Date: June Venue: Presenter: Mr Ricardo De Beer

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Ronald Armstrong
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1 Date: June 2015 Venue: Presenter: Mr Ricardo De Beer

2 Profile Merger between the South African Micro-Finance Apex Fund (samaf) and Khula Incorporating IDC s SME mandate Purpose: provide finance and related services (business support and properties) to the SMME sector Wholly owned subsidiary of the IDC Independent Board of Directors National footprint (Head Office; Regional; Branch and Satellite offices)

3 Mandate and Focus Foster the development of SMMEs and co-operatives Job creation Entrepreneurial drive Priority areas (rural and semi-rural) Post investment mentorship support only to financed SMMEs Capacity building support to financing intermediaries Equitable balance between financial sustainability and developmental impact

4 Market Position Institution Primary Mandate Range sefa SMMEs Retail: 50 K - Up to R5m Wholesale: Up to R50m IDC Industrial Development Minimum = R1m NEF Broad Based Black Economic Empowerment Minimum = R250k Land Bank Agricultural Sector Finance Maximum Unsecured Facilities = R25k NYDA Youth Development Programmes R1k R10m DBSA Infrastructure Development Minimum = R10m (average) seda Non-Financial Support (Business Support Services)

5 Distribution Network (Future) Regional Offices = 9 (in all provinces) - SEFA branded offices Branch Offices = 26 - Collocation with strategic partners Satellite Offices = 24 - Kiosks (loaded with basic assessment software)

6 Funding Model Retail General SME Finance Wholesale Micro Finance & Niche/Sector Focused SME Markets sefa sefa Financial Intermediaries SMMEs & Co-Operatives SMMEs & Co-Operatives

7 Pricing Principles Cost of funding Risk Developmental impact (jobs, priority sectors, gender equity, etc.) Scale (impact) Innovative funding instruments

8 Target Market Direct Lending South African citizens Owner managed businesses Adequate business skills or access thereto Creditworthiness NCA Compliant Satisfactory basic feasibility study Some level of contribution (cash and/or assets) Desire for development finance means test

9 Value Proposition Cash-flow based financing (collateral not a determining factor) High flexible own contribution (based on repayment ability) Faster turnaround times: contract financing = maximum 10 days up to approval stage term loans = maximum 22 days up to approval stage Facilities tailored in accordance with the applicant s requirements and affordability (deferment; interest rates; etc.)

10 Market Offerings Direct Lending Term Loans Asset Finance Bridging Finance Revolving Credit Facilities Guarantees (available soon) Loan range: currently R50k - R3m Business Support (Post Investment Mentorship)

11 Priority Sectors Projects with high job creation potential Rural development projects and enterprises located in sub-urban areas Manufacturing Green economy

12 Exclusions Direct Lending SIN Industries (Tobacco, Liquor, Gambling, Sex trade, etc.) Manufacturing and selling of ammunition Speculative real estate Property development Leverage buy-out funds Illegal trade Non-profit organisations Persons under debt review Technically insolvent businesses and individuals Un-rehabilitated insolvent shareholders and/or directors of applying entities Primary agriculture

13 High Level Process Flow

14 Deal Evaluation Process

15 Direct Lending Checklist Fully completed application forms (business, personal and surety where applicable) Certified copies of identity document(s) - (not less than 3 months) Certified copies of marriage certificate(s) - (where applicable not less than 3 months) Proof of residence (not less than 3 months) Owners and companies recent six month bank statements (stamped by the bank) Company registration documents Valid certificate of annual CIPC returns Valid tax clearance certificate (original) Company s recent six months bank statements which must be stamped by the bank Signed loan breakdown (application of loan proceeds)

16 Direct Lending Checklist (cont ) Cash flow and anticipated project schedule Valid purchase order (contract finance) Valid quotation on suppliers letterhead Members or owners resolutions that the applicant can raise external funding Proof of registration with the relevant industry bodies - where applicable (e.g. FASA, CIDB, etc.) Compliance certificate(s) or proof that the applicant is compliant with all relevant legislation (e.g. Health and Safety, Labour, etc.) If a judgment, notice, default is issued against the applicant, a letter or documents to prove that arrangements are made to settle the account or proof that the account is settled must be provided

17 Target Market Wholesale Lending Niche market financiers: sector specific (e.g. textile, mining, etc.) specialised financing instruments (e.g. trade finance; leasing transactions; etc.) Sound management capabilities Prudent funding models/methodology Efficient portfolio management systems

18 Market Offerings Wholesale Lending Credit Indemnities (risk sharing instrument with private sector funders) Business Loans (wholesale loans for on-lending to SMMEs) Joint Ventures (joint venture funds between sefa and external investors) Capacity Building (facilities geared towards providing business support to sefa s financial intermediaries)

19 Exclusions Wholesale Lending Consumer credit On-Lending Activities in line with direct lending exclusions Unregistered groups Existing close corporations Natural persons applying in their individual capacities Insolvent businesses Registered entities with directors who are incapacitated in terms of the Company s Act

20 Contact Details Contact Person: Ricardo De Beer Telephone: Website: Physical address: 72 Long street, Business Partners building Kimberley

21 Thank You

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