Imara East Africa Fund SP Edition Monthly Region East Africa Date June 2015 Issued by Imara Asset Management Limited

NAV: US$12.61 (-5.0%) as at 29/5/15

The Fund closed the month at US$12.61, a drop of 5.0% from the previous month. The dollar remained buoyant, backed by strong economic indicators in the US that bolstered the case for the Federal Reserve to raise interest rates later in the year, the Euro weakened further owing to persistent woes in Greece and signs of fatigue with austerity among the Spanish public. Except for the Rwandese Franc, which strengthened by 1.7%, all other regional currencies weakened against the USD. The Kenya Shilling, Mauritian Rupee and Uganda Shilling declined by 3.1%, 2.4% and 1.4% respectively. After a 3-month wait, Kenyan President Uhuru Kenyatta nominated International Monetary Fund (IMF) advisor, Patrick Njoroge, as the next Governor of the Central Bank of Kenya (CBK). Other nominees to substantive positions at the CBK include Harun Sirima, current Deputy Governor, and Sheila M’Mbijiwe, a banker and former member of the Monetary Policy Committee (MPC), as deputies, and Mohammed Nyaoga, a seasoned lawyer, as CBK board chairman. The nominations come at a time when the steady weakening of the Kenya Shilling vis-a vis- the US Dollar (7.2% YTD) had seen the CBK step up its monetary operations to intervene in the foreign exchange market and bring the periodic MPC meeting forward by one month to 9th June 2015. The MPC, which meets bi-monthly to discuss the monetary policy stance, held its last meeting on 6th May 2015 and retained the Central Bank Rate (CBR) at 8.50%, citing lack of demand-driven inflation and a stable shilling. Meanwhile, an IMF mission noted that the country’s gross international reserves, equivalent to USD 7.3bn as at end of May, remained adequate. The weakening shilling continued to take its toll on the Nairobi Securities Exchange (NSE), as foreign investor portfolio outflows continued to dominate trading activity. The FTSE NSE-15, FTSE NSE-25 and NSE-20 indices dropped by 9.1%, 3.1% and 8.9% respectively, all in USD terms. Year-to-date, the indices have respectively declined by 7.6%, 1.9% and 13.1% in USD terms. Equity Bank commenced implementation of its 10-country Pan African expansion strategy by announcing the acquisition of a controlling interest (79%) in ProCredit Bank DRC. ProCredit Bank has been in operation since 2005 and had total assets, shareholder funds and profit after tax of USD 213 mn, USD 26m and USD 2.6 mn respectively in FY14 and market share by total assets of 4.7% in

2013. Meanwhile, Centum Investments received regulatory approval for listing of its USD 62 mn bond through issuance of fixed-rate and equity-linked notes at the NSE. The notes will be senior unsecured fixed rate bonds (13% p.a.) and unsecured equity linked notes comprising a fixed rate component at 12.5% p.a. and a variable component with an upside of up to 10% of the redemption price-subject to a 25% increase of Centum’s NAV at maturity. In positive news for East African Breweries, a new law now grants a higher excise duty waiver of 90% for beer made from sorghum, millet or cassava grown in Kenya. The new rate is a significant increase from the current excise tax waiver of 50%, and should result in improved sales for the company’s low-end product, Senator Keg, which prior to June 2013 (when the excise duty waiver was reduced from 100% to 50%) accounted for 15% of total beer sales. The lowering of the tax waiver had resulted in a steep price increase and massive reduction in beer volumes. The IMF expects Uganda’s economy to expand by 5.8% in FY15/16, up from 5.3% the previous year, boosted by scaled-up public investments and a recovery of private consumption supported by stronger credit growth. The government is at various stages of implementing several multi-billion US Dollar infrastructure projects, including hydropower dams, a refinery, express highways and a railway line. The Treasury estimates economic growth of 5.3% in FY14/15, from 4.5% in FY 13/14. As with prior trends, the looming 2016 General Election remains a major source of concern, with the IMF noting that it was crucial for the country to contain spending pressures. Last month, core inflation increased to 4.6% from 3.6% in March but is likely to remain within the Central Bank’s medium-term target of 5%. In April, the monetary authority raised the policy rate to 12% from 11%, in part to slow the rise in inflation and support the Uganda Shilling, which YTD is down 7.5% to the USD. The country is expected to start pumping crude oil from its oil fields in 2018 and will leverage these projects to maximise benefits from the burgeoning oil industry and accelerate the pace of industrialisation.

In Mauritius, higher exports resulted in the narrowing of the country’s trade deficit by 3.4% from a year earlier, to US$ 151 million in March. The value of exports increased by 18.3% while imports rose by a smaller margin of 9.2%. The United Arab Emirates was the main buyer of goods from Mauritius, accounting for 22.5%, while China supplied 20.4 % of the nation's imports.

Rwanda continues to receive plaudits for upholding prudent economic policies and implementing reforms that have delivered satisfactory economic performance. Following the third review of Rwanda’s economic performance under the 3-year Policy Support Instrument (PSI) program (which is designed for low-income countries that do not need or may not want financial aid to boost their balance of payments) the IMF noted that the country’s economic outlook was stable with strong economic performance expected in 2015. The IMF singled out the 2015/16 budget framework for prioritizing public investment in line with available resources, including measures to improve domestic revenue mobilization, protect priority spending and limiting the crowding out of credit to the private sector.

Historic Performance (with net dividends reinvested):

Change (%) Fund MSCI World

1 Month -5.0 0.3

3 Month -9.7 1.1

Year to Date -9.1 5.1

Compound Annual Return (%)

1 year -4.0 5.7

3 year 12.6 17.1

5 year 8.2 12.8

Disclaimer: The purpose of this document is to provide summary information and does not constitute a recommendation to anyone in any jurisdiction to buy or sell shares in the Imara Africa Series SPC Limited – Imara East Africa Fund (the Fund) where such a recommendation is not lawful, or in which the person making such a recommendation is not authorised to do so, nor has it been prepared in connection with any such recommendation. The Fund has been established and is recognized as a professional fund under the British Virgin Islands Securities and Investment Business Act, 2010 and as such is only suitable for professional investors (as defined in the Fund’s Prospectus, available from the Fund Administrators to eligible investors in certain jurisdictions where the Fund has been authorised) who have taken appropriate professional advice and who are in a position to understand and to take such risks and satisfy themselves that such investment is appropriate for them. The Fund is defined as an Alternative Investment Fund (“AIF”) and the promotion of an AIF within the European Union is severely restricted by statute. As at the date of this document, the Fund has not been authorised, in accordance with the Alternative Investment Fund Managers Directive (“AIFMD”) National Private Placement Regime, for marketing in the European Union. As such this document may only be transmitted to professional investors in such jurisdictions at their own initiative. This fund is not approved by the Financial Services Board for distribution in South Africa. Any past performance figures are not necessarily a guide to future performance. The value of investments and the income from them can fluctuate and are not guaranteed. The return on assets invested by a member of the Imara Group may go down as well as up and there is no guarantee or assurance as to performance. Any reference to returns linked to currencies may increase or decrease as a result of currency fluctuations. The views expressed are as at the date hereof and are subject to change. This document is produced by Imara Asset Management Limited, registered in the British Virgin Islands and authorised and regulated by the British Virgin Islands Financial Services Commission.

Contact Details: Kenya – Einstein Kihanda E-mail: einstein.kihanda@icealion.com South Africa - Dave Eliot E-mail: dave.eliot@imara.com Zimbabwe John Legat E-mail: john.legat@imara.com Jon Chew E-mail: jon.chew@imara.com United Kingdom / Europe – Harry Wulfsohn Email: harry.wulfsohn@imara.com Mauritius – Rajeev Sookur (Chief Administration Manager) E-mail: rajeev.sookur@imara.com Administrator: Cim Fund Services Ltd E-mail: imarafunds.admin@cimglobalbusiness.com Website: www.imara.com

Fund Details:

Fund Name: Imara Africa Series SPC Limited - Imara East Africa Fund Segregated Portfolio

Fund Manager: ICEA LION Asset Management Limited

Custodian: Standard Chartered Bank (Mauritius) Limited

Administrator: Cim Fund Services Ltd

Fees: 1.5% per annum

Valuation Date: Monthly

Dealing Dates: Month End

Bloomberg Ticker: IMARAEA VI

CUSIP: G47263135

ISIN: VGG472631271

Inception: February 2008

Investment Philosophy:

We seek growth companies at a reasonable price. The fund is long-only with no limit on the cash position. We look for companies with: a good (cash generative) business model not overly reliant

on debt earnings that are growing quickly which are cheap i.e. trade at a discount to

intrinsic/replacement value or are on a low PE/high yield

Top Five Holdings

Safaricom 11.5%

British American Tobacco Kenya 9.8%

East African Breweries 9.1%

Bank of Kigali 8.5%

Kenya Commercial Bank 8.2%

NAV US$ 1.7m (29/5/15)

2011 2012 2013 2014 YTD

IEAF -18.6% 22.7% 27.4% 10.1% -9.1%

Kenya -22.7% 27.4% 18.9% -1.3% -13.1%

Uganda -32.0% 29.0% 34.1% 15.7% -11.4%

Mauritius -0.7% -11.9% 23.1% -6.4% -15.5%

Fund performance

4.00

9.00

14.00

19.00

24.00

29.00

IEAF Kenya Mauritius Uganda

Sector Breakdown

Geographical Breakdown

Net Cash 9%

Uganda11%

Kenya58%

Rwanda13%

Mauritius9%