STRICTLY PRIVATE & CONFIDENTIAL STRICTLY PRIVATE & CONFIDENTIAL

Sustainable Value Creation – Abraaj Performance Acceleration Group A PE Approach to ESG

Agenda

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Team Introduction

Our Principles and Values

Our Core Policies

ESG Through the Investment

IFC Performance Standards

Beneficial Certifications

The Value of Robust Corporate Governance

Value Enhancement

Sample Case Study – Athi River Steel, Kenya

Geetha Tharmaratnam Director 15+ yrs of experience Alea Group

ESG

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Aziz Moolji Managing Director 15+ yrs of experience Merrill Lynch, Goldman Sachs

1Sales, Marketing, Pricing & Digital 2Environmental, Social & Governance (ESG)

Wahid Hamid, APAG Head Partner at Abraaj Member of Group Investment Committee & Chair of Global ParCo Review Committee 25+ yrs of experience PepsiCo, Boston Consulting Group

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Ovais Naqvi Managing Director 20+ yrs of experience WPP plc, Omnicom, PwC M

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An experienced Abraaj Performance Acceleration Group which leverages central and regional team members

SEA

Alvin Hew Managing Director 25+ yrs of experience P&G, L’Oreal

Mark Wong Associate Director 15+ yrs of experience Reed Elsevier, PwC, BCG

LatA

m Carlos De La Fuente

Managing Director 15+ yrs of experience Coca-Cola, BCG

Akani Rodriguez Lopez Associate Director 8+ yrs of experience Groupon, McKinsey & Company

Hisham Moussa Director 10+ yrs of experience HSBC, KPMG M

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Tarek Kabil Partner at Abraaj, Member of Global ParCo Review Committee 30+ yrs of experience P&G, PepsiCo

SSA

Ashish Patel Managing Director 25+ yrs of experience Intel, PwC

Additional global and regional resources at the Associate and Analyst level

A global team with a significant operating track record, working with locally based APAG regional teams to leverage sector and geographic capabilities

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The Abraaj Group has an unwavering belief in sustainability, which is interwoven with our values and based on market relevance

1. Our Common Future, Brundtland Commission

“Development that meets the needs of the present without compromising the ability of future generations to meet their own needs” 1

• Sustainability can be achieved by unlocking the value in private sector companies in growth markets as they play a central role in promoting growth and development • And that resilient, long-term financial value can be attained not only through governance and reduced environmental impact, but also through positive social change and inclusive business models

We Believe:

The Classic View:

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Our values are based on our core business principles

1. Openness and honesty in all dealings, with respect for commercial and personal confidentiality;

2. Objectivity, consistency and fairness in the treatment of all shareholders;

3. Good corporate citizenship and integrity in all dealings with investees and communities;

4. Respect for the dignity and well-being of all internal and external stakeholders;

5. Respect for the environmental and social capital of host countries and commitment to sustainable business practices;

6. Professional operation in a performance-orientated culture, and commitment to continuous improvement.

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The Partnership has six guiding principles:

Environmental Social Governance

Underpinning our approach are our core ESG policies

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Social Policy

We seek only to invest in businesses which:

• comply with local law and ILO conventions;

• take action to mitigate their impact on employees, contractors, the local community and all others affected by their operations;

• pay wages which meet or exceed industry or legal national;

• allow consultative work-place structures and associations which provide employees with an opportunity to present their view to management.

Environmental Policy

We seek only to invest in businesses which:

• take account of the environmental impact of their operations and take steps to mitigate any risks;

• are designed and operated in compliance with local law and IFC PS;

• take account of relevant international environmental agreements.

Health and Safety Policy

We seek only to invest in businesses which:

• comply with local legislation and regulations and international standards (IFC PS);

• assess the specific risks arising from work activities and introduce measures to eliminate; or

• reduce those risks.

Business Integrity Policy

We seek only to invest in businesses which uphold high standards of business integrity and honesty and operate in accordance with local and international laws and good practice, including those intended to prevent extortion, bribery, and financial crime.

The ESG management approach at The Abraaj Group is based on dual concepts of value preservation and value enhancement

• Compliance with our values, local regulations and working towards IFC Standards

•Compliance with Fund shareholder agreements

• Focus on risk avoidance and risk prevention through investment lifecycle

•Regulatory/operational risk mitigation

Opportunities for: • Efficiencies •Revenue growth • Stakeholder value •Carbon credits •Preferential access to capital • Improved branding •Product innovation • Improving governance

Value Preservation

Value Preservation

Value Enhancement

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Pipeline & Initial screening

DD & Final screening

Legal Documentation & Disbursement

Post Acquisition Value

Acceleration

Exit

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• Inherent risk rating and exclusion list

• Identification of ESG issues to focus on due diligence - internal/external

• ID value creation opportunities

• Residual ESG risk rating, Abraaj’ investment checklists + compliance (local regulations & applicable standards)

• Environmental &Social Impact Report + Agreed Corrective Action Plans (CAP)

• Test and develop ESG as part of value creation plan (VCP)

• Legal/investment agreement: ESG Undertaking as part of SEMS clause+ ESG commitments with appropriate ESG covenants

• Agree ESG aspect of VCP and CAP with ParCo

• Reporting: Quarterly reporting, environmental performance review, ASI, Limited Partners requirements, portfolio reviews

• Monitor CAP and effect ESG VCP progress through opportunistic initiative

• ESG Filing

• ESG assessment at Exit

• Cultivate increased exit valuation through ESG (e.g. IPO)

• Capture ESG Value Add + Case Studies

• Final reporting: Quarterly reporting, ASI, ESG

ESG is firmly embedded throughout our investment process

SEMS: Socio-environmental management system

In investing, the Group comprehensively considers ESG on an ongoing basis

Environmental

• Air Emissions and Ambient Air Quality

• Energy Conservation

• Wastewater and Ambient Water Quality

• Water Conservation

• Hazardous Materials Management

• Waste Management

• Noise

• Contaminated Land

Occupation H&S

• General Facility Design and Operation

• Communication and Training

• Physical Hazards

• Chemical Hazards

• Biological Hazards

• Radiological Hazards

• Personal Protective Equipment (PPE)

• Special Hazard Environments

• Monitoring

Community H&S

• Water Quality and Availability

• Structural Safety of Project Infrastructure

• Life and Fire Safety (L&FS)

• Traffic Safety

• Transport of Hazardous Materials

• Disease Prevention

• Emergency Preparedness and Response

Construction & Decommissioning

• Environment

• Occupational Health & Safety

• Community Health & Safety

Governance

• Improving governance framework

• Fair and reasonable remuneration

• Considering the issue of gift and conflict of interest

• Audit, credit, risk and remuneration committees

• Strategic mapping

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PS1: Assessment and Management of E&S Risks and Impacts

To identify and evaluate environmental and social risks and impacts of the project

PS2: Labor and Working Conditions

Establish, maintain and improve the worker-manger relationship

PS3: Resource Efficiency and Pollution Prevention

To avoid or minimize adverse impacts on human health and the environment by avoiding or minimizing pollution from project activities

PS4: Community Health, Safety and Security

To ensure that the safeguarding of personnel and property is carried out in accordance with relevant human rights principles and to anticipate and avoid adverse impacts on the Affected Community

PS5: Land Acquisition and Involuntary Resettlement

To anticipate and avoid, or where avoidance is not possible, minimize adverse social and economic impacts from land acquisition or restrictions on land use

PS6: Biodiversity Management and Sustainable Management of Living Natural Resources

To protect and conserve biodiversity and maintain the benefits from ecosystem services

PS7: Indigenous People

To ensure that the development process fosters full respect for the human rights, dignity, aspirations, culture, and natural resource-based livelihoods of Indigenous Peoples

PS8: Cultural Heritage

To promote the equitable sharing of benefits from the use of cultural heritage and protect it from the adverse impacts of project activities and support its preservation

Our environment and social standards are based on world class IFC Performance Standards which amalgamate other key policies/standards

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We identify standard industry specific inherent risks early in the investment process

Based on industry standards (GICS)

Environmental, Social, Health &

Safety

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Considers industry inherent risk and residual

risk

Governance, Environmental, Social,

Health & Safety

HSES and governance risk assessment tools

Residual Risks Ratings

H M L H M L

• Rapid diagnosis of risks associated with partner company operations

• Sector specific lessons from Abraaj global portfolio

And further include the complexity of the business in residual risk analysis

Based on industry standards (GICS)

Environmental, Social, Health & Safety

Previously known as managed risk ratings

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Considers industry inherent risk and

residual risk

Governance, Environmental, Social, Health &

Safety

HSES and governance risk assessment tools

Residual Risks Ratings

Inherent Risk Ratings

H M L H M L

• Expanding our risk analysis to include the complexities (size, nature, etc.) pertaining to partner companies

• Allows for a scientific and consistent approach for measuring company specific risk

Why?

Sound corporate governance is vital for the development of a sustainable business

• Good governance involves a journey and a commitment to an ethic of continuous improvement • The Board’s role is to foster effective necessary, decisions and amplify relationships

The Governed Corporation

SHAREHOLDERS: • Maximize shareholder value • Ensure equitable treatment of all shareholders

BOARDS: • Ensure that Board members and committees are all

receiving requested information in a timely manner •Board members should ensure that they are familiar with

the company, its management and its business

SENIOR MANAGEMENT: • Maximize shareholder value • Ensure equitable treatment of all shareholders • Establish the ParCo’s strategic goals, objectives, values

and standards • Comply with laws and regulations, auditing and

accounting principles, • ParCo’s charter and governance documents

Duties and Powers of the Board Towards

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Abraaj works alongside ParCos to identify opportunities for value add

How does Abraaj add value for Partner Companies?

Management Quality Growth Return on Capital

Innovation

New Markets

New Products

New Costumers

Reputation/ Differentiation

Preferential Access to

Capital

Carbon Credits

Operational Efficiency

Cost Savings

Energy/Resource Conservation

Employment

Stabilization/Creation

Leadership

Development

Adaptability

Long term Strategic View

Enhanced Corporate

Governance

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There is value in seeking internationally recognized certifications, benefitting customers, suppliers, and acting as a differentiator

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•IFS Standards are developed for parties in the supply chain, which would like to use uniform standards to ensure safety and quality of food and non-food products and related services •Requires annual external foreign audits

•Specific requirements to enable an organization to: •plan, implement, operate, maintain and update a food safety management system aimed at providing products that, are safe for the consumer •to demonstrate compliance with applicable statutory and regulatory food safety requirements

•For work place safety and health of workers. •Key areas assessed for certification : •management systems •planning and risk assessment •staff training and awareness, etc.

•Specific requirements for an environmental management system to enable an organization to: •develop and implement a policy and objectives which take into account legal and other requirements •information about significant environmental aspects

•A management tool developed by European Parliament regulation for companies to evaluate, report and improve their environmental performance

•Quality management system: •provides guidance where a company needs to demonstrate its ability to consistently provide a product that meets customer and applicable regulatory requirements •aims to enhance customer satisfaction through the effective application of the system

IFS Certification ISO 22000

OSHAS 18001 ISO 14001

Eco Management and Audit Scheme (EMAS)

ISO 9001

Expansion on this scale and speed has been – and will remain our single biggest challenge. And it is here that Abraaj has really provided immense value.

-- Suresh Aggarwal, CFO

Investment Rationale Opportunity to invest in the leading company in a fast growing sector

High demand for infrastructure from both public and private sector

Proven management team

Value Added

Post staff tragedies in the business, Abraaj worked with the CEO to implement a heightened Health and Safety program, utilizing a specialist consultant placed on site over 3 years. The accident rate subsequently reduced, an enhanced employee-led safety committee now accountable, and a greater investment in PPE.

With the help of Abraaj resources who also process mapped the firm, ARSPL implemented an ERP significantly increasing its agility and speed of reporting to its Board.

Secured funding for the Company’s initial emissions reduction efforts

The robustness of the Board has been improved, lead by 2 senior Abraaj deal team members. The quality and further formalization of Board papers and decision making has increased the institutionalization of this family business. Sub-committees have been added with additional plans to enhance board composition.

Company Description

Current Status

“ ”

Financial Performance

Country: Kenya

Fair Value: US$9.9 mm

Deal Type: Growth Capital

Stake: 15.4%

Investment Amount: US$6.8mm

Status: Unrealized

Investment Date: October 2006

Current MoC: 1.7x

Origination: Proprietary

IRR: 10.2%

Athi River Steel Plant is preparing to raise additional capital to support its enhanced production capacity and finance additional machinery. Expected exit date is March 2014

2008 2009 2010 2011 2012

Revenue 16.4 14.8 13.8 18.7 16.6

EBITDA 3.3 3.0 0.9 3.9 3.0

Athi River Steel Plant: A critical change in Health & Safety process

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Athi River Steel Plant (ARSPL) is a steel smelting company, established in 1996, which produces hot and cold rolled steel products from recycled scrap metals. These include building steel, fasteners, steel springs building and structural materials

In June 2012, ARSPL commissioned a plant expansion which more than doubled the Company’s production capacity

Tailored ESG training programs are supplemented by an information platform to operationally support the Group

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Staff receive ongoing internal and external training annually

Comprehensive Training Knowledge Portal

Utilizing Opera, Abraaj’s online community

Abraaj Academy

Knowing the value our ParCos create provides us with deeper engagement opportunities

• 78 carefully chosen quantitative and qualitative indicators forming 6 pillars of sustainable private sector development

• Output is comparable across deal types, sectors and regions • Provides valuable insight into the relationship between

financial performance and ‘intangibles’ providing a framework for engaging our partner companies on key non-financial issues

• As we believe true profitability cannot be achieved without

sustainability, the ASI’s rigorous approach provides us with a crucial lever to accelerate business performance for value creation

The Abraaj Group utilizes an in-house developed, bespoke index to measure and report development across its partner companies

85% of partner

companies pay wages well above minimum wages in 2012

SSA

43.7% of

employees are women in Asia in 2010

ASIA

US$1.95 was

injected in LatAM partner companies for every dollar we invested (2004-2010)

LATAM

230% increase in

employees amongst MENA partner companies (2007-2011)

MENA

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Our Sustainability Council supports and enhances our activities at the Group and ParCo level

Jose Maria Figueres Former President of Costa Rica CEO, Carbon War Room

Ms. Helene Gayle President and CEO of CARE USA

Prof. Ian Goldin Founding Director of the Oxford Martin School at the University of Oxford

Dr. Joseph B. Wanjui Chairman of the Board, UAP Provincial Insurance, Chancellor of University of Nairobi, Kenya

Dr. Nathalie von Siemens Managing Director – Siemens Stiftung

Sev Vettivetpillai Partner, The Abraaj Group

Ms. Jane Nelson Director of the CSR Initiative, Harvard Kennedy School Chair of the Sustainability Council

Fred Sicre Managing Director, The Abraaj Group

Further we are members of industry partnership and contributors to:

We also provide thought leadership through:

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Our view is that a partnership between The Abraaj Group and ParCos provides an opportunity to create sustainable shared value with a singular focus

Strong ESG management has been a part of our DNA and a conscious strategy since inception, affording us and our partner companies:

• A competitive advantage in rapidly developing global growth markets

• Opportunities to drive value through Growth, Enhancement of the return on capital, and sustainable entrepreneurship.

As an investor with strong values, Abraaj works with partner companies to assist them in growing responsibly over time

“You cannot separate ESG from value creation in high growth markets. It is not discretionary, rather it is integral to the long-term sustainability of the private sector as it contributes to the development of economies.” Wahid Hamid, Head of APAG

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The information contained in this presentation is given without any liability whatsoever to Abraaj Holdings, any of its affiliates or related entities or their respective members, directors, officers or employees (collectively "Abraaj") for any loss whatsoever arising from any use of this presentation or its contents or otherwise.

Unless otherwise indicated, information presented here in is as of 31st December, 2012.

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