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Industrial Development Corporation
30 June 2011 IDC EC Regional Office Kwakanya Mtintsilana
2
Background
o Established: 1940
o Type of organisation: Development Finance Institution (DFI)
o Ownership: State owned company, 100% owned by the SA government
o Total assets: R139 billion (31 March 2014 - group)
o Total liabilities: R32 billion (31 March 2014 - group)
o Funding status: Self financing, pays dividends and income tax
o Main business area: Provides funding for businesses and projects that are
contributing to industrialisation and job creation
o Geographic activities: South Africa and the rest of Africa
o Products: Financial products to suit client/project needs including debt, equity,
guarantees or a combination of these
o Stage of investment: Project finance – project development, feasibility, bankability
Business finance - start-ups, expansion, commercialisation
o Number of employees: 828 (31 March 2014)
3
Positioning IDC as DFI
• Non-commercial focus
• Fiscal transfers and grants
• Social development objectives
Government / NGOs
• High commercial focus
• Private sector capital
• Financial objectives
• Known risks
Commercial Financiers
• Commercial and developmental focus
• Sharing risk
• Internally generated funds, government funds, loans
DFIs
Places greater importance on financial objectives
Places greater importance on social and developmental objectives
• Industrial Development Corporation
• DBSA
• SEFA
• National Empowerment Fund (NEF)
• Landbank
• FDC
• ABSA
• Standard Bank
• FNB
• Nedbank
• Capitec
• Business Partners
IDC does not directly compete with any of these institutions, but encourages cooperation to achieve its goals
4
Operational model
• Agro-Industries
• Mining & Beneficiation
• Chemicals & Allied Industries
• Metals, Transport & Machinery Products
• Textiles & Clothing
• Forestry & Wood
• Tourism
• Media & Motion Pictures
• Healthcare
• Green Industries
• ICT (Information, Communication and Telecommunication)
• Strategic High Impact Projects
• Venture Capital
• Commercial debt
• Mezzanine debt/quasi equity
• Equity
• Guarantees
• Bridging finance
• Special funding schemes
• Business support products
• Project feasibility funding
• Venture Capital
Sector specialization through
Strategic Business Units (SBUs) …
… flexible application of a large
variety of financial products
… utilising two
business channels…
• Industrial or Business Finance
• Project development finance
5
The project or expansion must facilitate the creation of jobs
The funding request must be for at least R1-million
Risk sharing (through equity participation) from private-sector investment operating partners is non-negotiable
Finance limited to 60% of the total funding requirement for start-ups.
This may be increased for viable BEE clients
IDC can fund a full expansion if the debt at peak is <= 35% of total assets
IDC will consider equity finance if IDC the project is viewed as strategic (only minority stake < 50%)
General investment guidelines
6
General investment guidelines - continued
New projects, start-ups or expansions
Economic merit (profitable within a reasonable time)
Fixed assets and working capital
Security (Collateral)/Surety
Environmental & Legal compliance
7
Special funding schemes
Cross sectoral
schemes/funds
Managed on behalf
of the DTI
Sector specific
schemes/funds
Gro-E Scheme (inclusive of Gro-E Youth Scheme <35)
UIF Fund for job creation
Transformation and Entrepreneurial Scheme (TES)
o Women Entrepreneurial Fund
o People with Disabilities Fund
o Development Fund (Workers)
o Community Fund
o Equity Contribution Fund
Risk Capital Facility (RCF)
Energy Efficiency/Renewable Energy Fund (GEEF)
Clothing and Textiles Competitiveness Programme (CTCP)
Support Programme for Industrial Innovation (SPII)
Agro-Processors Competitiveness Scheme (APCF)
Agro-Processors Linkage Scheme (APLS)
Clothing, Textiles, Footwear and Leather Competitiveness Scheme
8
Gro-E Youth Scheme (IDC, SEFA, & NYDA)
Gro-E Youth Scheme
• Applicant must be less than 35 years at date of application
• >50% of business owned by youth
• Maximum cost per job = R500 000
• Prime less 3% for 5 years, thereafter market rates
• Start-ups and expansions
• Minimum finance amount is R1 million
• Maximum finance amount is R50 million
• No minimum owners contribution, but will be determined by financial capacity of owner and cash- flow profile of business
• Only businesses based in SA
• Must be within IDC’s sector mandate, else referred to SEFA
• NYDA to assist with vouchers for compiling business plans
9
Regional presence
• IDC has offices in all provinces;
• Regional offices are operational offices that
form part of the SBUs’ value chain;
• Satellite offices – some with permanent
staff and some not. Often co-located with
other DFIs;
• Responsibilities include:
Dealing with enquiries, applications and
business support in the province;
Improving IDC stakeholder relations and
stakeholder perceptions;
Extending IDC’s reach and footprint;
Proactive sourcing of deals/projects;
Engaging with provincial and municipal
government on regional development
plans;
10
IDC Regional Exposure by Industrial Sector
11
• Wholesale & retail trading activities (SEFA, FDC,
NEF)
• Purchase of land (BANKS)
• Property development (BANKS, BUSINESS
PARTNERS)
• Re-financing of existing facilities (BANKS)
• Overdraft facilities (BANKS)
• Public Private Partnerships (DBSA)
• Pure primary agriculture (Land Bank, Old Mutual -
Masisizane Fund)
• Pure sale of shares for empowerment purposes
(NEF unless > R75 million then IDC)
• Franchises (SEFA, FDC & NEF)
• Transportation (SEFA, FDC & NEF)
• Construction (SEFA, FDC & NEF)
THANK YOU
East London
Chesswood Office Park
08-10 Winkley Street
Berea, 5412
East London
(043) 721 0733