1 / 47

10 MARCH 2006

PRESENTATION TO THE PARLIAMENTARY PORTFOLIO COMMITTEE ON TRADE AND INDUSTRY. Presenters: Victor Mabuza – Asset Manager Andrew Wright – Manager in the CEO’s Office Nozizwe Mthembu – Legal Officer. 10 MARCH 2006.

tinagreen
Download Presentation

10 MARCH 2006

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. PRESENTATION TO THE PARLIAMENTARY PORTFOLIO COMMITTEE ON TRADE AND INDUSTRY Presenters: Victor Mabuza – Asset Manager Andrew Wright – Manager in the CEO’s Office Nozizwe Mthembu – Legal Officer 10 MARCH 2006

  2. PRESENTATION SECTIONS: POSITIONING PERFORMANCE FINANCIAL CURRENT INITIATIVES CASE STUDIES

  3. NEF STRATEGIC FOCUS Broad Based Black Economic Empowerment The Codes of Good Practice Priority Sectors Arts & Culture, Tourism, Textiles, Agro Processing Automotive, Chemicals, ICT, Aerospace Film Industry, Exports • Government Aims: • . Access to Finance 2. Job creation 3. Geographic spread 4. Women empowerment 5. Integrated manufacturing economy 6. Efficient, fast & flexible economy 7. Diversity of enterprise 8. Skills transfer & development The dti Objectives NEF Act: Objectives Accelerated & Shared Growth Initiative for SA ASGI - SA 6% GDP Growth 10% Investment Growth 10% Export Growth 2014

  4. NEF POSITIONING IN ADDRESSING MARKET FAILURE • Identification of market failures particularly regarding participation of Black People in ecoonomy • Avoid duplication of other DFI product offerings • Positioning of NEF to complement other DFIs and financial institutions

  5. BEE Participation Thresholds

  6. PERFORMANCE

  7. NEF INVESTMENT PROCESS REPORT: Since 1 April 2005 to 28 February 2006 Investment Committee Legal ENQUIRIES APPLICATIONS PENDING MORE INFO NEW DEALS ACCEPTED DUE DILIGENCE APPROVED DISBURSED (Including Undrawn Capital) 28 worth R241m 30 worth R244m 1,092 worth R801m Approx 9,532 17 worth R282m 60 worth R241m 1,556 NEF work in progress: 135 of R1bn

  8. FINANCIAL

  9. CURRENT INITIATIVES

  10. BEE Retail Schemes: Key Objectives • The creation of innovative savings and investment opportunities for Black people to create wealth (assets) • Provide a meaningful broad-based ownership of SOCE shares by Black people • Unlocking listed SOCE share value for NEF investments through value-adding and empowerment opportunities for Black people • Educating and promoting an understanding of investments and other related savings instruments amongst Black people

  11. Designated SOCE’s • Asset Shareholding % Status • MTN Group 1.5 received by NEF • Telkom 5 not yet received • SAA 5 not yet received • ACSA 10 not yet received • Connex Travel 10 not yet received • Viamax 10 not yet received • Syncat 10 not yet received • Transwerk Perway 10 not yet received • Sentech 10 not yet received • Uthingo 5 received by NEF • SAFCOL 10 not yet received

  12. Product Offerings • Once-off share offerings • Collective Investment Schemes • Broad-based Share Ownership structuring & administration Assets to be used: • NEF SOCE share set-asides (currently on Balance sheet) • Further SOCE share set-aside allocations (upon transfer to NEF Balance sheet) • NEF invested equity portfolio (when it exercises its exit strategy) • Equity set-asides for BB-BEE groupings by applicant companies (Database access and ESOPs)

  13. Targeted Beneficiaries • Targeted broad-based groups of Black people: • General public (nationally and of all income levels) • Savings Schemes(e.g. stokvels, investment clubs, etc.) • Rural and Community organisations (e.g. burial societies, co-operatives, etc.) • Women-entrepreneur groupings (both rural and urban organised groupings) • Other organized groupings (e.g. informal traders, employee share schemes, etc.) • Local, Provincial & National Governments (e.g avail affordable funding for their LEDs, IDPs & Strategic Projects) • INDIVIDUALLY OR COMBINATIONS THEREOF

  14. CASE STUDIES Choice Technologies Bohang Bead Manufacturers Morobe Trading

  15. Company background Black owned IT and systems integration business (hardware and software solutions) Established in 1997 Staff complement of 5 in 1997 ; 200 in 2005 Based in Gauteng, regional branches in Cape Town, Durban 10 service centers throughout South Africa Shareholding pre NEF funding • 51% owned by Choice Group • 49% owned by Dimension Data

  16. Capital injection to buy out Didata ( R5m ) • Cash injection for working capital ( R15m) • R10m Equity • R10m Debt • Negative market perception • Financial risk – Negative cash position • Business risk – Need for more contracts • Established from scratch ( not an equity • acquisition) in existence for > 7yrs • Employs over 200 employees (>70% BEE) • Training and skills development for youth • Good track record with stakeholders • Lucrative government & private contracts • Preferred supplier for 2010 soccer world • cup Salient features of the deal Risks Strengths NEF funding Funding amount

  17. Compliance with funding criteria and NEF Mandate Strong empowerment dividend ICT is a priority sector Addresses market failure Supporting black entrepreneurship Saved 150 black IT professional’s jobs Liquidity and Warehousing product NEF to hold 49% equity whilst BEE managers return the business to profitability Commercially viable

  18. Company Background Bohang Africa Investments (Pty) Ltd founded in 2003 by Mr. Tlholo Mohlathe. All beads are imported into South Africa. Large scale specialised glass plant in Wadeville producing range of glass beads. Located adjacent to Consol supplying glass and technical expertise. The company will in the first 2 years create 70 new jobs.

  19. Cash injection for working capital and asset • acquisition • R6.75m Equity • R13.5m Debt • Exchange rate risks • Capital risks • Business risk • First manufacturing facility of seed glass • beads in Africa. • Will create 70 new jobs. • Training and skills transfer from Consol • Women Empowerment • Supports 106 000 rural & community • crafters Salient features of the deal Risks Strengths NEF funding Funding amount

  20. Compliance with funding criteria and NEF Mandate Strong empowerment dividend Arts & Culture one of NEF’s sector focus Addresses market failure Supporting black entrepreneurship New jobs to be created and supporting 106 000 bead workers jobs Provincial bead SMME industry clusters Strategic Projects product NEF to hold equally with PIC 15% equity with 25% shareholding in the hands of Rural Women Crafters Commercially viable

  21. NATIONAL EMPOWERMENT FUND Growing Black Economic Participation Morobe Trading Enterprises CC (“Morobe”) “Preferential Procurement”

  22. Company background Electrification services company 100% owned by a Black woman, Ms. Alettah Ngwetjana (also a Managing Member). Established in 1993 to provide various services. Recently branched into contract work as a result of opportunities provided by preferential procurement policies. Company provides maintenance and installation services as a contractor to Eskom in areas surrounding Polokwane. Company has created 16 jobs. NEF provided non-financial support in a form of advise on business plan and financial modelling.

  23. Salient features of the deal • NEF invested R1.1 million in a form of 5-year loan. • Interest rate charged @ prime less 1% with capital holiday of 6 months. • Loan secured by assets and suretyship by Ms. Ngwetjana. • Proceeds used for funding working capital and capital expenditure – acquired specialized trucks • ABSA provided asset finance as a result of NEF’s funding.

  24. Compliance with NEF Mandate NEF facilitated access to finance to enable the business to service the contract. Assisted the business to build the track record and hence improve its credit rating Without NEF’s investment, the company would not have qualified for ABSA facility. Assisted with capacity building of the business. Investment resulted in the creation of 16 jobs. Investment in Limpopo in line with government policy to spread economic development to rural provinces. Direct financial support to SME

More Related