Tag Archives | management
After being neglected for years, Mozambique’s transportation infrastructure has drastically improved in recent years due to the growing economic opportunities in the region. Once considered one of the most dilapidated transportation systems in the world, it is now being revitalised through both public and private funding. Extensive development is underway in ports, rail systems, and roads. The Mozambican Government is currently developing three corridors that provide export outlets for Mozambique’s neighbours.
It has been noted that cities are key to connecting countries to the increasingly globalized world – in many instances cities serve as both economic and creative hubs. In Africa, we are seeing a trend of rapid-urbanisation, with many Africans seeking a better future and prospect in the developed cities of the continent. As a result, these cities are facing ever-increasing challenges. These challenges include service delivery and the massive infrastructure deficit.
Growth, whether organic or inorganic (expansion by mergers and acquisitions), is often the most important driver of value. The main challenge management face in achieving ambitious targets is to assess the most optimal funding structure suitable for their company. There are several funding options available in our markets, these can be primarily categorized into debt and equity.
Seven of the world’s ten fastest growing economies are in Africa, 52 African cities have populations of over 1 million people and by 2040 it is expected that 1.1 billion Africans will be of working age. Africa has 60% of the world’s uncultivated, arable land; 56.7% of the world’s diamond (gemstone) production, 66% of the worlds’ cocoa production, 10% of the world’s oil reserves, 80-90% of the world’s platinum group metal reserves and 40% of the world’s gold reserves.
South Africa and Mauritius have concluded a new double tax agreement (“DTA”) on 17 May 2013. Depending on how quickly the final processes can be implemented, the new DTA may come into effect as soon as 1 January 2014. We summarise below some of the key features of the new treaty.
In our last post, KPMG’s approach to infrastructure prioritisation for Big Cities, we documented our approach to the prioritization process, and advised on how KPMG assists Big Cities in prioritization, planning or sequencing of the projects. In Big Cities Infrastructure Prioritisation we looked at the necessity of accurate and though-out prioritization to ensure sustainability and long-term benefit. Here, we take a look at the benefits of prioritization of infrastructure projects, and introduce you to our Big Cities team.
As previously highlighted, private equity returns continue to outstrip quoted shares and it is certain that operational improvement in portfolio companies is a key component of value creation. Of our sample, 63% had been involved with a private equity-backed business which was subsequently sold and, of these, 77% had been sold for a profit.
According to the survey, the most important contributors to the value uplift were operational improvements and sales growth. Leverage and growth through acquisitions were much less important; highlighting perhaps the reality of the more difficult funding climate.
Most of the seasoned executives and non-executives interviewed for the survey had experienced situations where a business underperformed against plan. When the going gets tough, the relationship between management and private equity backers can come under strain.
When this happens, private equity directors naturally become concerned at the potential threat to the value of their investment and need to be very aware of how their skills can help, rather than make things worse. The non-executives and executives interviewed for this research suggested constructive actions that private equity directors could take to help address underperformance.
The results of our research show a high degree of consensus on this topic, with private equity directors’ lack of operational or management experience seen as a weakness in the way they interact with portfolio companies. Over 70% of those interviewed said that having managerial, operational or sector experience would give private equity executives more insight into the reality of running a business and a greater empathy with management.
The Working with Private Equity portfolio companies survey was carried out with more than 300 non-executive directors and senior management who had experience of working with private equity firms. The survey analysed how private equity executives interact with their portfolio companies and the different private equity approaches.
The majority of those surveyed rated the quality of the private equity director’s involvement in the business as good or excellent.