Helios Fairfax Partners Corporation (FFXXF) Earnings Call Transcript & Summary

So a very good afternoon to all of you, and a warm welcome to our first annual HFP Investor Day. I'm Tope Lawani. I'm Co-CEO of HFP along with Baba Soyoye who's here with us as well. It's great to see so many of you here today, and I look forward to meeting you individually as many of you as possible individually during the course of the day. The purpose of this event is to provide a forum where we can give you insight into HFP's performance and prospects in a deeper and more interactive way than we can either in our annual report or at our AGM, and of course, to create an opportunity for us to get to know one another. But before we get started, there are a few housekeeping items that I'm obligated to cover. First, as you're likely aware, in addition to our roles as co-CEOs of HFP and major shareholders of HFP, Baba and I are also founders of Helios Investment Partners, HFPs Investment Manager. Today, we'll be presenting solely in our capacities as co-CEOs of HFP and all of our commentary should be construed as such. Second, our presentation today, mine and the ones that will follow, may contain certain forward-looking statements and information. The forward-looking information represents the company's expectations as of the date of this presentation and is subject to change after such date. We don't undertake to update or revise such information, except as required by law. And then third, as HFP is currently in a quiet period in anticipation of the release of our quarterly financial statements, we won't be in a position to answer questions relating to Q1 results. HFP's Q1 results will be released in May, and we'll be pleased to answer questions related to that at our AGM on May 11. So with that said, our agenda today will focus on 2 main topics. The first is how we create value. And the second is how we measure value? Value creation is about the progress that we're making, executing the strategy that we articulated previously. And value measurement is about how we translate our admittedly complex and somewhat accounting-led financial statements into our view of the fair value of HFP shares. I'll cover portions of this myself, while others will be covered by Baba and members of the Helios Investment Partners team that are driving various value creation initiatives for HFP's benefit. There's a fair bit of material to go through, and you will no doubt have questions. For those of you here in the room, may I ask that you hold those questions until our Q&A session and at which point we'll have a chance to address them. And for those who are joining us online, please log your questions as soon as they occur to you, and we'll address them as well during the Q&A sessions. So with that, let me start by introducing some of the Helios team members that you will be hearing from later during the course of the day. First is Baba Soyoye, who is my co-CEO of HFP and Co-Founder of -- co-CEO of HFP, Co-Founder of Helios Investment Partners. Baba, raise your hand and smile. Second, Luciana Germinario, who's the Chief Operating Officer of HFP and also Chief Operating Officer of Helios Investment Partners. Luciana is right there. Third is Ahmad Zuaiter. Ahmad is the leader of the Helios Seven Rivers Fund. Helios Seven Rivers is the hedge fund that we're developing -- that the Helios team is developing for HFPs benefit. Ahmad will speak about that later on. Christopher North, unfortunately, Christopher wasn't actually able to join us in person. So you'll be hearing from Christopher in a prerecorded message, but wherever he is, I'm sure he says hello. Ogbemi Ofuya, who's also in the corner over there. Ogbemi's the lead on HETI, which stands for Helios Energy Transition Infrastructure. This is the energy infrastructure, gas infrastructure or midstream, as you might call it here investment theme that we're developing. Wale Ayeni, who runs Helios Digital Ventures, this is the venture capital fund that we've recently seeded. And last but not least, Absera Gizaw, who runs -- who is leading our Helios Sports and Entertainment Group initiative. Since much of what you'll be hearing today actually comes out of the work of the Helios team, I'll begin with a brief introduction to Helios Investment Partners and provide a summary of the investment strategy for its core private equity business. So Helios Investment Partners is the largest Africa-focused private investment firm with a little bit more than $3 billion in assets under management, almost exclusively or predominantly in private equity. The team has 38 people operating out of offices in London, in Lagos, Nigeria, Nairobi, Kenya and in Paris. And Helios is really committed to driving positive socioeconomic development and operating to the highest of ESG standards. There are basically key tenets to the strategy or the approach that Helios takes. One, which we'll come back to in a couple of minutes, is that Helios to invest in the PE business, invest behind the 2 long-term African megatrends being on the one hand, demographics and urbanization. And on the other hand, technology and innovation. And from a deal selection standpoint to select individual investments, Helios applies selection criteria that have proven to generate growth with resilience. By that, we mean growth, obviously, but resilience against downturns, whether macroeconomic downturns or other -- or geopolitical adversities in the market. So stability, protection against loss or exposure to growth. So we look at FX protection, noncyclicality with the preference for capital-light businesses. And then, of course, it's the value creation side of things where the Helios team really drives financial and ESG performance by leveraging a very experienced and specialized portfolio operations group based in Lagos, in Nairobi as well as in London. From a results standpoint, Helios has actually done quite well historically in its private equity funds. Fund 1, its first fund is fully exited now. But for the funds that remain that are still operating, Funds 2, 3 and 4, the estimate is that when it's all said and done, the gross returns on those will be about anywhere from almost 2.5x to just under 3x the invested capital. And these returns, as I was discussing earlier with one of our colleagues here, these returns are also quite high quality. What do I mean by high quality? They're high quality in the sense that they've been achieved with very, very low levels of leverage. Just as a benchmark, in the U.S., more than 20% of all private equity deals have more than 10x debt-to-EBITDA leverage and something like 60% have more than 6x debt-to-EBITDA leverage. Typical leverage levels in Helios deals are, I would say, less than 30% of the capital that goes into a deal is leverage. So the returns you see here are really, we believe, of a higher quality. They're also quite effective achieving -- at providing diversification effect because the correlation to other asset classes is actually quite low. To have relatively low correlation to global PE and venture capital returns is about 58%. You have relatively low correlation to U.S. buyouts at about 60%. And quite low correlation as well as to the S&P 500 at about 53%. If you look at the correlation between, as an example, U.S. buyouts and the S&P 500, it's pretty high. It's -- I think it's in the high 80s. From a results -- in terms of results as well on the ESG side that they've also -- they performed quite well. For those of you who are not familiar with them, EcoVadis is the world-leading business sustainability ratings company. I think that's how they're characterized. And in Helios' portfolio, more than 25% of their companies are rated in EcoVadis' highest tier. That's sort of a goal, it's called the platinum and gold level, which is only award -- it's about 5% of the global population of over 100,000 companies that EcoVadis has rated. And more than 60% of the portfolio has received metals in some -- in one of the ESG categories, either gold -- platinum, gold, silver or bronze. So overall, we're quite pleased. I think we think exposure to some of the ideas that this team is able to generate will be to the benefit of HFP. And I think you'll hear more about that later on from the team. So I mentioned just on the last slide, this notion of the twin megatrends of demographics and urbanization on the one hand, technology and innovation on the other hand. And I thought I'd dwell a little bit more on that, again, from the HIP perspective. So if you think about the first one, demographics and urbanization. This is not a new trend. This is a trend that's been going on for some time. But maybe it's worth framing it a little bit. I know some of these statistics will be familiar to many of you, but I might just repeat them in any case. So over the next 30 years, 70% of the net increase in the world's population of young people will come from Africa. The median age in Africa now is about 19, a little bit less than 19. In Europe, it's 43 In the U.S. and Canada, it's about 38. So that's quite a profound demographic difference so we'll pay dividends. But as I said, that's not a new trend. That trend has been happening. And as a result, not only has that trend been happening, but also you had the world's highest rates of natural economic growth. By that, I mean, economic growth that is not necessarily driven by monetary stimulus. So if those things are true, why is it that you haven't had over the decades that have gone by very large numbers of high growth, high ROI businesses coming out of Africa routinely. That's sort of what you might expect given those conditions. The reason is the following: So Africa is not a rich continent and individual customers, be the households or corporate customers, are low value from a dollar standpoint -- in terms of low dollar value, the customers are low value. You also have the fact that the physical infrastructure in Africa is quite poor. So when the physical infrastructure is poor, it means the cost to serve is high. So when high cost to serve meets low customer value, you have an issue, right? So historically, you really had to thread to work pretty hard to find companies that did not fall into 1 of 2 categories. One category would be highly profitable, but with a limited total addressable market, right? Or very large addressable market and high growth potential, but with very, very low ROI because of this problem of low customer value. You have to work hard to find -- to sort of thread the needle and find those that actually tick both boxes at the same time. And the team at Helios has historically been successful, but that was hard work. So what's different now? The thing that's different now is technology. And look, this is not an Africa, this is not a phenomenon that's unique to Africa, but there's probably no place where the technological developments over the last decade or so have been more profoundly felt than in Africa. What you've seen is 2 different trends taking place at the same time. First is, globally, there's been a democratization of innovation. So 10 years ago, if you wanted to start a new company, a technology-driven company, well, you needed to have a -- you buy a bunch of servers, you have a room with air conditioning, and that's a few thousand dollars there. You needed to be a pretty good programmer, right, to write the code. And even advertising, you basically have -- you take sort of billboard spots and TV ads and radio, et cetera, and all that kind of high fixed cost ways of getting your product to market at least of getting your customer educated about your product. When you fast-forward to today and with Amazon Web Services or Google Cloud, you don't need to serve a room, and all of these costs have become highly variabilized. Pay-per-click advertising has replaced high fixed cost, high risk advertising. And the effect of all of this has been to basically move innovation from sitting in Japan or in Taiwan or in Germany or in the United States or Canada into market. So now you have homegrown innovation using globally available, readily available tools to solve domestic problems. So that's a global trend, but it's very -- it's had a lot of bearing in Africa. And at the same time, in Africa, you've had -- we've had, of course, mobile telephony for a long time. And mobile telephony penetration has been quite high, but smartphone penetration has now crossed 50% across most parts of the continent, and it's actually quite a bit higher than that in some parts of the continent. So this intersection of democratization of innovation and readily available tools in the smartphone, which itself has driven broadband connections and data consumption has now created a very significant and rapidly growing population of investable companies and opportunities in the digital infrastructure that has to support them. So this overall picture is what we, at least in the -- on the Helios Investment Partners side, sees as being very, very interesting today in a way that is different really from any point in history. So we think for the first time, we're at this positive inflection point where the demographic opportunity or the demographic attraction that Africa holds can now finally be monetized because of technology that's making it possible, reducing the cost to serve, so that even for a low-value customer, you can actually make money. So this is what Helios Investment Partners focus is on, and we are very excited as HFP in being able to invest our own capital alongside the ideas that come out of this overall thesis. So this is the framework for Helios' private equity business. So let's talk about the HFP value creation process. How do we create value? As I said at the outset, this really is about the progress that we're making, executing against the strategy that we articulated to you last year and the year before that. So just to recap, there are basically 3 key planks of our strategy. The first is to liquidate the legacy investments in an orderly fashion. And we do that to generate cash to redeploy into high conviction opportunities. So that's the first one. The second is to invest our balance sheet capital into core investments along which our principally private equity today. And of course, the appeal of that is what we discussed on the prior slide, so generate capital appreciation from exposure to the Helios team's best ideas. And the third is to invest balance sheet capital to see the formation of new strategies beyond private equity that we believe can attract fee and carry paying third-party capital. When we do that, we increase the fee and carry income flows into TopCo LP, TopCo LP being essentially the conduit into which these fee and carry income flows come into HFP. And we create additional co-investment opportunities for HFP across those strategies. So again, we're providing diversified exposure to the Helios team's best ideas in PE and in the other investment strategies that you'll hear about later on today. So that's a recap of our strategy. Now how we actually do against that? How did we do in the year that we've just finished in 2022? The short answer is that we're making really good progress. On the first one, liquidating the legacy investments. If you look back now, let me look back beyond 2022 to 2020 when we completed the combination in December 2020. We've stabilized the value of those legacy assets. When you incorporate the value of the Fairfax guarantees and insurance features that we've built in, that portfolio is essentially flat since 2020 versus the 40% decline in the year prior to that, that we saw. So that's taking a 3-year look. But just last year, some of this bled into this year, by the way, some of this is Q1. But we realized $86 million by exiting completely our investment in Atlas Mara, a partial return of capital in AFGRI and also a complete exit of our investment in Conlog, via the CIG loan as it's referred to on the balance sheet. So $86 million realized in the last year, basically in the last 12 months, and we're making really good progress on exiting the remaining assets. So we feel very good about how that first part is coming along. On the second part, co-investing alongside Helios Funds, we made a small additional investment of $3.2 million into Helios' Fund IV the use of which was to fund an additional investment into ASR, African Specialty Risk, which is a Pan-African reinsurer that Helios Investment Partners through its Fund IV has invested in. And that investment and others seem to be going really quite well. And the last is investing to see new fund strategies. And here, we've been very busy. You'll hear more about this during the course of the day. We seeded 3 new fund strategies. One, Helios Digital Ventures, which is the venture capital fund. We seeded that with $14.5 million. Helios Sports and Entertainment Group, HSEG, which as its name would imply, is about sports entertainment and the creative industries. We seeded that with $39 million. Although of that $39 million, $30 million is the investment in NBA Africa at cost of the original cost, and $9 million was incremental. And also seeded the Helios Seven Rivers Fund with $30 million, which comprised in about equal parts, cash from HFP's balance sheet but also the -- a few securities, public investments in public equities that we already held on our balance sheet. We transferred into HSRF with Ahmad managing it. So see the 3 new fund strategies and we've got 2 new strategies in advanced development. One is our Climate Fund, Helios CLEAR, Climate Energy Access and Resilience. Chris North, one of the co-leads of that is the gentleman who will be speaking on a prerecorded video because he was unable to join and HETI, Helios Energy Transition Infrastructure. Both of those are in quite advanced development. So overall, really quite good progress in the year that we've just concluded. So now let's talk about how we measure value. How do we arrive at our view of the fair value of HFP's shares? So the way we look at it is that HFP is a combination of 2 things. One, a portfolio of assets on our balance sheet. And second is an operating company. So valuing the portfolio of assets is straightforward enough. We'll come back to that one. But that's straightforward enough. The operating company requires a bit more explanation. This is basically HFP itself. So it's our team, it's our offices and our attendant operating costs, rents, salary expense, general overheads, regulatory and public company costs and, of course, the fees that we pay our investment manager. Basically, everything that's required to make HFP run on an ongoing basis. That's the operating company, and those are its costs. This operating company derives revenue from 2 sources. The first and generally more predictable of the 2 is excess management fee income from the Helios funds that comes through to us via TopCo. That's the first source of revenue. The second source of revenue, which is more volatile, is carried interest or performance fees from those Helios funds. So we have the operating company, 2 sources of revenue, one more stable and predictable than the other. From a valuation perspective, we value the operating company on the basis of the profits that it earns from the more stable management fee revenue after we deduct all of the operating expenses. Such profits are typically referred to as net fee-related earnings, or NFRE. So NFRE profits are valued on a simple PE multiple basis with market benchmarks. But as we, HFP, are still running NFRE losses, I'll share that with you in a minute, i.e., our management fees are not yet sufficient to cover all of HFP's operating costs. We need to ask what has to happen for these losses to turn to profits and then take a view on what kind of multiple to apply to those potential profits. So that's our approach. So once we've dealt with valuing the balance sheet assets -- the portfolio of assets on the balance sheet, and we value the net fee-related earnings, what we're left with is the value of the carried interest, which we must then add. So we'll cover this in this section that follows. And of course, I'll give you an opportunity to ask questions after I conclude. So let's get started on this. There are basically 4 parts to it, and we'll go one by one. So let's start with the value of the balance sheet investments. These investments are -- the investment portfolio is valued simply on a price-to-book basis. And there are really 4 components or 4 kinds of assets on the balance sheet. We are, first, the insured legacy assets are the ones that are covered by some form of insurance or guarantee from Fairfax. We have uninsured legacy assets. Then we have the co-investments with Helios Fund IV, and we have the capital that we've invested in seeding new investment strategies. Then of course, you've got net cash and other assets. So those are the components available we have on our balance sheet. As of the end of 2022, Insured assets were $91 million. That's principally AGH, Philafrica and the Philafrica Facility, offset by the HFP redemption derivative, which is essentially the amount -- the reduced amount of the reduction in the amount that we are obligated to pay back to Fairfax on the debenture that was taken out about 2 years ago. So $91 million in insured legacy assets, which benefit from the full faith and credit of Fairfax, which we believe to be substantial. The second are the uninsured legacy assets, and that's no more than 90% Nova Pioneer. Access Bank is small and that's $26 million Nova Pioneer is the education business that you might be familiar with Third are the core investments of the Helios Funds you know which have been valued at $51 million now. Not just the Helios fund investment, but one co-investment in a deal that Helios did, which is Trone. Trone is a medical technology distribution company, the leading medical technology distributor in Morocco. In total, we've invested $94 million in seeding new strategies, HDV, HSEG and HSRF. And then net assets and net cash, $14 and $42 million, respectively. So in total, the value of the balance sheet assets at the end of the year was $319 million. So next, let's talk about NFRE, net fee-related earnings. And just to cast your mind back, this is the operating company that I referred to before, take all of the costs of running this machine that holding the balance sheet assets separately, hold the carry separately, cost the overall machine and see if you can cover that with management fee income. So that's the middle bucket, that's NFRE. The excess of management fees from TopCo over all of HFPs operating expenses. And that's valued on a simplified a PE multiple, making reference to market benchmarks. So first step, how do we calculate NFRE? Well, I'll just start with the familiar. On the leftmost column, you see the numbers that would come straight from the 2022 annual report, the financial statements. So there, we show negative $22 million of income, so negative $22 million of income. But as you'll see, all of that comes from either net changes in unrealized gains -- sorry, net changes in the value of unrealized investments or net realized losses or gains from investments, some interest, some dividends, all of those items are essentially investment related. None of them are operating related. But that's -- just starting you there. So minus $22 million of income that you can take from the financial statements. So if you adjust all of these nonoperating items, but then include the one bit of income that is that we've discussed before, this is the management fee income that has come from TopCo into HFP. That's the $1.336 million that you see. So from an NFRE perspective, our income, our revenue, if you will, for 2022 is just that $1.336 million. Everything else is a nonoperating item for these purposes. So then let's look at the expenses. We recorded $20.9 million of expenses, which you will see from the financial statements, $20.9 million. But there, again, when you adjust certain nonoperating items and some items that, while operating are nonrecurring take away some costs that we think are -- which we know are associated with the actual -- with certain underlying investments being carried on the balance sheet. When you make those adjustments, that $20.9 million of expenses adjust to $13 million, $13.2 million on the far right column. So $1.3 million of revenue, $13.2 million of costs. So we have a loss on an NFRE basis of $11.9 million. So $11.9 million in NFRE losses. Obviously, that's not the destination. So how do we get to positive what's the path to positive NFRE. Well, the key driver is what is there on the left. It's all about growth. It's about growing the assets under management in the Helios funds to which we're entitled to excess fees, right, growing those assets at a rate that's faster than the growth of our expense line. That's basically in a nutshell. So it's about growth, growth in the AUM of Helios Funds. Typically, what you find, depending on the strategy, it will vary. But typically, the AUM on new capital in the Helios funds will range from 1.5% to 2% on the capital that's raised. And the marginal profit after all the costs that are associated with in any uplift, et cetera, will also range between 40% and 60%. If it's a brand-new strategy where you're still building the cost base, the infrastructure to run the strategy, the marginal profit will be lower. It will be more like closer to the 40%. If it's a mature strategy like the PE business where more or less the organization required to execute that strategy is already in place, then the marginal -- the marginal profit, excuse me, would be higher and closer to the 60%. So those are really the things to play with. So the question is, okay, well, where might this incremental AUM come from? Well, the sources are those that are listed here. So where Helios is investing, it's Fund IV now. That's almost fully invested as I'll come to in a minute. So Fund V, which means Fund V is on the horizon. That's a potential source of AUM. Helios Digital Ventures, the venture fund, sports and entertainment, HSRF, et cetera, and of course, over time, successor funds to all of these as well. These are the potential sources. So if we just do a little bit of a hypothetical and say, look, today, if you remember, we're running at just under a $12 million NFRE loss. So if you just make an assumption about how much incremental AUM might the Helios funds raise amongst them -- collectively amongst the -- from all the potential sources listed on the left side of this page. And we've just taken a range from $1 billion to $4 billion. You can expand that range or contracted as you see fit, but $1 billion or $4 billion and applying a range from the low of the fee base, either 1.5% to 2% and from a low of 40% marginal profit to a high of 60% marginal profit and see what would you get? What would that incremental fee income generated on an NFRE basis? And the range is obviously broad, but let's say, anywhere from $5 million to $15 million of NFRE, which seems to us to be entirely plausible. So then how do we think about -- if you were to get to NFRE in this kind of range, what does that mean for value? What might that be worth? Well, there are many benchmarks, including Brookfield as a manager, that just went public, although the data -- the research hasn't really revealed the right numbers for those, so we couldn't include it here. But listed [ alternately ] manages typically, the NFREs valued at around a 25x multiple. When interest rates were lower, that number was actually higher, but that's where we are right about now, around 25x. Now 25x, I think these companies have many advantages over HFP and so you've got to apply some sensible discounts to that. So take discounts for -- scale is one very obvious example. And maybe you're not at 25x, 15x for the sake of argument, 15x to 17.5x, assuming that's the value of NFRE profits. If so, that would create about $100 million to $250 million of value from that operating company. So taking a view as to how successful the strategies are likely to be -- that you'll hear about later on are likely to be in attracting third-party capital. And estimating what the range of outcomes in terms of fee income, incremental profit, et cetera, and with the fact that these efforts are currently underway, we think there's $100 million to $250 million of value embedded within that operating company despite the fact that it's today experiencing NFRE losses. So just going back a bit. So the value of the balance sheet investments that we discussed, $319 million. The value of the NFRE a range of $100 million to $250 million depending on the assumptions that you make. And so that leaves the value of carry in existing funds. So there are 2 ways of thinking about the carry in existing funds. One is the value of TopCo Class A, which is shown on the balance sheet you can find in the financial statements. The way TopCo Class A works is that it's a discounted present value of the carry that would be earned in the future based on the forecast that the Helios investment team has for the timing -- for the value and the timing of exits of the underlying portfolio companies in the funds to which HFP has a carry entitlement. So that's what TopCo Class A is. That's one way of looking at it. The other way of looking at it is to say, well, on a mark-to-market basis, if you actually just take the portfolio companies that are in those funds today, at the value as of December 2022, and you just liquidated them, right? And you just sold them at the current value. You don't wait for the growth, you don't wait for the future, just sell them now. How much carry would that generate for HFP? What would HFP share of that carry be? So those are 2 ways of looking at it. But one point to emphasize that which I'll come to again as we go is that in either case, is any value given in TopCo Class A for carried interest in funds that don't actually exist today. So we can think of that as franchise value. That's Part D, we'll come to that later on. So first let me may be remind you what is HFP's carried interest entitlement. So what do we actually own. So on the left side of the screen, you see the funds that exist today, Helios Funds II and III and Helios Fund IV. HFP is entitled to 25% of the carried interest coming out of Helios Funds II and III, and 50% of the carried interest coming out of Helios IV. Both Helios Funds II and III are today fully invested. The carry structure is a 20% share of the profits above an 8% hurdle. They're fully invested, as I mentioned. Together, they have about $2 billion of total commitments. Of that $2 billion, $2 billion, same number has been realized. So about all -- so investors have received all of their capital back. And the residual value as of December 2022, was $1.9 billion. And we forecast the HIP team forecast exiting that portfolio over time from between this year and probably to the end of 2025. So that's Helios Funds II and III. Helios Fund IV is being invested now. It's about 78% invested. The carry structure is the same as Helios II and III, 20% carry over an 8% hurdle. Of the $355 million in total commitments, $275 million has been invested. So the 78% might include a bit of capital that's committed, earmarked to be invested in a specific thing, but the capital hasn't been called. So $275 million has been called and that's currently valued at $306 million. And the forecast exit dates for those are including -- or between now -- sorry, between the end of this year all the way through to 2030 because, of course, those investments are new and still need to be to sort of season. So that's what's in the ground today. And so when we talk about either TopCo Class A value or embedded carry either measure, that refers only to value coming out of those 2 verticals -- those 2 buckets. In all of the other strategies, HFP is entitled to a 50% share of any carry or performance fee or incentive fee type of compensation that comes out of those funds. HDV, the venture fund, has been seeded by HFP. Wale will tell you more about this later on, but 2 investments have already been completed, and they anticipate starting third-party fundraising this year and into the next year. HSEG, Sports and Entertainment, also seeded by HFP. 2 investments have been completed, the investment in NBA Africa and the investment in Event Horizon and one investment has been signed but not yet completed. We expect that to be completed soon. And third-party fundraising is also expected to take place this year and run into next year potentially. Third is HSRF, the hedge fund seeded by HFP. It's in the pilot phase. Ahmad is investing that as we speak. And that's a hedge fund strategy. So that will be open for fundraising, starting depending on how the pilot phase goes and market conditions or rather investor appetite. We may open that to third-party capital sooner rather than later, but 2023 into next year is when we anticipate doing that. In the case of HETI, HETI is actually a slightly different approach to capital raising. This will be seeded by -- this is the energy transition infrastructure effort. This will be seeded by 2 companies that are in the Helios Fund portfolio will be merged by merged with a NASDAQ-listed SPAC towards the end of this year, and that will form a permanent capital publicly listed similar to if you're familiar with the space, companies like Fortress Energy, for example, listed energy infrastructure investment entity, to which HFP will have an entitlement to excess management fees and a 50% share of the carry. And then last but by no means least, is CLEAR, the Climate fund, which actually already had a soft closing on third-party capital from investors last year and is anticipating additional third-party investors coming in this year and possibly into next year. That's just a recap of what we're entitled to. As I mentioned, the only ones that exist now the only ones that exist now that are factored into any of the numbers that you've seen are the 2 on the left. So maybe I'll spend 1 minute just giving you a bit of an insight into what's actually inside of these funds on a very aggregated level. As I mentioned before, just now I'm on the chart on the left most side of the page. The total commitments between Helios II, III and IV, about $2.4 billion. Of the $2.4 billion, about $2 billion has been realized. That's the light gray top portion of the second column, $2 billion realized and $2.2 billion yet to be realized. That's as of December 2022. Of the $2.2 billion, $1.9 billion, substantially all is private -- is still privately held and therefore, privately valued and about $250 million in value is in companies that have now become public ,that either we took them public or as a structured pipe deal when we did the -- when the deal was done at the outset. So that looks pretty healthy. There's a really excellent geographic diversification. More than 50% of the -- by capital of the companies in the portfolio weighted by capital are Pan Africa, they're geographically diversified. And then you've got some of the big economies, Nigeria, Morocco, Egypt, Ghana, well represented. But you'll also see East Africa. So again, that's regional. North Africa regional. So regional diversification is really -- and national diversification is quite healthy in that portfolio. And lastly, we see a lot of representation from the sectors that we're all very excited about. Financial services and financial technology is about 40%; consumer nondiscretionary food, beverage, personal care, those kinds of things, education, et cetera, 22%. Clean energy and power, much of which will come out in the future and be done through CLEAR and HETI, but that's about 20%. Digital infrastructure, those are the data center investments, one in Kenya and one in Morocco. So it seems a healthy portfolio, geographically diversified and exposed to some of the most exciting sectors in the market. So we feel pretty good actually about the prospects. We're generating meaningful carried interest for HFP as these funds season and get liquidated. And just a couple of words on the performance of these underlying businesses, which we think is actually quite extraordinary. 2022 was a difficult year, as I think everyone is aware. And in that difficult year on a weighted average basis, revenue growth for all of the companies in these funds was 36% in U.S. dollars, 36% revenue growth for all of the companies in the Helios Fund private equity fund portfolio versus 3% growth, revenue growth in the S&P 500. On the profit side, 28% profit growth, 28%, a world where all you read about was gloom and doom in emerging markets and this the other 28% profit growth in that portfolio, whereas in the S&P 500, S&P 500 profit has declined 26% last year. Of course, because on the private portfolio, where the public portfolio values adjust by themselves or by -- they adjust. And in the private portfolio, you're marking them with reference to comparable companies, et cetera, many of those valuations came down and discount rates went up, et cetera. So despite that strong performance, the value of that portfolio was down 6%. But that's still substantially better than the 19% by which the S&P 500 was down last year. So a lot of reason to be encouraged by the performance of this Helios portfolio. So back to the value of the carried interest. As I mentioned before, there are 2 separate ways of looking at it. One is the value of TopCo LP Class A interest, which is -- which you can find on the financial statements. Again, that ascribes no franchise value. So there's no value given either for the potential or carried interest in any of the strategies that you will hear about today or even from Fund V or subsequent funds on the private equity side. The value of TopCo Class A interest at the end of 2022 was $77 million, down 15% because of the value of the underlying, as I mentioned before, the value of the portfolio was down 6%, and these things are highly leveraged -- carries highly leveraged to the value of the underlying. So $77 million is the value of TopCo Class A interests. And the other way of looking at it is the embedded unrealized carry. So just liquidate everything at the carrying value, all the new investments don't wait for the growth, just get rid of them and that would be $46 million, more leveraged, of course, because that's 1 -- that's a moment in time, not a discount. So that's more leveraged. So $46 million. So $77 million, $46 million, that you can sort of think of the carried interest in 2 different ways. So $319 million for balance sheet investments, $100 million to $250 million in the value of NFRE, $46 million to $77 million, depending on which way you look at the value of in existing funds. But then, of course, again, no franchise value, right? That assumes that this is the end of it and nothing interesting will come out of the future. So when we sum all of that up, how does that compare -- how does that view that we have on the fair value of HFP shares actually compared with the market value of HFP shares. So the value of the balance sheet investments at $319 million the range that we have on NFRE, the value of existing -- of carrying existing funds that sums up to [indiscernible] the numbers you see in the yellowish column, about $465 million to $650 million. And that compares to about $300 million, at least as of the end of March about $300 million in market cap for HFP. So our view -- and of course, that does not give any value to -- there's no franchise value ascribed to that. So depending on the view that you take, we think it's in our own opinion, at least, that HFP is anywhere from 50% to 100% undervalued in our opinion. And look, I think with the -- so when we look at the -- this will take time, right? I mean this will take time. None of these things actually will happen overnight. But the view that we take is that we're very pleased with the progress we're making, executing on the 3 elements of our strategy, which I'll just recap again, it's liquidating the legacy portfolio. Redeploying our capital into high conviction investments alongside Helios Funds and seeding new high-potential investment strategies that we believe can boost HFP's share and carry income. And while, as you've seen, the value of HFP shares are materially below what we consider to be fair value. We, like all of you, are long-term investors. So we're very optimistic about HFPs prospects, and we're confident that in time, the share price will reflect true value. So I know that was a lot to digest. I will now be happy to take any questions that you may have. And for this Q&A session, I might just ask Baba and Luciana to join me on stage for moral support if nothing else.

Thank you, Tope. Good afternoon, everyone. My name is Luciana Germinario, and I'm the COO of HFP and I will be facilitating this first Q&A. [Operator Instructions] All right. Let's start with the online one. We have a few. If you compare the various drivers of HFP value, balance sheet investments, value of the net fee income and value of carry, which have the greatest potential for upside in the medium and long term? Tope, maybe this is a good question for you.

Sure. That's a good question. So the way -- I guess the way I think of that is, is I suppose the way I think of most investments, which is almost like a layer cake, right? I think you need a basic foundation on which you can kind of hang your hat. The thing that is lowest volatility, greater stability and then on top of that, you can layer on sort of higher potential, possibly higher risk elements. So for me, I think of the balance sheet assets as sort of the base. I mean, we can debate whether you think it will be worth a lot. But the reality is that, that's a pretty solid base upon which to build. Now, as we sit here today, I would say that you might think that the NFRE portion, if you follow me, seems potentially sort of high risk. But the reality is that it doesn't take a lot of given the operating leverage in that business. It doesn't take a lot to break from NFRE losses to NFRE profits. And when you get to that point, that's also a pretty stable. You just clear a threshold and then you have another stable layer of that layer cake if you just keep that imagery. And then at the top of it is carried interest where you can really get some very interesting upside, but admittedly, there's greater volatility. So I think maybe less in terms of just what's upside and what's downside, but really more in terms of just how you layer your investments, so you protect your downside and you expose yourself to the greatest potential for value creation. So balance sheet assets, NFRE subject to us crossing that threshold into profit and then the carried interest on top.

Great. You have a question. Go ahead.

My name is [ Hugo Nelson ]. And my question is around the drivers of appetite from investors in terms of allocating to African orientated funds. Presumably, I mean, I'm working on the basis that you've got some historical perspective on that in terms of the various funds that you've raised and what the capital market environment as -- or what impact that's had on how prospective investors have responded to the opportunity to participate in these funds? And how you think that may play itself out going forward in terms of whether allocators are influenced by, be it other opportunities, be it optimism or pessimism about Africa, whether it's the return potential of the fund, but it just seems to me that there are a whole bunch of factors that seem hard to predict.

Can give that a go?

Yes.

I think that's a really, really good question. And I think actually, maybe we'll -- we have another Q&A session at the end where it might be worth exploring that question again in light of when we talked about the new strategies. But I think that question is one that permits everything, right? So look, I think the last 12 years or so have been very, very difficult fundraising environments for emerging market, private equity, emerging market alternatives generally very difficult, not just Africa, but basically everywhere, even China got very difficult. And the reason for that is that, obviously, the U.S. dollar is the reserve currency and the most money that goes into these things are seeking dollar returns, right? And when you've had the kind of bull market in all assets, especially financial assets that you had in developed markets, the U.S. here and in Europe. As a dollar investor, it's been hard to persuade yourself or to be persuaded that you needed to look far and wide for diversification or for all the opportunities when you're mining the S&P 500, you levered a little bit as I indicated before, and everything works, until it doesn't. So now -- so in that environment, it's been -- it was really difficult to get that your voice sort of heard above that noise, and I understand it. But now, I think given what's happening with rates, given what's happening in the market and then the realization that actually not only were the returns that were being generated of maybe of a sort of stimulated quality, but a lot of them, especially in the private markets where they were mark-to-market that were not realized gains. But now I think that the imperative for asset allocators to start thinking again about diversification, I think again about other markets starting to look -- is really starting to change. So it's early days, and we'll see how it goes. But I would say that the recent conversations that we've been having now with my Helios Investment Partners had on with investors is actually quite encouraging, right? It's now -- we will not -- nothing grows to the moon. These markets are not going to the moon. And I think the music has stopped a little bit given the way the returns were getting generated. So we think that the next several years for emerging market alternatives will be much more interesting than the last several years have been from a capital flows standpoint. So I think that's a statement that I think it's safe to say, it applies relatively broadly across the strategies in Africa. But even within that, there are some of the strategies that have particular appeal for specific reasons that we think could actually be more or less interesting to investors. But I think that's a super question.

Thank you, Tope. Any more questions on the room? Please.

Thanks for that wonderful presentation. My name is [ Rajiv Agrawal ]. I was pretty curious to look at the investment slide that you put where you showed on the balance sheet, how you have come up with the value of your investments. And specifically there, it was mentioned that there are certain assets which are insured by Fairfax. Can you just talk about what -- how is that structured? Because I think the $91 million approximately you're saying is ensured by Fairfax. So how is that insured? And what is the -- at what point do you realize it?

Go for that one again? Sure. Yes. So that's another good question. So when we completed the combination in December of 2020 and a little bit thereafter, there were a few -- actually prior to that. So in the agreement, there were a few investments, Atlas Mara being an example, where even though they remain on the books of HFP in the agreement that was struck, Fairfax agreed essentially to indemnifies our own work to ensure HFP against any losses associated with those particular investments. So think of that as sort of an insured. And then separately, post closing, we had -- we entered into another agreement with Fairfax which I won't bore you with the complex details, but which essentially had us taking on the debenture from Fairfax in the amount of $100 million. And the amount that we are to pay back at maturity would flex by the amount by which a portfolio of assets, when liquidated or at least at the time of -- the date of maturity of that debenture if they weren't liquidated, the amount by which they fell below the value at which we were carrying them when we completed the investment. So a bit complex, but that's essentially how it's happened. But we've been liquidating and exiting some of these as we go. And so the idea is that -- and we're still trying to obviously maximize value. We're not merely sitting on these investments and waiting to claim on our insurance policy. We're keen to maximize value. Whatever the case. Does that answer your question? Yes. Look, I think we've got to be a little bit careful about forward-looking statements, but I feel we feel quite good actually about the progress we're making on exiting the entire portfolio of legacy assets insured or noninsured, right? We feel really pretty good about the progress we're making. We don't think it's not going to be a job of many years, if you see what I mean.

Hello. Baba and Tope, nice to meet you again. My name is [indiscernible]. I'm an individual investor. I run a family office based out of Montreal. My question is regarding like when you are liquidating the legacy investments and you are sitting on some cash, how do you weigh the possibility of investing it out of Helios structure for a deal that you might not have access to within Helios versus investing it within another Helios fund? Because obviously, when you are putting it in a Helios fund, the HFP investors only meet back 50% in carry and 100% in excess management fees. So if we were to invest it out of Helios like NBA, [indiscernible] directly, like HFP was investing and not through Helios. Like HFP investors will make more money in that way. So how do you weigh the risk -- not the risk like just like way that possibility investing inside and outside?

2 parts. Maybe I'll answer the second, and you can do what mind taking the -- yes. So the second one, I just want to correct is just a small correction, which is the -- just to be clear that the HFP pays itself, pays no fees or carry on its investments to Helios Investment Partners. So it will earn -- HFP will earn its share of fees and carry on third-party capital. It does not pay any fees or carry. So the choice as to where to invest has actually no bearing on what comes on the cost, if you will, to HFP. So I just wanted to maybe correct that, I would.

What was the first part again actually? That was a kick in exactly.

So we just look for the best ideas, and we have -- there's a team at HIP that is, we believe, as strong as any that exists, and it doesn't mean they'll see every perfect investment. It doesn't mean that, but on the balance, we think there's some enough good ideas coming out of there to invest HFPs capital.

In this sense, you can think of the shares of fees and carry as a boost on your investment because you make your investment, you got a return on that. And on top of that, you get share of third-party profits.

Hello. My name is Mike. I work at a local investment council. My question is with respect to the management fee that's charged from TopCo to the HFP shareholder, have you ever considered scrapping that since the 2020 deal?

No, we have not. I mean, I think the reality is that we do have to pay. There's a team of 38 people who are doing the job of investing the capital on our behalf -- on HFP's behalf. And as I said that service does need to be compensated. Now it's clear though that it is overwhelmed by the flip side, you see what I mean, the carry that comes in, assuming they perform, the carry that comes in, the excess fee that will come in will drown the fee that we have to pay them to manage our capital.

Is that clear?

All right. We have one more from online. Are there any plans to do a tender offer for share or do you see a lot of interesting opportunities in the current landscape? Baba, would you like to take that one?

Okay. Thank you. I mean as we said at the top of the screen earlier, there's, I think, 5 different strategies we're looking at. If you [indiscernible] the question actually simply first, the answer to that is simply there's a lot of opportunity. We overwhelmed [indiscernible] opportunity, and we see the pipeline of highly attractive investment opportunities actually increasing, not reducing -- and when you hear from the rest of the team later on, they'll sort of, I think, talk you through the ideas they're working on, I think you'll see the level of excitement, maybe that actually haven't transmitted to you the level of excitement that we feel collectively in what we see ahead of us. So there is no -- yes, I think we just need -- we need to liquidate the legacy assets, get the capital. We also have some bank facilities to help us have more capital to invest. So I think we're very long opportunities in the current landscape.

Guys, thanks for crossing the Atlantic to come and see us here in Toronto. My name is [ Hui ]. I work with an asset management firm out of Montreal. You mentioned Brookfield briefly. And as you know, they've separated the asset management side from some of the other stuff. Capital markets love simplicity. And I know this is [indiscernible] bucket. But do you guys have a think of like maybe like in the really long-term kind of like rolling all of Helios into this vehicle, getting rid of the balance sheet assets and just having like a pure-play alternative asset manager for Africa that's traded here. Is this something that like you've ever brainstormed about just from the press and if you can be specific just from the perspective of like capital markets, just love and simplicity, you see it over and over again? Even with Brookfield, they talked about closing the discount forever and ever and ever, and it's like just through their arms up and this new thing. So just any like color you can give on that?

I mean, quite clearly, what you see, I say, we spend a lot of time thinking about the options we've got. And I think everything you said there makes a lot of sense. Simplicity has a lot of volume into ourselves, not just to investors having an approaching model that people are familiar with is also clear to us. And I think we -- the comp you see up there that would this cost I think is what we look at. So I think clearly, some of that we have -- it's on our list of things that -- a long list of things that we consider. But I think the job right now is simply legacy assets win the trust of investors have investors understand what we're trying to achieve. And then this structure can -- something that would just follows that. But I think without sort of, I think, sort of our legacy assets issues, when you trust of investors. I think the rest is just and nice to have. So look on the priorities first. And then, yes, to go on we do in the future.

Thank you One more, maybe the last one, and then we'll transition. Today, there is $3 billion in current funds yield, very little cash stream. But you expect large stream for the future. Can you please explain the new profitability you expect versus the low in the past?

Forgive me if I misunderstood the question, but I think I understand it. So I think that the question is the existing AUM. So in the private equity funds, we have sort of unrealized value of a couple of billion. So maybe we'll hold the $3 billion right? I think that's the $2 billion being referred to. And the question is, what is the cash yield associated with that? If I understand the question. So I think historically, the nature of these investments as private equity investments, they are not so much yield investments, they're made for capital appreciation. And so historically, what they've done is, as I mentioned, the data we're at liberty to discuss these funds will return 2.5x to 3x gross value -- the value invested. So that's what they play for. They play for multiple of money appreciation, of course, at good IRR as well. they don't really play for cash yield. So I think if I understand the question, clearly, the historical performance of those funds has actually been quite good. The prospective performance we expect to be, we believe, will be similar or better because the macro environment is changing for the better because of this technology and innovation meeting demographics. So I think we won't see cash yields going up from the PE portfolio because that's not what those investments are for, what we do expect to see capital appreciation from those funds in line with or better than what we've seen in the past. It's the same team at Helios investment Partners that had that historical performance. It's the same team that will be driving it going forward. What we then need to do is make sure that on the HFP side, the capital that we have on our balance sheet see similar rates of return. And the best way to see those similar rates of return is to make sure that it's being managed in the same way, in an aligned way with the investments of the HIP team is making.

Thank you about that. I think we're going to be wrapping up this first Q&A. If there will be more questions, we have a second Q&A at the end. And now we're going to transition to the second part of the presentation, and they will be introduced by Baba.

Thank you. Welcome, everyone, to the second half of this, our very first Investment Day, you're now going to hear about the strategies behind which we are put on our energies looking forward. It's been a journey of nearly 2 decades. Started when Tope and I both had hair in our heads and [ Vince Carter ] was wrapping up with dunking career with the Raptors. We are [indiscernible] to express over a long period of time in the things we're doing. I think you saw the things that we told earlier of the kind of returns we get in, how we think about our sectors and which we're investing in, how we think our geographies which we invest in by having the geographical diversification. Basically, what you're going to hear from us is about how we are planning that 20 decades of around Qatar, [ Dunkin ] and everything else to generate very attractive returns for you, our investors. You actually just heard from Tope as well about how our business generates value for you through successfully deploying capital under our care along with third-party capital that we raised. We have very strong alignment of substantial shareholders in U.S. Fairfax. And this model of boosting investment returns through managing third-party capital is what we believe generates really compelling returns as well as plays to our strengths as your equity fund managers. To deliver on this, we have a number of strategies that we have seeded and are developing, which address distinct opportunities in which we have expertise but are all driven by the same fundamentals of demographics, organization, formalization which drives secular growth and technology and innovation, driving leapfrogging of ideas, business models, cost structures, and innovation as well as the impact on the quality of livelihoods of people across Africa. These strategies will result in a well-diversified portfolio of investments across the continent, which we believe will offer very attractive returns. The strategies are focused on have largely been borne out of successful things we've done in the past. And trends that we've observed over 2 decades of investment in continents. Ogbemi, who's been with us for 10 years, will speak about infrastructure as power in Africa. Ahmad who have been known for over 15 years initially as an LP, will elaborate on public market investing on the continent. Absera will focus a very long telescope on African Sports & Entertainment. Wale, who's joined us from IFC, will intimate also on its initiative to support founders and creating Africa's next generation of high-impact businesses. And finally, you will hear from Chris who unfortunately was not issued a visa by the Canadian government and will be on video to talking about Africa's growth decoupled from greenhouse gas emissions. I'm actually glad is not flying and contributing to the carbon saving footprint, so we're driving a climate fund. Everyone will speak for roughly 10 minutes. And at the end of this all, we will invite questions, bearing in mind things around marketing communications for funds being raised and [ MPI ] considerations. First off, Ahmad.

Thank you, Baba. My name is [ Ahmad Zuaiter ], and I'm the strategy lead for the Helios Seven Rivers Fund. Seven Rivers is a bit of a departure in the context of Helios' traditional business, which is principally focused on private markets. Our focus will be on the exciting opportunities in Africa's public markets, both equities and credit, a space that, in many respects, some would call right now, a classic empty room. While liquidity of the asset class differentiates us, our process and strategy draws on quite a few similarities with Helios' private funds. First, Seven Rivers is an alternative strategy. an absolute return risk-adjusted mandate. And this gives us the flexibility to deploy capital both opportunistically and patiently while using financial instruments to hedge systemic risk. Secondly, we employ a private equity framework to resource allocation, diligence and underwriting. And in this way, we can concentrate the portfolio and maximize the alpha, a clear differentiator, we think, versus peers. And third, we share with Helios a singular focus on Africa, their deep local networks and we're very much aligned with our sector and thematic convictions. And all of this means we can expect to exploit great synergies from our partnership with Helios. So why a hedge fund for Africa and why now? Two primary reasons for the why. One, public markets, we believe, offer a rich and growing opportunity set. Many listed companies represent leading franchises in their respective countries. And some will inevitably need to raise growth capital to scale. There's also a large visible pipeline of exciting new IPOs, which will introduce new sectors to the stock market, some that do not exist currently. And today, if you look at valuations on a risk and liquidity adjusted basis, public markets are deeply discounted versus privates, a sharp reversal of where we saw this relationship in 2015. Secondly, we're big believers that greater institutional involvement will have a profound impact on market development through issuer engagement and capital deepening. It's no coincidence that as foreign participation increases in these markets, the whole ecosystem of financial intermediation tends to benefit. So why now? We'll unpack this in the next few slides as we believe this point is actually quite critical. Foremost is valuation. We believe that African public markets are today deeply dislocated both relative to other markets and importantly, versus their own history. Much of this is due to scarcity and high cost of capital. The other key driver, we think, is a valuation in itself is just deep neglect. We believe that Africa's superior growth profile is effectively being ignored by most investors, due in large part to liquidity, but also a widening perception reality gap. One of the hallmarks of any less trade asset class is diversification. African markets are actually quite idiosyncratic and continue to offer uncorrelated returns to developed markets. At a time where investors are rebalancing away from developed markets in the U.S. dollar, this aspect positions Africa quite well. And finally, and most importantly, catalysts. We believe that in large part due to macro adversity since 2019, several countries are now at key inflection points. In terms of governance, and, in some cases, embarking on wholesale changes to social contracts and national growth strategies. Egypt and Nigeria are really good examples today. In Egypt's case, the role of the public sector vis-a-vis the private sector is being recast. While in Nigeria, the focus on diversification away from -- or diversifying away from overreliance on oil is front and center in the national dialogue. So as the saying goes, capital inevitably chases returns. Africa in this vein has not been a big magnet for foreign capital due to poor performance over the last decade. As you can see from the top left chart, this has been particularly acute since 2014, when Frontier in general and Africa, in particular, languished. There's also been a negative feedback loop where the exit of foreigners has led to derated liquidity, which in turn became a gating factor for new investors to reengage. The right chart illustrates the hollowing out of fund assets since 2004. While Frontier experienced a recovery in flows since the global financial crisis, Africa's share of these flows has, in fact, fallen since 2012 and now represents a [indiscernible] 0.1% of the stock, not even a rounding error. So finally, just to frame where sentiment is on a longer historical perspective. The bottom left chart shows Africa versus EM and the S&P 500 going back 25 years. On a relative basis, we're now back to 2000, 2001 levels. And if you recall, the sentiment for Africa back then, think of the time magazine aids in Africa cover. That image essentially illustrates where markets are in terms of relative sentiment. So where does this place Africa now in a global context? And when it comes to capital markets in particular? The growth potential for Africa is well documented and understood. And I would echo many of the points made by Baba and Tope. If you look at this chart, which shows Africa's share of the world on several top-down metrics, these comparative advantages are barely evident. Despite accounting for almost 1/5 of the world's population and 3% of GDP, the size of the markets are a fraction of these shares, just 0.5% of market cap and foreign portfolio flows, those are the red bubbles, of which South Africa is 2/3 of the total. Now it's important to note, markets tend to follow a typical discovery cycle at early stages of development once classified as frontier markets like Brazil in the '80s, China or Russia in the '90s, Indonesia, Philippines in the 2000s and Vietnam in the 2010s, all of which rerated upon discovery, overshot on the downside post the crisis and eventually normalized to reflect intrinsic dynamics. In this regard, Africa is arguably a big outlier with just 10% of its GDP reflected in its market cap. And on this metric, one could argue that Africa's real discovery stage is yet to begin. So one of the signposts for Africa's recent performance is the high cost of capital. Today, Africa stands out as home to some of the highest rates of external borrowing globally. The chart here shows 5-year sovereign credit default swaps across the globe, the hotter the colors, the higher the risk spread. In many countries, spreads are 2 to 3x their 2-decade average. While no country in Africa has been able to issue a Eurobond since last spring, a stark contrast as just 2 years ago when countries were borrowing at half of their normalized spreads. For example, Rwanda in 2021 borrowed 10-year U.S. dollar money at as low as 6%. Underneath these elevated spreads are, in many cases, decade low reserves and as a consequence, materially weaker currencies. In a few cases like Ghana and Egypt, currencies have lost over 50% of their value versus a strengthening dollar, all in under 18 months. So how did we get here? Popular narratives blame the ramp in debt accumulation following the HIPC debt relief in the early 2000s, historically low U.S. interest rates since 2010 and the Belt and Road initiative, we're lending from Africa -- from China quadrupled. All sources of credit at indiscriminately low rates. The narrative goes on to explain that when this foreign capital dried up in the last 18 months, most borrowers were left distressed because they cannot rely on endogenous pools of capital. We take a different tack here and suggest that cause and effect are actually being confused. One can argue that the rush of subsidized capital in itself may be the primary driver for complacency on reforms, effectively creating a dependency on external funding and delaying much needed financial deepening, effectively creating a crutch. Empirically, this ended up creating the backdrop of a lower growth environment rather than boosting growth sustainably. Now that capital is scarce and dear, countries are forced to perform in order to survive, quite a potent anchor. If one goes back to first principles of investing, one of the seminal rules is to underwrite investments only when expected returns exceed the true cost of capital. when cost of capital is elevated and fully reflective of risk, return tends to be the greatest and the most sustainable. So the combination of elevated cost of capital, shallow markets and extreme foreign investor neglect has translated into some of the lowest valuation ratings for Africa, both in aggregate and particularly for some of the smaller markets, really on the periphery even of a market like South Africa. This slide pulls out the largest, most investable markets in Africa where Seven Rivers will focus top down, Nigeria, Egypt, Morocco, Kenya and South Africa, and compares them to more mature EM peers. We chose here on the right, Indonesia and India, 2 markets we believe that shared quite a few characteristics to African markets a few decades ago before they emerged into mainstream EM. So the big 4 markets share many attributes, both relative to EM and importantly, versus their own history. One, acutely low valuations, particularly in terms of forward multiples. In all cases, trading at bottom decile ratings versus a 15-year history. Two, historically low foreign portfolio ownership. And three, liquidity levels that in many cases are 1/5 to 1/3 of peak velocity. And finally, in sync with Helios' top-down framework, Seven Rivers will focus mainly on high secular growth themes, offering growth rates that are multiples to headline GDP. We will target consumer-driven sectors and leading franchises with resilient pricing power and strong competitive advantages. But most importantly, we will only underwrite high incremental return on capital that exceeds our top-down hurdle rates. In that way, we're quite top-down driven. At the center of what drives and connect these sectors is the African consumer thesis, one that is predicated on improving real demand across the income spectrum, and this is tilted heavily towards the base of the pyramid, which accounts for the bulk of Africa's addressable growth. So in the interest of time, I'm happy to take questions in the Q&A session that will follow. And I'll now hand over to Christopher North who will introduce the CLEAR strategy. As Tope mentioned, Chris was not able to join us in person. And so I believe we'll hear from him via a prerecorded video.

Thank you very much, and good afternoon. It's a pleasure to present to you today. I'll be at not in person, but over a video recording. My name is Chris North. And alongside my colleague, [indiscernible], I co-lead the Helios Climate Investment work. Over the last year, we've been developing and refining the firm's climate investment strategy. This strategy builds on Helios' prior track record as a growth equity investor on the continent, including in low-carbon growth equity businesses such as [indiscernible]. What we plan to do in this session are 2 things. Firstly, I'll provide some context around the market opportunity for Climate Investing in Africa as we see it. And secondly, I'll spend some time to unpack 5 focus areas where we think the opportunity is largest and most compelling to deliver attractive commercial returns, and high climate impact at the same time. In terms of market context, African needs up to $2.4 trillion of capital in order to meet its climate objectives as set out by African governments themselves. So there's a very large Pan-African funding opportunity in the decade through to 2030. The funding need is in 2 categories: climate adaptation, Here, the question is, how do we make Africa more resilient to deal with the effects of climate change? And secondly, climate mitigation. How do we make sure Africa's economic growth can decouple from its emissions profile. Here, there's opportunity to deploy proven solutions at scale that are cheaper, better, cleaner. In other words, more affordable, more reliable and more sustainable. We know African governments themselves are generally not in a position to finance their national climate agendas. So much of the opportunity is left to private sector players to step in identify the right focus areas, raise capital and deploy against these strategies. If we zoom in on Climate mitigation for a minute. We think there will be significant opportunity in specific sectors and regions in the coming years. Looking at it from a sector lens. Given the sheer physical size of the continent, transport will likely be one of the largest drivers of emissions, but also one of the greatest scale-up opportunities for low carbon players who are solving Africa's logistical challenges on the ground. Energy, manufacturing and other heavy industry will need to continue to decarbonize their existing operations, but also expand the future growth in a low-carbon sustainable manner. Next, given the importance of agriculture and more broadly, land use in Africa, there's a chance to scale up low-carbon agricultural businesses who are implementing climate smart practices and techniques and are able to compete both regionally in Africa and internationally. So we think there's a strong basis for a multi-sector growth equity investment strategy on the continent. If we look at the opportunity through a geographic lens, we believe the opportunity is truly Pan-African, although initially, many of the near- and medium-term opportunities may be located in Southern and Eastern Africa, at least initially. Notwithstanding, we think the best players will build Pan-African platforms that are diversified also from a geographic perspective. In our Climate team, we have set 5 focus areas, and have begun to build a robust pipeline against these 5 themes. We believe already today the pipeline is large, diversified and validates our sense of the market opportunity. We believe already today the pipeline is large, diversified and validates our sense of the market opportunity. To provide a few concrete examples. Our first bucket, renewability energy solutions, here, there are opportunities to build commercial and industrial scale, decentralized energy champions that fill a void being left by national utilities in Africa, whose balance sheets are generally constrained. Within climate smart agriculture and food, there's a chance to bring drought-resistant seed businesses and low-carbon fertilizer to commercial scale farmers and small holders alike, in a process improving agricultural productivity and helping Africa to fight food insecurity. Looking at green transport and logistics. In East Africa alone, there are 15-plus electric vehicle scale-ups, all competing for market position and expanding aggressively. At the same time, innovative cold storage players are bringing reliable, affordable cold chain solutions to market in the process allowing Africa to minimize its food waste, which is currently very high by global standards. Within resource efficiency, there's a chance to build more effective waste collection, waste transport and waste processing solutions. And also to deploy energy efficiency and water efficiency solutions across the continent in a process allowing Africa to do more with less. In our last bucket, which is climate enablers, we're seeing a growing number of financial platforms, whether they are credit platforms or insurance businesses, deploying innovative new climate-focused financing products, which allow their clients to achieve significant climate impact. So as we can see, there is a broad and compelling market opportunity across the five focus areas. We look forward to accelerating and scaling our efforts in climate investing on the continent. And with that, I will hand over to my colleague, Ogbemi, who leads the HETI platform. Thank you very much.

Thank you very much, Chris. And on video, good afternoon to everyone. It's a pleasure to be here on the HF Investor Day. I'm Ogbemi Ofuya, I lead the energy transition infrastructure strategy, HETI, which has been referenced a few times in the prior presentations. So I want to spend the next few minutes just giving an overview of why we're really excited about the strategy? It's a complementary strategy to the strategy Chris has just covered, the climate strategy. HETI is an infrastructure strategy, focused on driving energy transition in Africa. So I'll start with laying the backdrop and setting the scene for why, from this point going forward, energy access and energy transition is a compelling opportunity in Africa. So if you look at the first chart on the left-hand side, we've talked about urbanization. [indiscernible] referenced in his introductory slide as one of the key drivers for our investment thesis. As people move into urban environment in Africa, there is an increased need for power to drive commercial activity and industrial activity and also power to drive the resource sector, the mining sector across most of the mining regions in Africa. So urbanization is a key driver of energy demand. So if you look at the left-hand chart, you see Africa outpacing the rest of the world in urbanization and the resultant growth in electricity demand. Now, over the last 2 decades, population growth has significantly increased and has outpaced the development of the grid on the continent. And so if you look at the middle chart, you kind of see Africa flatlining in terms of the numbers of people who still do not have access to electricity has remained relatively high compared to the rest of the world. Now a number of technology and regulatory tailwinds changing and capitalizing a transformation of that dynamic. And going forward, we see that the advent of more modular, behind the [indiscernible] captive solutions for providing power, for providing gas to end users is driving a real decentralized approach to electrification, which is a trend we're very excited about. So the governments are finally acknowledging that they can't solve the problem on their own. And they are letting go of control of power generation and distribution in a lot of instances and allowing the growth of private power production. And we see that as a significant opportunity for HETI, the HETI strategy. The final chart on the right-hand side talks about the dominance of coal and liquid fuels in the energy mix today, still driving a lot of the energy production in countries like South Africa, where coal represents 85% of the energy mix. So we see the opportunity to switch coal and liquid fuels, largely imported to gas as another exciting opportunity to pursue. So to summarize, urbanization is a key megatrend here driving electricity demand. Energy access is being catalyzed now by technological and regulatory tailwinds. And finally, from the starting point of where Africa is today, there is also an opportunity to swap out the fleet of generating capacity today, switching out coal and liquid fuels for cleaner gas and renewables. And so on this same theme of gas, the starting point for this strategy is gas infrastructure. Africa is endowed with significant gas resources, as you can see on the slide, quite a number of countries have domestic gas resources. And historically, since the first LNG cargo was shipped out of Algeria many, many years ago, this gas has driven industrialization and growth in other parts of mainly Europe and Asia because a lot of this gas is exported in the form of LNG. And as we think of the opportunity we see here, it's the build-out of infrastructure to allow a good slice of these gas resources to be utilized on the continent to drive industrialization. And once that infrastructure is built, it can lead to significant economic benefit. Just look at the middle chart, think of the cost of electricity in most countries in Africa without access to gas resources. It's very expensive generation electricity through diesel or heavy fuel oil. We can see a median price of about $0.22 per kilowatt hour for power generated across countries. In Liberia as close $0.40, which is just -- it just had to fathom, right? If you think of how you want to industrialize with a cost base that high in terms of power generation, it's really difficult to achieve. Swapping out liquid fuels today in those markets to gas will drop the cost of electric generation by 50% as a starting point. And we see that as the best price to win in delivering on this strategy. And subsequently, there's also an attendant environmental benefit by reducing the CO2 footprint by north of 20%, close to 25% in most instances. So again, Africa has cost advantaged gas resources. There's an opportunity to use those gas resources to drive down the cost of electricity and also drive industrial growth and save and improve the quality of the environment in the same vein. So these are very long-term opportunities. These are multi-decade opportunities if you think of the scale of what we are trying to do in terms of driving gas penetration in Africa. And so setting the stage and laying the backdrop with the first -- prior two slides, we just want to quickly talk about what are we trying to achieve and introducing this strategy, which have been referenced a few times. So HETI is a -- an infrastructure strategy. It's permanent capital, which will be on the public markets. And the objective will be to drive energy access on the continents, reduce greenhouse gas emissions in the process, and ensure attractive sustainable long-term returns, right, by making very attractive dollar-linked, inflation index investment in hard assets that will be around for a long time on the continent. So that's the objective of the strategy. And we feel that, over the last decade, we have built significant expertise across the energy complex in Africa. And this is one strategy that we're very excited about, and we want to continue to develop. And so what is the starting point for HETI ? In the prior presentation, so strategies have been seeded, we cut off for [indiscernible]. This strategy is being formed with a portfolio of assets that are managed by Helios [funds], Accella and Access LNG. These are existing businesses in the gas infrastructure space, owning a portfolio of assets and 7 industrial -- over 200 industrial customers in the region. So these assets will form the foundation of the HETI platform as we seek to list it publicly and raise additional capital to fund growth. The team running these assets have credibility. They've been in the market for a long time. And then we feel very excited about the opportunity to scale this platform across multiple markets in Africa, building out, starting from gas infrastructure and driving energy transition. And so what is the opportunity set we are addressing, right? We're starting, of course, on the left-hand side of the screen with LNG and natural gas infrastructure. That's a starting point. We believe that in the context of Africa, this is a very important means of decarbonizing and driving the adoption of low-cost baseload power. In addition to natural gas and LNG infrastructure, we see the opportunity to also solve the power problem because a lot of end customers just want the power. They're happy for you to provide them with gas, by the end of the day, they want power. And so sometimes, the offering is bundled as gas and power supply in the same package via long-term contract. In addition to that, there is also a significant challenge in Africa with things like hard-to-abate sectors where there's high emissions intensity like in oil and gas upstream production, whether it's gas flaring, methane emissions are a big problem for the environment. And in a number of African contributor, the extensive oil and gas production because gas has no home to go to if gas is flamed. And some of the infrastructure that will be delivered by HETI will address the program of gas [indiscernible], which is something we're very committed to. We want to make a change. We want to drive significant environmental impact. And finally, as we provide a suite of energy solutions to end customers, we also want to be leading the way in providing lower carbon fuel solutions, moving from natural gas to renewable natural gas, to biogas, to hydrogen down the line as the market is ready and these fuels are more viable and cost-effective in Africa. We want to, through the same pipes we own, deliver lower carbon intensity fuels. So we see this as a future-proof strategy. Starting from natural gas today and transitioning all the way to look up carbon fuels in the future, and we're very excited about the opportunity set ahead of us. And just to kind of make this very clear. This is an infrastructure strategy. It's going to be based on long-dated contracts, U.S. dollar linkages, very strong ESG and potentially carbon credit enhancements as we displace heavier and more pollutant fuels. So we feel that both the economic and the environmental case for these assets are quite compelling. And so to wrap up, we will be deploying the full inventory of the Helios capabilities to drive the strategy. We will acquire and build for value. We will drive growth and commercial excellence. We leverage on the Helios Investment Partners portfolio operations group, for example, to drive value creation in these investments. We will also recycle capital opportunistically on the public market. And so on this note, we just want to kind of recap that. This is a long data strategy. We feel that the scope for energy infrastructure in Africa, the penetration today is low, and so the runway is very large ahead of us. We feel excited about the opportunity to deploy significant amounts of capital into the strategy, generating, of course, income for HFP investors down the line. So thank you very much for your time. I will now hand over to my colleague, Wale, who will cover the Helio Digital Ventures strategy. Thank you.

Thanks, Ogbemi. Hi, my name is Wale Ayeni. I'm going to cover kind of our strategy for venture capital. The -- I'll take it in two parts. One, I'll start kind of with the background and then also show kind of where and how we actually intend to play. So I think if there's one thing you're going to have to leave this room with, before you all leave is kind of [indiscernible] to an organization. Everybody has said it. We say this because it's actually true. It's very, very real and particularly in venture capital. Because when you look at Africa, we have a medium age of 18 years old, 70% under the age of 30. It creates a huge opportunity for venture capital in particular because there's not in there sales opportunity to tech people like yields because that is actually the future. And what you can see on the chart here shows that, that yield is coming online faster than anywhere in the world. And that's kind of real stats. And then coupled with that, with urbanization, you start to see great opportunities for -- to create large tech businesses that can serve a majority of the population in one place. And then that's leading to a significant growth or opportunity from a digital economic perspective. So this slide is not just us saying it, it's actually most global -- or not most global investors starting to say it. What has happened in the last 7 years is that money has started to go into venture capital asset class in Africa. Last year, it was ranked the fastest-growing asset class globally, although it starts from a very, very low base. So it's grown 18x in the last 7 years, growing at a CAGR of about 54%. Now about $5 billion is going into the asset class every year in Africa. And I would like to say -- people that see the opportunity, we like to say, tech is tech, right? So I don't know, for the technical people in the room, if you know how to code Java or Python, it doesn't matter if you're in San Francisco or [indiscernible], it's the same Python. And what the technical founders in Africa have figured out is that they can obscure themselves, they can code and build digital businesses to solve problems that they see in their communities. And then, although I've talked about kind of what the opportunity is, the important thing to note is also is that although $5 billion is going into the asset class annually right now in Africa, is still kind of very, very small. It's less than 2% of the total amount of venture capital that goes in globally. So when you compare the amount on a [indiscernible] basis that goes into venture capital in Africa, it's lower than any other region in the world, although the macro trends are actually more attractive in Africa. And so we see that as a huge opportunity, and it's an opportunity that we are well primed to capture. And then historically, it's very good to look at the chart on the right-hand side to say where has all the historical money gone into in venture capital in Africa. Most of it has gone into the very, very early stages, or have gone into the growth players. And then what that has created is a significant gap in kind of what we term early growth in the middle, and we call that kind of the value of [indiscernible]. And not to say we're bold, I would say we're just experienced about Africa. We think the best way to capture value is actually to play in the early growth because we understand the market. We understand the global dynamics of venture capital and there's a serious need in the early growth stages. So I'll transition to what is Helios digital ventures and what we build in. Six key things, I'll touch on three and then summarize the remaining three. We are investing in Series B companies across Africa that have a pan-African axis. And we are really laser-focused on early growth. And what does early growth mean to us is that we're investing $5 million to $20 million in rounds of between $20 million to $50 million in companies that have shown ability to create market share, and then help them crystallize that market share on a pan-African basis. I guess, our whole goal is to build regional PanAfrican tech businesses that can start to attract global capital, global talent to rival their counter packs in Asia and Latin America, India. And the opportunity is there to capture. And then from the platform perspective, we are leveraging the same toolkit that you've heard from the Helios platform, which is experience, on the ground presence, hands-on portfolio management and a laser focus on exits. This slide will talk, and I'll spend some time here because I think it's quite important. And the preamble here will be to go back it's what kind of things that we invested in and what are our principles of investing? And I'll start really when people think about tech in the west that the next one that comes after that is disruption. And in Africa rather than actually disrupting, we're actually creating. Because in the Western world, there's a lot of legacy infrastructure, legacy moats that you have to overcome. To an extent, doing tech in Africa is actually easier because you're not fighting an incumbent because you're actually recreating opportunities of building it up. So we would like to call it rethinking and reimagining how technology can be used to address the issues that people see on ground and service the population. And the key two things that I should take away about where we see the differentiating factors in a lot of these digital platforms is: one, they're democratizing access; and then, two, they are lowering the cost to serve. And the cost to serve is quite important because, in Africa -- has a lower GDP per capita than, let's say, the Western world. So when you're thinking about what to invest and how to create platforms, that critical notion of the platforms reducing the cost to serve becomes quite important. So the kind of things we invest in will be quite different from what maybe you see in the West. So the five key sectors that we're focused on is sectors that touch the daily lives of Africans and how can tech make it touch more Africans at a lower price. The fourth sector is financial services. And obviously, there's a lot of stats about how on the bank, or on banked a lot of Africans are. And then what fintech platforms can help solve that problem? The other sector that we're spending a lot of time on is on food security. And our approach to that is what I like to term from farm to fork, is that we invested in a technology that can stack increasing yields in like agriculture, all the way to distribution and supply chain, or how does that get to the plate. And that's quite critical examples would be like genomics in agriculture that can help increase yield to e-logistics platforms that get this -- that creates price visibility and creates access where people can start to transact digitally. And then healthcare, obviously, we've talked about the demographics as more people are in Africa keep growing, they need access to healthcare. And then the fourth sector is human capital, and that goes back to the yields theme that I mentioned earlier, is that how do we transform this massive humanity that is the youngest in the world that is now mostly in Africa, and how do we upskill that and make that into capital? That's not only, in my view, good for Africa, it's actually good for the world. Because if you look at the demographic statistics, in the next 50 to 75 years, there will be a lot more Africans in the world than in other regions per se. And then on the last sector, is really around sustainability. And that is how do we invest in tech platforms that help reduce waste and improve efficiencies. And then on the left side of your screen, it's kind of our principles on a high-level perspective of kind of how we invest in. The first one is, we're taking a market-based thesis approach, which is -- and I think I alluded to this before, is that you have to understand the African market. You have to understand the African consumer, and you have to develop a thesis based on that. So that's very, very key to how we're playing venture capital in Africa. Obviously, we have found it first. So we are back in founders that have a long-term vision to transform or provide solutions to issues that you see. And the good thing is that more and more young people are getting into technology and building platforms and coming up with great ideas. And we're very happy to just see the transition in the last 7 to 10 years. And then the third part is, which combines both the first and the second, is product market fit in that you have to invest in products that serve the African population. No offense to my friends in San Francisco, they invest in app that walk your dog. That's a very western opportunity. But in Africa, we're looking at opportunities that actually serve majority of the masses there. And then we're also looking for exponential outcome versus linear outcome. So we -- in the venture capital space, we like risk. We're going to take risk, but we're looking for exponential outcomes. And then, obviously, we have to -- the last point is very important as well. We have to be disciplined, right? Because -- and it's very hard to be disciplined if you don't have a huge pipeline to look at. And in the early growth sector in Africa right now, there's a huge pipeline so we can afford to be selective. And that's very, very important for like a risky asset class. And I'll end with this slide just to show you where -- what we've done and kind of where we are. I think you can see that we've done two deals, and you can see the amount of how the pipeline is. There's just a lot in the funnel and just the selectivity. So we've seen a lot. We're very selective in choosing, and we are very diligent in kind of who we back and why we back them. On the right-hand side shows kind of the two deals we've done. One is [Paymob] in Egypt, is a digital merchant acquirer that is servicing the long term of the retail segment in that market. Since our investment, they've scaled to Pakistan and Saudi as well. And that number is also servicing the retail segment, but it's becoming evolving into a digital bank for small SMEs in Nigeria that we also invested in. The three key things in this investment is aligned with our thesis. The first one is large market segments. Both of these companies serve the informal sector which, as most of you here will know, are the drivers of economic activity in Africa. #2, is following a macro trend of digitization, which, in all of these markets, cash, which has been efficient, is moving online. And these companies are actually capturing it. The last thing that I'll end with is maybe one of the things I mentioned as well. Brick-and-mortar businesses cannot or are unable to service the customers that these two tech platforms serve. Because given their tech platform, they're lowering the cost of access to the merchants that use their solutions to accept payments. And the important thing is that across all sectors, it's very, very important for us to invest in regional Pan-African tech platforms that are able to reduce the cost to serve, whether that's in education, in healthcare, and food security, as I mentioned earlier. So on that note, I'll be able to answer questions at the end. And if there are more questions, I'll stay after as well. We don't that will end and then pass it to my colleague Absera, that will talk about our sports and entertainment strategy. Thank you.

Thank you, Wale, and good afternoon, everyone. My name is Absera Gizaw. I'd like to take a few minutes to speak about our dedicated strategy for Sports and Entertainment, the Helio Sports & Entertainment Group, or HSEG for short. It's a strategy that we're very excited about and one where HSEG has already made two existing investments using its balance sheet to seek the strategy. And we're pleased to report that so far, those investments have been performing well. HSEG is a corporate permanent capital vehicle, similar to HETI that you heard about from Ogbemi earlier. But while we expect HETI to be a publicly listed vehicle, HSEG is private. We see significant opportunity to deploy additional capital into the space, and we think that these assets in the pipeline that we're looking at have the potential to generate very strong returns. If we focus on African talent for a moment, the one thing that you've heard about today from [indiscernible] from other people is the demographics in Africa. What we have undenied [indiscernible] in Africa is human capital. Whether it resides within the continent or throughout a vast Diaspora. We see continued patterns of success of this African human capital. If we look at sports, for instance, if we look at European soccer, they're currently over 500 African athletes playing for the top European soccer leagues, such as, for example, the English Premier League. We look at the NBA, they're currently over 50 African athletes. And for those of you who are based in [indiscernible] includes the likes of Pascal Siakam [indiscernible] the actors. The NFL being similar, over 100 players currently in the UFC has had five recent world champions who are African. If we move on to music, we continue to see a similar dynamic where African artists are receiving global recognition in multiple genres, but in afrobeats in particular. The largest artists are now winning Grammys. They have #1 billboard hit songs and they are selling out -- selling out arenas and now even stadiums across Europe and North America. If we move on to art, film, literature, we see this continued pattern of the global consumption of African content and the success of the people who create it. And this success is taking place within a market that is very large and has a couple of unique characteristics. So first of all, this is really the only business in the world where the customer is called a fan, which is short for fanatic. And that [connotes] just a completely different level of customer engagement with the product itself, and these are billions of people across the world. It's an industry that matters culturally, emotionally, but also economically. If we look at music, if you're living your best life, you're probably doing that to a sound track of great songs. Equally also, if things aren't going so well, you might turn to music to cheer you up. Recession or no recession, whether interest rates are up or down, people tend to continue to support their favorite sports teams and watch them and to continue listening to their favorite music. And what that results in is really high quality, predictable and recurring cash flows, which are uncorrelated from other asset classes. And this has then created its own kind of content asset class that has become investable from the perspective of the institutional capital on the back of a couple of key secular long-term trends. The first is the institutionalization of the sector and also the professionalization of it, which has now made it accessible in a way that it wasn't previously. The second is technology, which has created multiple new avenues of monetizing content. So if we look at streaming platforms, for instance, where we've seen a proliferation, they compete for subscribers, for viewers, for advertisers. And when we look at that [indiscernible], the television slot left besides maybe the news, and that drives up the value of those rights. When we look at the behavior of Millennial and Gen Z audiences, we see an increased wallet share for experiences as opposed to the consumption of goods, which has an implication on just the types of products and services that they consume within this content asset class. And then finally, we see a truly global marketplace for both the supply and the demand of content. Whether a piece of content is created and generated in South Korea or South Africa, it can equally be consumed by a viewer halfway across the world in, for example, North America. And on the back of this, there have been several institutional platforms that have emerged who are specialized in investing in this space. And between them, they have invested tens of billions of dollars across the landscape. The examples that you see listed here are a cross selection of both private and public vehicles, and they have invested into everything from sports rights to production studios, to talent management businesses. But what they all have in common is that they are backed by large blue-chip institutional capital allocators. But then in Africa, we actually have not yet seen that same level of investment despite the outside success of both African content and talent on a global basis, and that makes it a unique opportunity. And we think that HSEG here has a first-mover advantage because of the existing investments in the portfolio. And we believe that we can deploy significant additional capital through the four verticals that you see here, which are synergistic with each other. So if we run through them quickly, the first is sports rights, and this would include HFP's investment in NBA Africa. The second is content and experiences, and this would include HSP's investment in event rise and entertainment. The third vertical is ecosystem enablers, and these are businesses that provide critical services through the other verticals, which really support and enable their success on the continent within a specific African context. So a good example of this would be specialist venue management companies. And then, finally, there are opportunities, kind of offshoot opportunities in talent management businesses and things like that. We're seeing a very strong pipeline of opportunities in each of these verticals. And we really believe that HSEG can become the partner of choice to provide both the capital and the know-how to develop and grow iconic exports and entertainment properties on the African continent. So if we focus for a moment on the first property that HSEG invested in NBA Africa, this is a league level investment at the very top of the sports hierarchy. And it's a type of investment that is typically not available in other parts of the world. The company owns its -- the sports IP rights into [perpetuity] and monetizes this both locally, so within the African continent as well as globally through the global distribution of content that is created within Africa, primarily through the Basketball Africa League. And the momentum so far, since its launch in 2021, has been quite positive. So if we look at the BAL second season, which was wrapped up last year in 2022, that content reached fans in over 200 countries and territories in 14 languages, and this includes all of Africa's 54 markets. And it managed to generate fan engagement -- well, to generate online fan management of over 600 million and clicks, [indiscernible] likes, et cetera. And the company continues to build on this fandom, which is a key lever for future value creation. The second property that HFC invested in is a company called Event Horizon Entertainment. And this is a company that produces and promotes global live events. It has a flagship portfolio of different festival and other event brands, for which it sells hundreds of thousands of tickets every year. This portfolio includes property called [affirmation]. In case you're not familiar with it, the [indiscernible] is the largest FRB festival in the world. It directly facilitates the export of Africa content, in this case, music to kind of the rest of the world. It has additions now in West Africa, in Europe, in North America, and it primarily earns revenues in hard currency, so either in British pounds, in euros or in U.S. dollars. The interesting thing about Afronation is that about 2/3 of its audience are actually female. But the vast majority of the festival goers are members of the African Diaspora no matter where the [edition of the] festival takes place. In conclusion, both [event horizons] this investment as well as NBA Africa provided a good flavor of the types of investments that HSEG will seek to make. And we're very confident that we can continue deploying significant capital into iconic sports and entertainment properties like these in Africa. We are very excited about the strategy, and we look forward to continuing our reporting on progress as we execute on it. Thank you very much for your time. We will now move on to our second Q&A section of the day, and I'll invite my colleagues back up to the stage that we can all take questions together.

Thank you, and we can transition to the second Q&A. Before we go to the question, I just wanted to take the chance to remind you the amount of capital that HFP has deployed in these new strategies. $14.5 million in digital venture that was presented by Wale, $39.4 million in Sports & Entertainment that was introduced by Absera, and $30 million in 7 River that was introduced by Ahmad. And now we're ready to take your questions.

Hello. My name is Bob Coleman. I'm from the United States. I work for an investment management firm. I have a question about the 50% reported ownerships that you have going back to the parent company. Like the entertainment business, there's a lot of noise between 100% and 50%, meaning that there's a lot of agency cost. So could you simplify that 50% to what we would actually earn at the holding company?

Yes. [indiscernible], you want to take that?

Can you hear me?

Yes.

Thank you. I think you're referring to the share of carried interest for the correct. So the 50% is a contractual right that HFP has the remaining 50 -- so in any fund that is operated by Helios Investment Partners, the Helios Investment Partners team, the 38 people that I made reference to in my earlier presentation, received 50% of the carry. And the remaining 50% comes straight to HFP as and when paid at the same time, completely pro rata with whatever might go to the other 50%, if you will. So there should be no lag or misalignment in that regard or friction cost in that regard.

But if you go up the line, of that 100% -- do we actually -- when the math works out, if you look at a movie deal today [indiscernible].

Absolutely. Yes. Having spent the early part of my career at Disney, I know what you mean. But no, in this case, it's actually fairly straightforward. So the way it works is that the -- so our funds typically at least on the private equity side, the Helios funds are and what's called the European waterfalls, not that it matters too much. But what that means is that the funds get invested, and then when they get liquidated, all of the capital goes straight to the LPs, the third-party capital until they received all of their money back plus a compounded 8% return, right? Once they've received that, then the GP starts to participate in its share of carried interest. And dollar for dollar, pro rata, that's when $0.50 go to the Helios Investment Partners team and $0.50 will come to HFP by its top LP. So there's not that room for interpretation, if you will, that you have in other industries.

There's another question here.

Thank you, Mark Sharma here. You have a number of strategies that you're seeding. One slide indicated that the coming to market for third-party investment in this year or next. What needs to happen for you to come to market? Do you need to add portfolio investments? Do they need to reach a level of maturation? And what kind of size are you targeting?

All right. Baba, you want to take that one?

I think I think we're now allowed to speak because of the marketing funds, we're not allowed to give too much detail on the information. The key drivers here, as we said, one of the structure sectors already raised some money. The teams are very advanced. Everything else put up there is at the stage where, I would say, they're ready to go. Basically, it's not -- yes, they are ready to go. And [indiscernible] -- I think I can't -- because the question on the size because that's market on the fund. So I think I can't say much more on that. Suffice to say, though, that each of them will have to be at a level that are large enough to generate to be profitable and generate the excess fee income and carry, which goes off the top [indiscernible]. So there's a size that's required to enable that to happen because each of the strategies will have a team of between -- call it, between 4 and 5 or 6 people, that would actually run two strategies.

There's a question online and then I'll come to you. Can you please speak about the role of cryptocurrencies in Africa, their impact on the financial stability, and will they be an enabler of growth and economic development? Wale, do you want to take that one?

Yes. No, I'll take that one. Thanks for the question. Maybe kind of background perspective is good to say that I think regulation is quite important and consumer protection is also quite important. And I would like to just answer simplistically and say, "Oh, I believe in blockchain or crypto. That's what people typically say. But the truth is that there is a great room for crypto and blockchain in Africa, is one and the same thing. I think our thesis from a venture perspective is, we have something called Frontier Tech in Frontier Markets. So blockchains are not good. They're not going anywhere. They're here to stay. And given that Africa has less of legacy systems in most places, there's a role for blockchain to actually play as long as it fits into the criteria of which we're talking about lowering the cost to serve and democratizing access. So it's something that we spend time on as well.

Okay. Question here.

Yes. Thanks. Hugo and Nelson. I have actually three questions. I think for three different people, but I can't remember all the names. So one is just with respect to the energy strategy. And there was -- in the presentation, there was a focus on, let's say, replacing, for example, coal with gas generation. I wanted to know if there was any opinion around the role that something like co-burning ammonia could play with coal power generation plants, if you thought about that? It's just a side question. The next question is around the public market strategy with Seven Rivers and just any opinion on, firstly, the regulation of equity markets? And with -- I'm talking about domestic equity markets in Africa, the efficiency thereof, [indiscernible] spreads, what you see happening with that it's been long time coming and maybe some commentary around what we've seen in Ghana with the default -- the domestic debt default, which I don't think -- it doesn't make logical sense if you're printing your own currency that you would default and what your thoughts are on that? And then the final one is a bit of a case study question around why the NBA needed -- I mean, to me, it doesn't make a lot of -- what's the word, now you sense as to why the NBA needed money from HFP to build out a strategy in Africa?

So I think we start with Ogbemi on the energy transition, then go to Ahmad on the Seven River and to Absera on the Sports & Entertainment and your NBA question.

Thank you for the question. Short answer is, yes, the specific use case you have referred to is blended in ammonia with coal to reduce the overall CO2 footprint. I think reduced by up to 30%, 40% in some instances. I think that fits within the overall decarbonization and emission reduction strategy. Carbon capture also works alongside that. So in the broader sense, we are looking at every opportunity to decarbonize the existing generating footprint, whether it's coal, heavy-fuel oil or diesel, using gas or any other technology that might be relevant.

Thank you, Ogbemi. [Ahmad]?

On capital market development and regulation, so these markets are very early, even though some of them have been around since the kind of early '90s, but from a regulatory standpoint and an efficiency standpoint, liquidity as well, they're still very nascent. We've seen a big drive to develop them. A lot of this is just pure pressure from South Africa. A lot of stock exchanges have seen how South Africa has developed and grown and are now starting to emulate them both from a regulatory standpoint, but also just in market mechanisms as well. There's a really ambitious initiative to link the top 10 or 12 exchanges in Africa so that they can at least cross settle with one another. So they -- you effectively merge that backbone. I'm not holding my breath for that. I mean, these are a lot of different countries, different egos. But conceptually, it tells you that these markets are trying to converge up rather than stay static. On Ghana, I completely agree with you. I don't think there is a logic. I think that the default in the local debt was something that they just had to do. I mean the -- that whole macro and the balance of payments and the debt load kind of collapsed on itself. We've seen them adopt yet another IMF program. I kind of like governments that are really with their back up against the wall and are forced to perform. You tend to see the biggest, the most painful type of reforms in kind of situations like Ghana is in right now. And so the expectation is that we'll see a more sustainable recovery in the future.

Great. I am sorry.

Yes, the question about the NBA. So I think what we try to do, whether it's with HSEG or what we've done throughout the private equity portfolio is not only provide capital but also know-how. And we have built many businesses into kind of taking them in whatever form we got them initially into world-class businesses that can kind of compete with any -- anywhere in the world. So in the case of the NBA, or really any international sports or entertainment property coming into the African market, what they're looking for is, yes, sure, some capital, a capsule partner, but really an active local partner who understands the local markets and can be just a helpful partner on the journey for growth, which is a long-term one. And this translates into just as they're rolling out actual physical presence on the continent, opening different offices and just attracting people and building out the organization. These are all things that we're very familiar with also throughout the private equity portfolio and that we bring to assets such as NBA in Africa and other sports and entertainment properties.

Thank you. Just want to go back to one question that we misinterpreted before and was asked online by Ken McNeil. I'm going to paraphrase it in my way. There is $1.3 million in excess fees on $3 billion of private equity funds, yet you expect large excess fees for the future. Please explain the expectation for the futures versus the low level of fee in the past? [indiscernible] would you like to...

Yes. I would. And apologies to can, for having misunderstood the question, but that's -- I understand it now. So maybe to answer it, I'll explain a little bit just how the private equity funds at Helios Work, and how they -- with respect to the fee structure. So when a fund gets raised, it gets -- it typically earns a 2% fee or 1.5% fee, but typically 2% on the capital that's committed. And that remains the case through the investment period, which is typically about 4 years. So for the first 4 years, 5 years of the life of that fund, it earns a 2% fee on the total amount committed. After that period, that 4-, 5-year period is over, the fee level steps down only to reflect the -- to be computed off a basis that is the value of the assets still in the fund at cost. So naturally, it's coming down. And then as you divest and sell investments in the portfolio, it tracks down as well. So typically, you start high and then it declines as a fund ages. So the $3 billion of AUM is not all earning fees right now. So you have, for example, Helios Fund 2 earns no fees whatsoever, right? So that's several hundred million dollars, $1 billion of AUM that is not adding fees at all. Helios Fund 3 is earning fees, but it's earning fees on a reduced basis because it's passed it sort of step down period. And Helios Fund 4 continues to earn fees at the full rate. So when you look at the AUM and -- at $3 billion and try to -- but then -- and infer from that, what the gross fee amount is, it's quite difficult to do from the outside. But roughly speaking, the gross fee income that leads to that $1.3 million net is actually about probably on a weighted basis 0.6%, not 2%, not 1.5%. So if it's about 0.6%, and so you're at, call it, $17-odd million of gross revenue, right? Sorry, of gross revenue, that $17 million covers all of the operating costs of the investment manager, Helios Investment Partners. And the excess of that, the profit of that is the $1.3 billion that comes up. Now what's really interesting is to just think about how much operating leverage is embedded in that. So if, tomorrow, Helios Investment Partners went to raised Helios Fund 5 on the PE side, for example, and let's say, that were $750 million, $1 billion fund, for the sake of argument. Well, day 1, that $1 billion fund would earn $20 million in fees. So that more than doubles the gross revenue right off the bat, right? And that will be the case for the 4 years, 5 years that follow. So you would go -- so if you get $20 million in gross fees incrementally from, for example, a Helios Fund 5, if that were to right then -- and the incremental profit based on the slides that I showed earlier work, let's say it's 50%, so that's $10 million of potential profit right away off the bat. So that -- so you're not -- it's not a linear progression as you raise new AUM. So I think that's the reason. It's that operating leverage in the fee income and the way it's calculated that gets you to a high fee level on an incremental basis, even if the base load of what you're earning right now is much lower. Now having said that, there are two dimensions to this. So if all you're doing is -- if Helios Investment Partners only has the private equity business, so every 4 or so 5 years, it raises a new fund, then you have, of course, the fee level starts high and then it drops off. So you have this natural kind of cyclicality volatility in the fee base. One of the advantages of developing additional strategies, the advantage from HFP standpoint, obviously, is getting exposure to a diversified pool of investment opportunities. But also when you increase the diversification of when you -- the larger the number of strategies, the more diverse, the number of funds that you're earning fees from. And so those cycles tend to get smoother, right? So the advantage of doing -- of seeding these strategies to the extent that we are then -- or the Helios team is able to then attract third-party fee-paying capital is not just the level of AUM goes up, and therefore, the fee level goes up, but the diversification of it goes up. And so you're not going to see the kinds of cyclicality that you see when you're managing only one product. So can I -- I hope if you're listening, that, that answers your question.

We have time for one more question if there is.

Please treat this as a concept question and not to get into personal business. But success usually follows incentives. So how -- this panel here, how are you incented to stay the long term, #1. And #2, to earn adequate weights return for the holding company conceptually, not dollars?

[indiscernible], you want to go back to that?

Yes. Sure. I think that's an excellent question, and it couldn't -- it's trust, I think, probably in financial services. So I think the first is that all of these funds, all of these strategies are long-term strategy. So whether they are private equity or [indiscernible] or it's venture capital, they're all long dated. And the primary source of compensation for people who are in -- on this panel is the kind of interest that they will earn their share of the [indiscernible] interest from these strategies. And these are, you need to invest the fund, you need to realize the fund, and you need to do so at a high enough return to be able to generate that carry. So naturally speaking, it is a long-term business. It's not like working at a bank and you get a great big bonus at the end of the year, and you can leave or not leave. To be in this business, you need to be prepared to be there for the long haul. Otherwise, you're not there to actually enjoy the fruits of your labor. So I think that's the long haul question. And I think in terms of the incentive to drive the best performance for the holding company, I think, again, that's an alignment point. And the first question you asked, I think, really goes to that. So there really is no way for the people on this panel, who are running these strategies, to make very -- to make really healthy compensation without pro rata Helios Fairfax Partners also doing the same. And I think lastly, but not unimportantly, everyone on this panel is also a shareholder in Helios Fairfax Partners. Bob and I are the largest shareholders in Helios Fairfax Partners. And so I think there as well, the alignment of interest between what's good for Helius investment partners, what's good for the individuals who are driving these strategies and what's good for Helios Fairfax Partners is quite strong.

Great. Thank you. So with this last question, we conclude the second Q&A and the session for today. I want to just take the opportunity to thank you all in the room and online for your time and attention, and remind you that the HFP will is AGM next month on the 11th of May. So thank you, and goodbye for now.