capturing an image is not just simply pressing the button it is how you capture a moment that will tell a story. Through her photography she wants to make a difference in peoples lives and help connect people from different life styles. Cherie attained a Bachelor of Arts Degree in Applied Design specializing in Photography at the Stellenbosch academy of Design and Photography.

Roselyne Yao is an Analyst at the sustainable investment architecture firm SinCo, where she conducts sustainable investment strategy research and analysis. Roselyne joined SinCo in October 2010 as Analyst on the IFC-commissioned research project, Sustainable Investment in sub-Saharan Africa 2010. She previously was a Research Analyst for JPS Global Investments (a California-based money management company focusing on sustainable investing) and an Intern for the Social Research and Advocacy team at Walden Asset Management (a Boston-based socially responsible investing company). Roselyne is also an AfricaSIF Steering Committee member. Roselyne passed the CFA level I exam in June 2009 and plans to sit for the CFA level II exam in June 2011. She holds a Master in Business Administration (with a double concentration in Finance and Marketing), a Certificate in Global Business Culture, and a Certificate of Excellence in Sustainable Management and Technology from the University of Illinois. She currently resides in Dakar, Senegal.

20110606 intro sin_co_f_poa.pptx

Economy & Finance