Introduction Adowa Infrastructure Fund Managers (AIFM) A private equity fund manager Specializing in SRI oriented investments in infrastructure and related businesses located in Sub-Saharan Africa “Our ethos advocates equity and debt financing of projects for the benefit of the community.”

Student housing challenge Demand side Shortage in available housing Accommodation available for 20% of University enrolled students (Excluding other higher education institutions) Global average is 50% Shortage amounts to >R100bn Opportunities extend into Sub-Saharan Africa

Student housing challenge Majority significantly below the global average of 50%

Student housing challenge Supply Side The economics of the industry are challenging Fiscus can’t support the required investment Traditional funding institutions have little appetite (although there is a growing interest) Most tertiary institutions are dependent on government subsidies Bulk of learners are indigent of students housed in residences, 71% received some form of financial aid

Student housing solution Pooled capital; investment management The challenge has significant capital requirements Government alone cannot provide the capital Private sector pooled capital solutions have a role to play The challenge presents investment opportunity for long-term investors

Student housing solution Adowa Infrastructure Fund A closed-ended infrastructure fund focused on developing high quality student accommodation opportunities in Sub-Saharan Africa The fund will provide financing for the acquisition and development of student accommodation properties The aim is to provide a pooled-capital vehicle that Addresses the identified challenges in this sector Creates an investment asset class for social impact driven investors

Student housing solution Adowa provides a solution beneficial to all key stakeholders Government Students Tertiary institutions INVESTORS

Student housing solution GOVERNMENT Pooled capital vehicles address the significant challenge identified by Government Identified required levels of accommodation coverage Current coverage – 1 bed per 5 registered students Short term target – 1 bed per 2 registered students Long term target – 1 bed per 1.25 registered students Capital investment of >R100bn is too much for the state alone The significant capital requirements offer an opportunity for private sector to assist; full support would be offered to investors who can fulfil the need

Student housing solution UNIVERSITIES Private sector involvement has high social impact on universities and students Accommodation creates an enabling educational environment Private sector solution allows university to direct more funds towards curriculum development The Build-Own-Transfer model creates capital for the institution for the future A private solution allows institutions to focus on curriculum development

Student housing solution University funding model Significant portion of government subsidies are allocated for teaching inputs (e.g. Curriculum provided) Universities are ranked based on Student numbers – Full-Time Equivalent (FTE) Enrollments Courses offered, ranked based on categories (see Table below)

Student housing solution Tertiary input funding weights Hard-skilled curricula receive higher weighting Socially impactful curricula receive high weighting

Student housing solution Teaching input scores Historically disadvantaged institutions need the most boost

Student housing solution Student housing provision has high social impact points Results of private sector solution Impact Housing creates an enabling environment Living on-campus housing during a student’s 1st year increases the chances they’ll finish college by 12% MORE GRADUATES BETTER GRADUATES INCREASED SKILLS LEVELS Universities focus on curriculum development Teaching inputs – i.e. Courses offered – have the biggest weighting for allocation of funds MORE COURSES BETTER QUALITY COURSES DIVERSITY OF COURSES HIGH HIGH

Student housing solution INVESTORS Student accommodation is a viable asset class Significant demand in the South African context 200 000 bed shortage plus future requirements approximates a R100bn Capital requirement to 2030 Maintenance backlog increases this further Globally, student accommodation is a unique asset class attracting yield seekers The concession model allows for improving long term yields Funding models from the US can be adopted E.g. Student revenue housing bonds Student accommodation presents a good asset class for yield seeking investors

Student housing solution The world student housing sector reached $7.2bn investments in 2013 Source: Savills World Research, Spotlight: World Student Housing 2014

Student housing solution US listed student housing REITS* Yields compare favourably to US 10yr bond yields currently around 2.38% *Note: Campus Crest Communities, a third listed student housing REIT has decreased significantly since its listing in 2004, with a CAGR of (7%). Source: Google finance and company websites

Adowa’s approach Infrastructure Equity Fund Equity investment into student housing projects Procures projects from tertiary institutions and independent property developers Equity funding of construction and development costs Procures lease agreements with tertiary institutions 15-20 year investment horizon Hurdle rate: 15% IRR over the investment horizon Exit strategy: Transfer of building for free to institution at the end of the lease

Fund business model Operating structure:

Example based on budget for Stellenbosch Tygerberg Fund business model Fund assets: CAPEX Construction costs are estimated at ~R200 000 per unit Technology improvements in building materials in methods will reduce this cost Example based on budget for Stellenbosch Tygerberg

Fund business model Innovative Building Technologies (IBT) Adowa aims to focus on IBT development so as to reduce the per-bed construction costs The fund has partnered with a property developer pioneering IBT in Southern Africa Technology improvements in building materials in methods will reduce capital costs and construction times Costs – up to 13% reduction Time – up to 40% reduction in construction time Waste – almost 0% of construction waste

Financial model

Financial model EQUITY IRR ~16%

Adowa’s investment strategy overview FUND INVESTMENT STRATEGY AND CRITERIA Fund size R3bn Fund term 15 years Commitment period 8 years Geographies Sub-Sahara Africa Sectors Student & Social housing Development stage Greenfields and selective acquisitions Investment size R50m and above Control Development execution, property management, exit Leverage Typically 60-70% of development costs Development partners Associated development platforms or independent providers Currency risk US$ leases (where counterparty is outside of South Africa) Concession 20 – 30 year leases Fund manager Adowa Infrastructure Fund Managers Exit Transfer of properties to tertiary institution

Thank you Sisa Rafuza Adowa Infrastructure Fund Managers Third Floor, Block B Park Lane Cnr. Park and Alexandra Road Pinelands 7405 Tel +27 21 514 5420 Cell +27 83 454 2598 E-mail srafuza@adowa.co.za