National Empowerment Fund Presentation 28 August 2014 Mr. Bongani - - PowerPoint PPT Presentation

National Empowerment Fund Presentation 28 August 2014

• Mr. Bongani Qokose

Regional Manager: Mpumalanga

Presenter

Mr Bongani Qokose

Regional Manager : Mpumalanga

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NEF Mandate …

Established by the National Empowerment Fund Act No 105 of 1998, the NEF is a driver and a thought-leader in promoting and facilitating black economic participation through the provision of financial and non-financial support to black empowered businesses, as well as by promoting a culture of savings and investment among black people

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NEF Mandate

Grow black economic participation

Fund Management

• 1. Fund black-empowered

businesses

• 2. Business plan toolkit
• 3. Mentorship support
• 4. Early-stage investments

Asset Management

• 1. Investor Education
• 2. Public Share Offers
• 3. Enterprise Development
• 4. BEE Repository

Unpacking the NEF Mandate …

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Culture of savings & investment Financial & non-financial support

Challenges / Market Failures facing black business

• Limited own capital,
• Access to affordable capital,
• Limited management skills, including financial, marketing and technical

expertise,

• Lack of accurate and reliable financial information,
• Poor quality of business plans,
• Lower bargaining power and strong competition from established

businesses with entrenched market dominance, and

• Lack of access to local international markets.

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R250 000 – R75 million

• Start-up
• Expansion
• Equity Acquisition

NEF Funding

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Product / Fund Description Funding amounts

Entrepreneurship Finance For starting a new business R250 000 – R10 million Procurement Finance For tenders and contracts R250 000 – R10 million Franchise Finance For pre-approved franchise licenses R250 000 – R10 million Acquisition Finance For black investors acquiring a stake in medium to large companies R2 million – R75 million Expansion Capital For growing an existing business R250 000 – R75 million *Project Finance Participation in green-field projects R5 million – R75 million Capital Markets Listing on the JSE or its junior Altx markets R2 million – R75 million Liquidity and Warehousing The NEF has Black Facilitator status, which can help black shareholders and companies wishing to sell a stake while keeping the shareholding black R2 million – R75 million *Rural and Community Development Fund for agri-processing, tourism, mining & beneficiation, manufacturing etc R1 million – R50 million *Strategic Projects Fund Venture-capital fund investing in early-stage projects for the purpose of developing strategic industrial capacity in poverty nodes, in renewable energy, business process outsourcing, tourism, manufacturing, mining and mineral beneficiation etc. R1 million – R75 million

NEF Funding Products in detail

On average, the NEF’s business loans are repayable over 4 to 7 years, and up to 10 years where marked with an asterisk (*) below:

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NEF Funding Criteria

Each application is assessed in terms of the following criteria:

• minimum percentage of black ownership or interest,
• black women empowerment,
• black managerial and operational involvement,
• commercial viability of the business,
• specific product criteria,
• job creation,
• geographic location of the business (rural/urban/disadvantaged areas),
• community involvement,
• compliance with all the relevant laws and regulations,
• return on investment, and
• the possibility of co-funding with another public or private sector institution.

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Performance Reporting

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NEF Approved and Disbursed Deals by value

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NEF Approved and Disbursed Deals by number

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NEF Portfolio by Value

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Business Planning?

www.nefbusinessplanner.co.za

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• Simple to use
• Free to the public
• Step by step question & answer

process

• Helps with financial projections
• Formats into a Word document
• Confidential (password-protected)
• Download and print
• Submit to any funder

No. Heading Description 1 Executive Summary Brief description of the business? 2 Purpose of funding What do you need the money for? 3 Valuation of business If buying a business, how was its value calculated? 4 Products & Services What is the business going to sell? 5 Industry Analysis Trends, developments , opportunities, laws, outlook etc 6 Target Market Who are your customers? 7 Competitor Analysis How are you going to do better than your competitors? 8 Supplier Analysis Do you have the best suppliers, eg cost, delivery, quality etc 9 Operational Analysis Technology, quality-control, safety, costs & processes etc 10 Management & HR Experience, qualifications, number and race of employees etc 11 Internal & External Risks Do you have plans to address possible risks & problem areas? 12 Social-economic benefits What does your business offer to society, eg jobs, skills etc 13 Financial Analysis History & projections: Income & exp, balance sheet, cash-flow

Details of a Business Plan

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Mentorship

Ongoing mentorship support across the country

• Globally, 30% of start-ups fail in the first 2 years,
• Less than 50% survive beyond 4 years
• Mentors across the country to help businesses
• Expert advice on strategy and operations
• Improve the chances of the business succeeding
• Provided for free to NEF investees

SAVINGS AND INVESTMENT

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Investor Education

• National campaign and booklet to

promote public understanding of:

• How to save & invest
• Tips on investing
• Personal financial discipline
• What are shares & dividends
• What are bonds
• Investing in property
• The money-market
• Terms & concepts

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Enterprise Development …

• Broad – Based Black Economic

Empowerment Codes

• f

Good Practice – Section 9(1) Series 600 provides that companies make monetary

• r

non monetary contributions either recoverable or non recoverable for development, sustainability and financial and

• perational

independence

• f

beneficiaries.

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Enterprise Development

Enterprise Development Fund NEF

Returns  Mandate  BEE Facilitator  Co - Funding

Measured Entity

Returns  Proper appropriation

• f funds

 Risk sharing  BEE points  Free from legislative restraint  Free from

• perating risk

Contribution

Beneficiaries

( NEF Investees & Beneficiaries from Measured Entities Supply Chain ) Returns  Financial Independence  Sustainability  Increased quality / skills  Guaranteed

• ff -

take  Vested equity

40 % 60 % Co - funding Fund Manager

Benefits of NEF as FM  Highly regulated Public Entity e . g . PFMA  Governance  Reporting

Quasi Equity Equity Non Financial Support

• Are you black?
• Do you have a viable business idea and a

business plan?

• Does it have financial projections?
• Do you need funding of between R250 000

and R75 million?

• Have you registered a company?
• Do you have a valid RSA ID?
• Will you be directly, operationally involved?

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Come to the NEF today

Examples of NEF Funding

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• This is a R50 million project
• The NEF invested R28,3 million
• The Trust represents 22000

beneficiaries in the Jozini area (Northern Kwa-Zulu Natal)

• Overlooks the third largest lake

in South Africa

• The hotel has 60 rooms
• Accommodates 144 guests

The community owns this 4-Star hotel!

Turning Villagers into Shareholders

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R14.8m R19.4m

CCT NEF IDC

Technical Partner

AMAJUBA R37m

• 60 HA raspberry farm in Amajuba district, KZN
• Farm established on land secured through restitution

process

• Supply local and export markets (70% of production)
• Tap into growing popularity of raspberries
• Supplies berries to Europe
• Supplies berries to Woolworths

CR

A Sweet Deal for the People!

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Masiza Mussel Farm (R9.9 million, Western Cape)

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• The commercialisation and an expansion of The Masiza Mussel Farm Pilot Project
• Masiza produces 739 tons p.a. of black mussels in Saldanha Bay, Western Cape
• Has a 100% off-take agreement with LaVie Seafood (the only processor of mussels in RSA)

Pre - NEF Investment

• Masiza Trust (6 farmers) & Blue Bay Aqua Farm

Pre - NEF Investment

• Masiza Trust, Blue Bay Aqua Farm, LaVie and

Blue Bay Workers Trust, Technical Partner (Mentor) and NEF

• NEF 7 year Senior Loan of R4.95 million @ 8%

interest with a 1 year interest and capital moratorium

• NEF 7 year Shareholders Loan of R4.95 million

@ 8% interest with a 1 year interest and capital moratorium

• The NEF is targeting a minimum IRR of 8%

Shareholders Funding Structure Project Description Investment Rationale

• 62% owned by BEE and Located in poverty stricken area
• Supports economically sustainable and globally competitive marine aquaculture

sector

• Retention of 6 jobs and creation of 10 new jobs at primary farming level & 90 new

jobs at processing plant

Masiza Mussel Farm…

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Qumbu Shopping Center t/a Aduma Trading (Pty)Ltd - Eastern Cape (R34 million)

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Pr Projec

• ject

t Salien Salient t Fea eatu tures es

• Area: Eastern Cape, Qumbu
• Sector: Retail Property
• Deal type: Start-up
• Community shareholding:
• Aduma Trading (Pty) Ltd :

44%

• Qumbu Community Trust :

37%

• NEF: 19% (warehoused by

NEF)

• NEF investment: 34 million
• Numbers of jobs created: 99

permanent and 151 temporary

iMbewu Fund deal summaries

• 1. Sale’s Hire is a Cape Town based

company that specialises in the hire of builder’s equipment and other related tools. The company has 20 company owned

• utlets in the Western Cape. The company

intends to franchise 9 of their branches to the current black management in those branches.

• 2. Sale hire specialized in hire and sale of

tools and equipment in the construction

• industry. Their product offering ranges from

access platforms, breakers , cleaning equipment , compacting and concrete, compressors , drills , generators and power tools etc. These products service both the DIY and construction industry.

Sale’s Hire

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Franchises Funded to Date

Pre-approved Franchise Agreements

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uMnotho Fund Deal Summaries

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• 1. This is a greenfields project in the broiler industry. Velevutha

Agricultural Consultancy’s operations will be in contract growing for chicken processing entities. It has secured a 10 year

• utgrower contact with Crown Chickens (Pty) Ltd, a subsidiary of

the JSE listed Sovereign Foods Limited to grow over 6,3 million chickens per annum. The NEF has approved R44 million new ventures finance to fund the land, infrastructure and equipment required to kick-start the project. Velevutha represents a genuine broad-based BEE initiative including 33% women, 10% Staff and 7.5% Broad-Based BEE ownership as well as the creation of 12 new jobs and transformation of a white, blue-chip dominated industry.

R44 million in the Eastern Cape

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• 4. LA Crushers (Pty) Ltd is a mining contracting company based in

Phalaborwa with operations in Limpopo and Mpumalanga. Having operated for more than 20 years, their client base includes blue chip companies like Phalaborwa Mining, BHP Billiton, Foskor and Exxaro. LAC’s Head Office is in Phalaborwa, and the company employs some 500 personnel. The NEF’s R45 million investment was to enable an acquisition of a 46% by a BEE Consortium, including the surrounding communities as well as for the business’ working capital requirements.

uMnotho Fund Deal Summaries

• 3. Just On Cosmetics (Pty) Ltd (JOC )is a black-owned

cosmetics retailer whose operations commenced in

• 1991. To date, the company boasts 38 outlets in the

Eastern Cape, Kwa-Zulu Natal and the Free State, 2 warehouses, 36 vehicles more than 50 suppliers and

• ver 600 employees. NEF has committed R50m in funds

to the expansion of JOC. This has the potential of creating in excess of 200 jobs in the above mentioned provinces whiles growing a black-owned company. R45 million in Limpopo R50 million in the Eastern Cape

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6. The NEF has supported the introduction of a consortium of black women and the Nozala Trust as shareholders in the Ma-Afrika business, and funded the production of 2 films, namely A Million Colours and

• Winnie. Through this investment the NEF is

supporting transformation in a key industry and has assisted in the facilitation of more than 350 jobs for crew and cast positions.

• 5. Desert Oil is a fuel branded marketing company. Institution of

the company comes a result of Chevron divesting in Retailing in the industry in line with the regulation. The company began its

• perations in March 2010 before securing full funding. The

assets acquired include supply agreements for 28 sights, pumps and tanks on all sites, and land and buildings for 4 sites. The entrepreneurs are strong individuals with 40 years experience in the industry indicating firm commitment to the transaction through a R2m contribution and 2 of the three directors moving from the Western Cape to the Northern Cape.

uMnotho Fund Deal Summaries

R7,950,000 in the Northern Cape R30 000 000 in the Western Cape

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Enterprises Owned and Managed by Women

Investee % of Women Shareholding Sector Value

Wassa Trading 100 Retail (Energy) R12 460 000 Nawane Ciao Baby Cucina 100 Food Franchise R 3 900 000 Ranna Pazza Karoo Cattle 100 Food Franchise R 4 400 000 Tawana Business Projects 100 Construction R 2 500 000 Barcelos Mthatha 100 Food Franchise R 1 100 000 Safepak 50 Manufacturing R 4 400 000 Moshitoa Selections 50 HR Services R 3 000 000 Afripotego Business Projects 100 Construction R 2 750 000

Funded portfolio to date = 25% Target = 40% Women, be a part of this growth

MPUMALANGA NEF FUNDED PROJECTS YEAR ENDED MARCH 2013

• Spar Kildare (Bushbuckridge) – R12, 3m. The store will be officially

launching on the 25th of July 2013.

• Sambane Mining and Logistics (Ermelo) – R1.5m. The project is currently
• perating.
• Badplaas Saw Mill (Badplaas) – R9m. The project is in implementation

stage.

• Bafune Construction and Electrical (Matsulu) – R1m. The project is

completed and company is sustainable.

• Khwezi Lakusasa Trading (Nelspruit) – R1.4m. Currently operating
• Mdokeni Transport and Tours (Waterval Boven) – R1,9m. Currently
• perating
• Lizin Transport Services (Machadodorp) – R2,1m. Currently operating.
• Lo-Mhlangano Private Tours (Nelspruit) – R2,8m. Currently operating