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