FUND
NATIONALEMPOWERMENT
Growing Economic Participation
FUND
NATIONALEMPOWERMENT
Growing Economic Participation
PRESENTATION TO THE PORTFOLIO COMMITTEE
ONTRADE AND INDUSTRY
4 MARCH 2005
Nchakha Moloi
Acting CEO
FUND
NATIONALEMPOWERMENT
Growing Economic Participation
CONTENTS
1. Who is NEF?
2. What does NEF do and why?
3. How does NEF do it?
4. What are the resource requirements?
5. How can performance be measured?
6. Challenges.
7. Questions.
FUND
NATIONALEMPOWERMENT
Growing Economic Participation
NATIONAL
EMPOWERMENT
FUND
(NEF)
NATIONAL
EMPOWERMENT
FUND
(NEF)
NEF TRUST
NEF VENTURES
In terms of the NEF Act Capitalisation from National
Treasury and share-set-aside Specific product offerings in
terms of June 2004 product relaunch
In terms of the NEF Act Capitalisation from National
Treasury and share-set-aside Specific product offerings in
terms of June 2004 product relaunch
Joint Fund between IDC and the NEF
Separate investment criteria and fund mandate
Transactions between R3m to R10m Minimal overlap with NEF Trust
Transformer product only NEF screens and processes
applications as Fund Manager Capitalisation on a 50/50 basis
between both organizations Fund Size R170m, with initial
expectations of an additional R30m to be earmarked for a smaller Fund
Management fees paid by IDC and NEF respectively
Joint Fund between IDC and the NEF
Separate investment criteria and fund mandate
Transactions between R3m to R10m Minimal overlap with NEF Trust
Transformer product only NEF screens and processes
applications as Fund Manager Capitalisation on a 50/50 basis
between both organizations Fund Size R170m, with initial
expectations of an additional R30m to be earmarked for a smaller Fund
Management fees paid by IDC and NEF respectively
WHO IS NEF?
FUND
NATIONALEMPOWERMENT
Growing Economic Participation
WHAT DIFFERENTIATES NEF?
Exclusive generalist funding for BEE
Not focused on personal credit worth/ security
Focused on the “Hurt Factor” (livelihood dependent)
Appetite for risk with a development focus
FUND
NATIONALEMPOWERMENT
Growing Economic Participation
CONTENTS
1. Who is NEF?
2. What does NEF do and why?
3. How does NEF do it?
4. What are the resource requirements?
5. How can performance be measured?
6. Challenges.
7. Questions.
FUND
NATIONALEMPOWERMENT
Growing Economic Participation
Main objective
To be a catalyst in facilitating economic equality and transformation
New focus Maximise the empowerment dividend
Driven by
- Current market needs- Broad-based empowerment charter- Government policy and other sectoral
charters- Addressing past failures of BEE
structures
WHAT DOES NEF DO AND WHY?
FUND
NATIONALEMPOWERMENT
Growing Economic Participation
THE NEF IS A DFI OPERATING UNDER THE UMBRELLA OF THE dti
The NEF’s product offerings address the NEF’s objectives and are aligned with government’s
NEF’s objectives as per the NEF Act Government and dti’s objectives addressed
• Providing HDPs with the opportunity of….acquiring shares or interests in state owned commercial enterprises that are being restructured or in private business enterprises;
• Encouraging and promoting savings, investments and meaningful economic participation by HDPs;
• promoting and supporting business ventures pioneered and run by HDPS;
• promoting the universal understanding of equity ownership among HDPs;
• encouraging the development of a competitive and effective equities markets inclusive of all persons in the Republic;
• contributing to the creation of employment opportunities
• Increasing the contribution of small enterprises to the economy
• Significantly advancing broad-based black economic empowerment
• Increasing the level of direct investment in the economy and in specific priority sectors
• Contributing towards providing accessible, transparent and efficient access to redress for economic citizens
• Partially fulfilling
- Contributing towards building skills, technology and infrastructure platforms in the economy from which enterprises can benefit
- Repositioning the economy in higher value-added value matrices in manufacturing and services
• Contributing towards building a single economy that benefits all and bridging the divide between first and second economies.
• Building an efficient, effective and accessible organisation to achieve these outcomes in a sustainable and economical manner.
FUND
NATIONALEMPOWERMENT
Growing Economic Participation
NEF POSITIONING IN ADDRESSING MARKET FAILURE
• Identification of market failures particularly regarding participation of HDPs in economy
• Avoid duplication of other DFI offerings
• Positioning of NEF to complement other DFIs and financial institutions
Examples of market failure NEF product Complementary to other DFIs / Banks
Limited access to finance for HDSA entrepreneurs with no collateral GeneratorAccelerator
Places new businesses in bankable positionsKhula & IDC
Enter buy-in / buy-out transactions from position of weakness Transformer / NEF Ventures
Banks provide debt funding
Lack of equity funding for rural & community infrastructure projects (longer term lower return)
Rural & Community Support
Leverages debt fundingDBSA, IDC & CPPP
Institutional Fund managers focus on large listed companies >R1bn market capitalisation
Capital Markets Fund Assists with exitsIDC
Dilution of broad based BEE shareholdings through second round capital raising
Liquidity & Warehousing Fund
Limited market liquidity to enable Black entrepreneurs to sell some/all of their businesses
Liquidity & Warehousing Fund
Over-geared historic BEE funding structures, potentially unwind out of the money
Liquidity & Warehousing Fund
Rescue & restructure
Lack of BEE funding for large strategic (greenfield & brownfield) projects
Liquidity & Warehousing Fund
Co-invest with IDC, DBSA
FUND
NATIONALEMPOWERMENT
Growing Economic Participation
CONTENTS
1. Who is NEF?
2. What does NEF do and why?
3. How does NEF do it?
4. What are the resource requirements?
5. How can performance be measured?
6. Challenges.
7. Questions.
FUND
NATIONALEMPOWERMENT
Growing Economic Participation
Established BEE companies and Government departments requiring equity warehousing for BEE
Entrepreneurs & Rural communities
Government Departments & Sectoral Charters
FUND
NATIONALEMPOWERMENT
Growing Economic Participation
KEY QUALIFYING CRITERIA
Entrepreneur Support
• Operational involvement at senior management level
• Financial commitment (relative to the individual and not the size of the transaction)
• Demonstrate sustainability of the business
• NEF investment into operating companies
• Compliance with laws and regulations(e.g. Income tax, Employment Equity)
Rural & Community Support
• Community involvement at all levels
• Strong social upliftment benefits
• Co-funding with other investors (NEF will not be the sole investor)
• Projects must be undertaken in conjunction with a recognised partner
Market Making
• Track record of operational involvement
• Established businesses
• No dilution of management capacity
• Compliance with laws and regulations (e.g. Income tax, Employment Equity)
FUND
NATIONALEMPOWERMENT
Growing Economic Participation
Generator Accelerator Transformer
• R250 000 to R1m • R1m to R3m • R3m to R10m Size of investment
• Create new HDP-owned and managed enterprises
• Grow and develop existing HDP-owned and managed enterprises
• Transformation of enterprises at the ownership, decision-making and control levels
Principal goal
• Close corporations) and private (Pty) Ltd companies.
• CCs and (Pty) Ltd companies
• Unlisted limited companies
Types of organisations supported
• Acquisition of equipment
• Financing of working capital
• Bridging finance• Acquisition of
licenses/franchises• Rehabilitation, lease
and performance bonds
• Primarily to fund business expansion, either by acquisition or organically
• Management buy-outs
• Management buy-ins• Employee buy-ins,
Employee share ownership plans
Principal use of investment capital
• Debt (secured and unsecured)
• Equity
• Secured debt• Convertible debt• Preferred equity • Equity
• Secured debt• Convertible debt• Preferred equity• Equity
Types of investment
• 3 – 7 years • 3 – 7 years • 3 – 7 yearsTerm of investment
• >75% • >50% • >25%
HDP equity thresholds (including NEF stake)
DETAILED INVESTMENT CRITERIA –
ENTREPRENEUR SUPPORT
FUND
NATIONALEMPOWERMENT
Growing Economic Participation
EVALUATION FRAMEWORKTHE FRAMEWORK TRACKS THE DEAL FLOW PROCESS THROUGH THE FOLLOWING GENERIC STAGES:
1. Eligibility screening;
2. Assessment of commercial viability (including historic analysis) and sustainability of financial forecasts, incorporating review of the business plan;
3. Evaluation of management’s ability to implement the business plan;
4. Proposed investment structure and capacity of business to service/ bear the required cost of funding;
5. Identifying risks inherent in the business, formulating the due diligence investigation plan and setting due diligence materiality limits;
6. RECOMMENDATION TO EXCO (PRE DUE DILIGENCE);
7. Performance of due diligence and evaluation of results;
8. Final review of due diligence and comparison to investment structure;
9. FINAL RECOMMENDATION TO EXCO AND IC
FUND
NATIONALEMPOWERMENT
Growing Economic Participation
INVESTMENT PROCESS: TRANSACTIONS > R5m Application Form / Screening /
Business PlanPreliminary Investment
ReportInvestment Committee Due Diligence Final Investment Report
PIDSA
Total Applications Received
(01/06/04 – 21/02/05)
185
1. E & B CitrusR10,000,000 (EC)
2. EHD Components
R9,940,000 (GP)
R19,940,000
Pending Applications
(01/06/04 – 21/02/05)
70
(Pre-Investment Business Support required to
accelerate transactions)
1. ListcoR50,000,000 (GP)
2. E & B Conservancy R10,000,000 (EC)
3. Solar SystemsR7,000,000 (GP)
4. Vac Air Technology
R10,000,000 (GP)
R77,000,000
Receipt of Investment Application Form & Business Motivation
Assessment of application for eligibility
Investment Associate perform assessment for commercial
viability, incorporating business plan
Communication with applicant: decline application or proceed with
evaluation
Completeness of Business Plan
Evaluate Financial forecasts
Internal Team Approval
Prepare Investment Report for pre-due
diligence & proposed Term sheet Approval by
EXCO Investment Committee (INCOM)
Present Pre Due Diligence Report to
EXCO INCOM Perform Due Diligence (DD) Final
Investment Report
EXCO INCOM Submission for
Approval
Presentation to the NEF INCOM / Ventures IC for Final Approval
(FICA)
Interim Investment Committee for
transactions above R5m approved
PIDA
Total WIP:R96,7 mill
FUND
NATIONALEMPOWERMENT
Growing Economic Participation
INVESTMENT PROCESS: TRANSACTIONS UP TO R5m
Application Form / Screening / Business Plan
Due DiligenceFinal Investment
ReportPreliminary Investment
ReportInvestment Committee
Receipt of Investment Application Form & Business
Motivation
Assessment of application for eligibility
Investment Associate perform assessment for commercial
viability, incorporating business plan
Communication with applicant: decline application or proceed
with evaluation
Completeness of Business Plan
Evaluate Financial forecasts
Internal Team Approval Prepare Investment Report for pre-due diligence & proposed Term sheet
Approval by EXCO Investment Committee
(INCOM)
Present Pre Due Diligence Report to
EXCO INCOM
Perform Due Diligence (DD)
Final Investment Report
EXCO INCOM Submission for Final Approval
Invested Portfolio
PIDAPIDSA
Total Applications Received
(01/06/04 – 21/02/05)
1174
1. Something FishyR390,000 (GP)
2. Makarapa HeadwearR400,000 (GP)
R790,000
1. Greisen Finance (Pty) Ltd.
R3,990,000 (GP)
2. Izazi Support Systems R300,000 (MP)
3 JC Backhoe Spares R2,000,000
(GP/PE/KZN)
4. Khanya Plastic R1,800,000 (WC)
5. Ogwini Bakery R1,167,367 (GP)
6. Platinum Koi R900,000 (WC)
7. Quality Frozen Food R2,950,000 (GP)
8. Speedy Umtata R415,000 (EC)
9. Steel Metal & Tools CC R3,374,700 (GP)
R16,897,067
Pending Applications
(01/06/04 – 21/02/05)
553
(Pre-Investment Business Support required to
accelerate transactions)
1. Amsterdam T/D ‘65 CC R680,000 (GP)
2. Semaku R1,345.000 (GP)
R2,025,000
NEF VENTURES –
5 Transactions(As per attached Report)
1. Exotic BreadsR1,700,000 (KZN)
2. Isibane Safety R1,000,000 (WC)
3. Kuzuko R5,000,000 (EC)
4. Notae R960.000 (KZN)
5. National Trans. & Ind. R1,500,000 (WC)
6. Secretarial UnlimitedR450.000 (KZN)
7. Theme-U-Snack CCR1,000,000 (WC)
8. Tilt Tango CC
R820,000 (WC)
R12,430,000
NEF TRUST –GES & MARKET MAKING
6 Transactions (As per attached Report)
Total WIP:R32,1 mill
FUND
NATIONALEMPOWERMENT
Growing Economic Participation
NEF TRANSACTION WIP SCHEDULELast Updated: 21 February 2005
Company name Company DescriptionCapital
RequiredPotential
JobsCurrent
JobsProvince
EHD Components Engine Spares 9,940,000 76 Gauteng
Greisen Finance (Pty) Ltd. Financial Services 3,990,000 15 Gauteng
Solar Systems Electrical Goods 7,000,000 8 8 Gauteng
Vac Air Technology Industrial Vacuum Products Mnf. 10,000,000 105 Gauteng
TOTAL: 30,930,000
Amsterdam Trading '65 CC Transportation 680,000 3 Gauteng
Exotic Breads Bakery 1,700,000 20 KZN
Isibane Safety Protective Equipment 1,000,000 14 Western Cape
Izazi Support Systems Harvesting & Distribution of thatched grass 300,000 Mpumalanga
Makarapa Headwear Headwear 400,000 4 Gauteng
Notae Entertainment 960,000 8 KZN
Ogwini Bakery Bakery 1,167,367 Gauteng
Platinum Koi Breeds Fish 900,000 0 8 Western Cape
Secretarial Unlimited Printing Services 450,000 5 KZN
Semaku Plasma Screen Adverts 1,345,000 4 Gauteng
Something Fishy Food Franchise 390,000 8 Gauteng
Speedy Umtata Automotive Services 415,000 7 Eastern Cape
Theme U Snack CC Novelty Gifts 1,000,000 5 Western Cape
Tilt Tango CC Transportation 820,000
TOTAL: 11,527,367
VENTURES
GENERATOR
FUND
NATIONALEMPOWERMENT
Growing Economic Participation
NEF TRANSACTION WIP SCHEDULE cont.
Company name Company DescriptionCapital
Required
Potential
J obs
Current
J obsProvince
J C Backhoe Spares CC Heavy Duty Equipment Spares 2 000 000 18 10 GP/ PE/ KZN
Khanya Plastic Recycling CC Recycles Waste Plastic 1 800 000 20 Western Cape
National Transmission & Ind. CC Imp. & Dist. Conveyor & Trans. belts 1 500 000 20 11 Western Cape
Quality Frozen Food Frozen Food Distributors 2 950 000 20 Gauteng
Steel Metal & Tools CC Imports Steel & Aluminum 3 374 700 9 8 Gauteng
TOTAL: 11 624 700
0
TOTAL: 0
E&B Citrus Citrus Farming 10 000 000 114 7 Eastern Cape
E&B Conservancy Game Farming 10 000 000 40 Eastern Cape
Kuzuko Game Lodge & Bush Camp 5 000 000 40 Eastern Cape
TOTAL: 25 000 000
Datacentrix IT Services 50 000 000 Gauteng
TOTAL: 50 000 000
GRAND TOTAL 129 082 067 615 280
Note:
This report is for internal deal flow management purposes
There is no certainty that all the abovementioned deals will be concluded
ACCELERATOR
TRANSFORMER
RURAL & COMMUNITY DEVELOPMENT
MARKET MAKING
PIDSA - Pre Internal Deal Screening Approval Requested / PIDA - Post Internal Deal Approval Received / DD - EXCO Committee
Approval / FICA - Final Investment Committee Approval Received
FUND
NATIONALEMPOWERMENT
Growing Economic Participation
The following calculations provide a sum-of-the-parts breakdown of the NEF’s required returns:
Rate p.a.Inflation rate 3% – 6%Real return required 3% - 4%Risk factors 2% - 8%Operating costs 2% - 3%Taxation (income tax & CGT) 2% - 3%Subtotal12% - 24%Less: empowerment benefit concessions achieved(0% - 5%)Total return required 12% - 19%
INVESTMENT PRODUCT PRICING cont.
FUND
NATIONALEMPOWERMENT
Growing Economic Participation
Gauteng43%
Mpumalanga5%
Eastern Cape4%
Limpopo4%
Northern Cape3%
Incomplete Data3%
Kwa Zulu Natal7%
Email 1& Email213%
Western Cape9%
International0%
North West Province5%Free state
2%Cellphone Enquires
2%
Gauteng
Western Cape
Email 1& Email2
Kwa Zulu Natal
Mpumalanga
Incomplete Data
Limpopo
Northern Cape
Eastern Cape
Cellphone Enquires
Free state
North West Province
International
GEOGRAPHICAL ANALYSIS OF TOTAL ENQUIRIES RECEIVED (1 JUNE 2004-28 FEBRUARY
2005)
Totals Gauteng 3878Western Cape 866Email 1 & Email 2 1192Kwa Zulu Natal 654Mpumalanga 445Incomplete Data 288Limpopo 340Northern Cape 287Eastern Cape 341Cellphone Enquires 137Free state 223North West Province 464International 8Total 9123
FUND
NATIONALEMPOWERMENT
Growing Economic Participation
Gauteng50%
Western Cape13%
KwaZulu-Natal8%
Limpopo4%
North West4%Mpumalanga
7%
Eastern Cape8%
Northern Cape2%
Free State4%
Gauteng
Western Cape
KwaZulu-Natal
Free State
Eastern Cape
Northern Cape
Mpumalanga
North West
Limpopo
GEOGRAPHICAL ANALYSIS OF TOTAL APPLICATIONS RECEIVED (1 JUNE 2004-28
FEBRUARY 2005)
Geographical analysis of applicationsGauteng 747Western Cape 202KwaZulu-Natal 128Free State 59Eastern Cape 126Northern Cape 33Mpumalanga 103North West 65Limpopo 64Total 1527
FUND
NATIONALEMPOWERMENT
Growing Economic Participation
CONTENTS
1. Who is NEF?
2. What does NEF do and why?
3. How does NEF do it?
4. What are the resource requirements?
5. How can performance be measured?
6. Challenges.
7. Questions.
FUND
NATIONALEMPOWERMENT
Growing Economic Participation
NEF Board
Chief Executive Officer
Chief Financial Officer
BE
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etai
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Man
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Gen
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Acc
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Tra
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Fin
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un
tin
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Man
agem
ent
Acc
ou
nti
ng
Audit CommitteeHuman Capital & Remuneration
Risk Management Committee Investment Committee
Executive - Group Entrepreneurial
Schemes
Executive - Market MakingVacant
Support Services Executive
Risk / Internal Auditor Vacant
Ru
ral
& C
om
mu
nit
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up
po
rt
Pro
cess
an
d P
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Co
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Secretarial & Compliance Officer
Kn
ow
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ge
Man
agem
ent
Executive Advisory ServicesVacant
BE
E F
acil
itat
ion
Str
ateg
ic P
roje
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Un
der
wri
tin
g f
or
IPO
Off
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Ad
min
istr
atio
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Hu
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Res
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Mar
keti
ng
& C
om
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Leg
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dvi
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Ser
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Info
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Tec
hn
olo
gy
PAVacant
Minister
NEF ORGANISATIONAL STRUCTURE
Total number of employees: 42
FUND
NATIONALEMPOWERMENT
Growing Economic Participation
CONSOLIDATED BUDGET
FUND
NATIONALEMPOWERMENT
Growing Economic Participation
NEF CAPITAL DRAW-DOWN SCHEDULE FOR YEARS ENDING
31 MARCH 2009
FUND
NATIONALEMPOWERMENT
Growing Economic Participation
DESIGNATED SOCE’s
FUND
NATIONALEMPOWERMENT
Growing Economic Participation
OPERATIONAL HIGHLIGHTS Constitution of Board Sub-Committees including
Investment Committee completed in October 2004.
Executive and management positions stabilised pending final appointments.
Disbursements on transactions approved, following launch of new products, commenced in November 2004.
Further disbursements in the IT, wine making and transport business sectors took place between November 2004 and January 2005.
Compliance and internal control procedures and processes fully implemented and transactions are closely scrutinised to ensure full compliance prior to disbursement.
FUND
NATIONALEMPOWERMENT
Growing Economic Participation
CAPITALISATION
Investments
R150 million has been earmarked for investment capital to the NEF for the current financial year which has partly been received following the successful signing of the Shareholder Performance Agreement.
The NEF has cash reserves at present (January 2005 – R152 million) to funds its operations and investment activities and will be essentially fully invested through its current funding work in progress (R129 million).
The first tranche of the R2 billion allocation is expected in the first quarter of the next financial year and this is understood to be in the order of R410 million based on the NEF business plan capitalisation draw downs and discussions with National Treasury.
The DG’s and the DPE are currently working on the transfers of the remaining allocation of SOCE equity investments. Significant impact on the balance sheet.
FUND
NATIONALEMPOWERMENT
Growing Economic Participation
CONTENTS
1. Who is NEF?
2. What does NEF do and why?
3. How does NEF do it?
4. What are the resource requirements?
5. How can performance be measured?
6. Challenges.
7. Questions.
FUND
NATIONALEMPOWERMENT
Growing Economic Participation
NEF TRUST – INVESTMENT PORTFOLIO
TotalUrban / Male &Rural Female
CAPITALISATION OF FUND 150,000,000
FUNDS COMMITTEDName of Investment:MUKS Business Enterprise CC 250,000 G Other Services Gauteng 3 1 100% 1 1Wax Works 650,000 G Manufacturing W / Cape 18 1 100% 1 1
All Joy 5,000,000 MMOther Services (Food)
Gauteng 230 6 86% 1 5 1 14% 1 7
Banra Enterprises CC 430,800 A Manufacturing Gauteng 9 1 100% 1 1Golden Falls Trading (Misho) 900,000 G Manufacturing Gauteng 18 1 100% 1 1Kula's Tissue Products CC 250,000 G Manufacturing Gauteng 8 1 100% 1 1
TOTAL 7,480,800 Undrawn Commitments 450,000 Disbursed 7,030,800
Undrawn Capital 142,519,200
No. of Transactions 6Total Value of Transactions 7,480,800 Employment Positions 286 286 10 5 5 2 2 12
Target CurrentSECTORS Target Current REGIONS Current Male 50% 83%Manufacturing 25% 1.5% Gauteng 4.6% Female 50% 17%Information Technology (IT) 20% Western Cape 0.4%Financial Services 20% Kwa Zulu Natal Non HDP 25% 42%Tourism 15% Mpumalanga HDP 75% 58%Other Services 10% 3.5% LimpopoPrinting 5% Northern CapeSmall scale mining 5% Eastern CapeTotal 100% 5.0% Free state
North West Province* NEF PRODUCT Key Target Current 5.0%Generator G 20% 1.4%Accelerator A 20% 0.3%Transformer T 20%Rural & Community R&C 20%Market Making MM 20% 3.3%
100% 5.0%
No. Percentage HDP NON HDPNo. Percentage HDP Non HDPValue ( R ) Sector Province EmployeesNEF
Product
Male FemaleShareholders
NEF TRUST INVESTMENT PORTFOLIO - GES & MARKET MAKINGas at 4 February 2005
Investment Portfolio
FUND
NATIONALEMPOWERMENT
Growing Economic Participation
TRANSACTION HIGHLIGHTS
• MUKS Business Enterprise CC– 5 year Term loan for R250 000– Repayment per loan schedule (fixed IRR)– Structured finance product with Standard
Bank Asset Finance
Std Bank
Trucks
MUKS NEFR250K
FUND
NATIONALEMPOWERMENT
Growing Economic Participation
TRANSACTION HIGHLIGHTS
• Kula Tissue Products CC– 5 year Term loan R250 000 – Repayment per loan schedule (fixed IRR)– Secured by negative pledge over assets
FUND
NATIONALEMPOWERMENT
Growing Economic Participation
TRANSACTION HIGHLIGHTS
• Banra Furniture Manufacturers CC– 5 year Term loan R430 800 – Interest at prime + 2%– 1% royalty on turnover– Secured by personal surety
FUND
NATIONALEMPOWERMENT
Growing Economic Participation
TRANSACTION HIGHLIGHTS
• Wax Works (Pty) Ltd– 5 year Term loan R650 000– Interest rate at prime + 2%– Secured by personal surety
FUND
NATIONALEMPOWERMENT
Growing Economic Participation
TRANSACTION HIGHLIGHTS
• Platinum Koi– Term loan R1 000 000 at 13%– Repayable over 5 years after 6 month “holiday”– Secured by cession of shares, trade accounts, bank
balances and a General Notarial Bond over stock with personal surety
FUND
NATIONALEMPOWERMENT
Growing Economic Participation
NEF VENTURES – INVESTMENT PORTFOLIO
TotalUrban / Male &Rural Female
CAPITALISATION OF FUND 170,000,000
FUNDS COMMITTEDName of Investment:Clickrite 4,911,991 ME Printing Gauteng 60 Urban 4 100% 4 0 0 0% 0 4Blink 3,500,000 S Media Gauteng 9 Urban 5 100% 5 0 0 0% 0 5Emergia 3,100,000 S Financial Services Gauteng 3 Urban 2 100% 2 0 0 0% 0 2Lindiwe 3,075,000 S Marketing & Dist. Western Cape 8 Urban 4 80% 4 0 1 20% 1 5Nucleus Administrators 3,400,000 S Financial Services Gauteng 4 Urban 3 100% 1 2 0 0% 0 3
TOTAL 17,986,991
Undrawn commitments 8,589,920 Disbursed 9,397,071
NEF Funded 50% 4,698,536 IDC Funded 50% 4,698,536
Undrawn Capital 152,013,009
No. of Transactions 5Total Value of Transactions 17,986,991 Employment Positions 84 84 18 16 2 1 1 0 19
Target CurrentSECTORS Prudential limits Current REGIONS Current Male 50% 95%Marketing & Dist. 30% 1.8% Gauteng 8.8% Female 50% 5%Financial Services 30% 3.8% Western Cape 1.8%Media 30% 2.1% Kwa Zulu Natal White 11%Printing 30% 2.9% Mpumalanga PDI 89%
LimpopoTotal 10.6% Northern Cape
Eastern Cape* STAGE OF INVESTMENT Key Target Current Free stateSeed capital, Start-up, Early stage S 50% 7.7% North West ProvinceMBO / MBI / Expansion ME 50% 2.9% 10.6%
100% 10.6%
NEF VENTURES - INVESTMENT PORTFOLIOas at 4 February 2005
Investment PortfolioShareholders
Male Female
Value ( R ) Sector Province EmployeesStage of
InvestmentNo. Percentage HDP Non HDP No. Percentage HDP Non HDP
FUND
NATIONALEMPOWERMENT
Growing Economic Participation
TRANSACTION HIGHLIGHTS
• Blink Magazine– 40% equity, senior secured shareholders
loan and senior debt facility: R3 500 000 over 3-5 years
– Interest on senior debt at prime + 2%– Put option on equity on loans settlement
• Lindiwe Wines– KWV supported– 49% equity, term loan facility:
R3 075 000 exit in 5 years
FUND
NATIONALEMPOWERMENT
Growing Economic Participation
ENTERPRISE GOVERNANCE
Statutory Compliance:
Emphasis of matter in terms of PFMA / Treasury Regulations were raised in the March 2004 External Audit Report.
These are being dealt with and will be fully cleared by March 2005
Ongoing PFMA / NTR compliance is being fully adhered to as described alongside.
31 Jan 2005 (done)
31 March 2005 (in progress)
10 Feb 2005 (presented to AC)
31 March 2005 (in progress)
31 Jan 2005 (done)
31 Jan 2005 – IA Manager1 Jan 2005 – IA Co-source
15 Oct 04 extension (done)
15 Oct 04 extension (done)
24 Sep 04 (done)
• Dti Performance Agreement
REQUIREMENT
• Risk Assessment
• Materiality Framework
• S38 Certificate
• Q3 Report
• Internal Audit
• Corporate Strategy/ Business Plan
• Budget 2006
• Annual Report
DUE DATE
FUND
NATIONALEMPOWERMENT
Growing Economic Participation
CONTENTS
1. Who is NEF?
2. What does NEF do and why?
3. How does NEF do it?
4. What are the resource requirements?
5. How can performance be measured?
6. Challenges.
7. Questions.
FUND
NATIONALEMPOWERMENT
Growing Economic Participation
NATIONAL EMPOWERMENT FUND DELIVERING ON ITS MANDATE
FUND
NATIONALEMPOWERMENT
Growing Economic Participation
CONTENTS
1. Who is NEF?
2. What does NEF do and why?
3. How does NEF do it?
4. What are the resource requirements?
5. How can performance be measured?
6. Challenges.
7. Questions.
FUND
NATIONALEMPOWERMENT
Growing Economic Participation