March 28th, 2006
Vinod Khosla Makes Microfinance Investment
For a long while now, rumours have floated about Vinod Khosla’s personal interest in the microfinance space. People have speculated as to whether Khosla was raising a fund of his own, offering lines of credit etc etc. The Indian newspaper, Business Standard, today confirmed that Khosla has in fact made an investment, with a couple of other VCs, in one of India’s fastest growing MFIs.
Top Silicon Valley venture capitalist (VC) Vinod Khosla, along with other social venture capitalists, Small Industries Development Bank of India (Sidbi) and the SKS borrower community, made a $2.5 million investment in SKS Microfinance today. The deal is the biggest investment in a microfinance institution in the country, a media statement said. SKS will use the money to access commercial debt and increase operations from its current base of 200,000 clients to 700,000 in 2006-07. SKS serves over 3,000 villages spread across five states - Andhra Pradesh, Maharashtra, Karnataka, Madhya Pradesh and Orissa. It has a portfolio of $18 million and has achieved an annual growth rate of 250 per cent.
Of the $2.5 million investment, Khosla contributed about $450,000, while tech entrepreneurs Ravi Reddy and Sandeep Tungare, co-founders of Vistaar Technologies, and Unitus Equity Fund (UEF) also pitched in with about $450K each. The rest of the money was raised by SKS borrowers and SIDBI.
March 28th, 2006
CIS Private Equity Conference in Moscow
I know Moscow is a long way off for most IPEG members, but if you or any of your colleagues are interested in the private equity space in Russia and/or the former CIS countries, this may well be a good conference to attend. You can find the details for the conference on the IPEG Yahoo Groups website (direct link here). Thanks to IPEG member, Tom Nastas, who is a speaker at this conference, for sending this along.
March 17th, 2006
Investing in India: A 20/20 Perspective
The South Asia Business Association (SABA) at Columbia Business School is organizing a fabulous conference on April 14th, titled Investing in India: A 20/20 Perspective. The keynote speeches are by Sam Pitroda (widely regarded as the father of India’s telecom revolution) and Kanwal Rekhi of Excelan and TiE. Other speakers include Jagdish Bhagwati, Anjali Kumar of Acumen Fund, Sonal Shah (a good friend of IPEG), David Good of the TATA group, Sreedhar Menon, chairman of Viteos capital markets, and Ajay Sharma, the director of Merill Lynch’s Pvt Equity Group. There are panels on capital markets, private equity and social enterprise, among others. If you’re in the NYC area on the 14th and have an interest in investing in India (in any form), I’d urge you to attend. You can register for the conference here.
March 16th, 2006
US-Africa Business Conference
The Worcester Polytechnic Institute, in collaboration with the Corporate Council on Africa, is hosting the third US-Africa Business Conference with the theme Building Partnerships for Economic Opportunities in Africa. Plenty of interesting panels including Alternative Energy, Microfinance etc. Speakers include, among others, IPEG member Euvin Naidoo of the Standard Bank of South Africa.
This conference is designed to enhance networking that will identify potential African investment opportunities in specific core sectors of the economy in sub-Saharan African countries. Its prime objective is to promote economic and educational partnerships that will strengthen trade and investment ties between the northeastern United States and Africa. Companies that have been successfully investing in and importing from or exporting to Africa will share their experiences with the participants. Plenary sessions and workshops will be held in Agriculture, Mining, Water Management, Higher Education, Alternative Energy, Health Management, Information and Communication Technology.
The objectives of the conference are:
# To promote linkages among African and U.S. businesses, governments, and educational institutions to facilitate the development of economic partnerships and a healthy and appropriately trained work force
# To promote accelerated development of fair trade and industry, including exports and imports between Africa & the US
# To expand opportunities for small-scale enterprises to become a force in global markets
March 7th, 2006
IFC Global Private Equity Conference
The IFC and the Emerging Markets Private Equity Association (EMPEA) are hosting the 8th Annual Global Private Equity Conference on May 11th and 12th in Washington D.C. The conference is titled Emerging Markets Private Equity: Breaking Through Boundaries. The keynote speaker is David Rubenstein of the Carlyle Group. The conference will include, among others, panels on Views from the LP seat, SME issues, Emerging Secondaries Markets, and discussions on regional/frontier markets among developing countries. I presume this will be a terrific networking opportunity for some of you?
March 7th, 2006
State of the Planet 2006 Conference
The Earth Institute at Columbia University is hosting the annual State of the Planet Conference on March 28-29, at the Roone Arledge Auditorium. The 4 broad areas of discussion are Research and Ingenuity, Tapping into Market Forces and the Economy, Developing Effective Institutional Structures and Challenging Behavioral Patterns and Perspectives. Speakers include, besides Jeff Sachs, Mark Malloch Brown, Carol Bellamy, Rajendra Pachauri, Abby Joseph Cohen, Stuart Hart, Joel Cohen and Nick Kristof. Of particular interest to IPEG members is the panel on market forces. Here’s what the panel looks like:
SESSION THREE: TAPPING INTO MARKET FORCES AND THE ECONOMY
Abby Joseph Cohen, Partner and Chief U.S. Investment Strategist,
Goldman, Sachs & Co.Joseph Romm, Executive Director, Center for Energy and Climate Solutions
Stuart L. Hart, Samuel C. Johnson Chair in Sustainable Global Enterprise, Professor of Management, Johnson Graduate School of Management, Cornell University
David J. Refkin, Director of Sustainable Development, Time Inc.
Amy Davidsen, Director of Environmental Affairs, JPMorgan Chase
I asked Stuart Hart to come speak to our group after the event, but he’s very hard-pressed for time. So, he has personally asked IPEG members who are interested (and have time) to try and make it to the session on market forces. You can register for the event here. If you cannot make it this time, I am sure we can get Stu Hart to come and speak with our group another time.
March 4th, 2006
The Africa Mobiles Story
I had made this post earlier on Zoo Station, but I figured this is worth reposting on here as well. This graph is from the Economist from a couple of weeks back, which shows the growth of mobile telephony in Africa. Admittedly, the growth is coming from a low user base and therefore you see some staggering growth rates. Nonetheless, this goes to show liberalization is no different in Africa than it is in India or China and that if you let a competitive private sector grow, you will see some amazing results. Now, if only these governments would let the lessons of telecom be replicated across other sectors.
March 1st, 2006
Jagdish Bhagwati Writes Bono a Letter
Jagdish Bhagwati wrote an op-ed in the Financial Times yesterday, in the form of a gentle letter addressed to Bono. As you can imagine, Bhagwati takes on the development aid lobby and explains why it is that an aid-driven approach has never really worked in Africa.
The key problem in much of Africa is what has long been called the “absorptive capacity” problem: will aid be used productively or will it be wasted? This issue was understood by the pioneering development economists Paul Rosenstein-Rodan and Gunnar Myrdal. The former famously estimated aid requirements in the 1960s by reference to this notion. He calculated how much investment was required to help accelerate the growth rate of an aid recipient, based on an assessment of that country’s ability to manage such growth. Foreign aid would then be given to finance the investment, provided that the recipient made a matching effort to increase domestic savings as well.
But many economists became sceptical. They argued, with substantial empirical evidence, that when aid was provided, the recipients were likely to reduce, rather than increase, their own savings efforts. This was an early recognition of the “aid curse” that afflicts some aid recipients. Uncritical proponents of aid deny this effect even as they talk of the “oil curse”; as if largesse from the windfall of oil earnings is somehow more corrupting than largesse that comes from aid donors.
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Absorptive capacity is far less of a problem if increased aid for Africa is spent outside the country. Spending can be increased in the rich countries to develop vaccines and cures for diseases that severely afflict Africa, such as Aids and malaria. Research on cures for diseases such as yellow fever and sleeping sickness should be well financed. Since much of Africa suffers from huge skills shortages for virtually every developmental problem, education and training of African students in western universities could be vastly increased. They will mostly stay abroad. But then the west should develop and pay handsomely for programmes where they can contribute in other ways, such as short-term visits to train others, for instance. Until these shortages ease years from now (as they did in the 1990s in India; the “brain drain” was a big issue there in the 1950s) as more nationals are trained and find return attractive, surely we could send out more of our own. I have advocated programmes such as a Grey Peace Corps that would find our aged and retired doctors, engineers and other professionals jobs in Botswana, Zambia and other African nations.
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How, then, are we to translate the enthusiastic altruism that you have generated, dear Bono, into larger, sustained flows of aid? Surely the answer is to go after personal, rather than governmental, flows. Personal spending on aid typically runs into softer budget constraints. With all the charitable spending I do, I could always forego a dinner at Maxim’s and eat at McDonald’s instead, pledging another $100 to the Geldof-Bono aid fund. So, if you take seriously the estimated audience for Live8 concerts at 2bn, halve it for those who were there for a lark or are impoverished themselves, and halve it again for those who attended the concerts twice, you would have half a billion who could sign up for an average pledge of $50 a head as a supplement to their normal giving, yielding a net sum of $25bn outright. The money would be worth almost twice that amount in actual aid, since they would be grants whereas most aid consists of loans that must be repaid.This would mean abandoning some of your current allies. But you can do nothing less if your efforts are to yield results. In a recent interview, you said that you expected your music would endure forever but poverty would have ended in a hundred years. I wish you good luck on your music. But not even a hundred years would suffice to end poverty if you fail to correct your course.
Read what you will into Bhagwati’s comment about Bono’s current allies 