Idc presentation
Download as PPTX, PDF1 like564 views
The IDC provides various forms of financing and support to promote industrial development in South Africa, including equity, debt, export financing, and guarantees. It aims to support investments that generate both developmental and financial returns while taking on higher risk than commercial financiers. The IDC offers funding to greenfield projects, expansions, rehabilitation projects with a minimum of R1 million. It also has special funds to support distressed companies and create employment, such as the R2 billion UIF Fund and the R10 billion Grow E Scheme. In addition to financial support, the IDC provides training and business support programs to help entrepreneurs.
Idc presentation
- 1. AIDC Automotive Investor Conference MTN Expo Centre, NASREC Moroasereme NtsoaneSBU Head: IDC
- 2. Financing and Investment Support for Industry Investment and Financing Support Available
- 3. Introducing the IDCEstablished in 1940, the IDC is a self-financing, State-owned development finance institution
- 4. The vision of the IDC is to be the primary source of commercially sustainable industrial development and innovation to the benefit of South Africa and the rest of the African continent
- 5. Provides financing to entrepreneurs engaged in competitive industries and enterprises based on sound business principles
- 6. Pays income tax at corporate rates and dividendsto the shareholder
- 7. Aims to maximisedevelopmental and financial returns within an acceptable risk profileRiskDevelopment impactFinancialreturnIndustrial development approachIDC addresses market failures / gaps by supporting investments, which may otherwise not happen, in partnership with private sector companies
- 8. IDC investments are for development purposes, with the ideal investment being one that generates developmental as well as financial returns
- 9. This entails taking a higher risk profile than commercial financiers in order to support the development of sectors and new entrepreneursFinancingcriteriaGreenfield projects, expansions & rehabilitations
- 10. Minimum financing in South Africa R1 million
- 11. Profitability & sustainability within a reasonable time frame
- 12. Developmental impact (jobs, value addition, exports)
- 13. Fixed assets and the fixed portion of growth in working capital requirements
- 14. Reasonable financial contribution from owners
- 15. Security
- 16. Environmental, Health and Safety
- 17. Corporate GovernanceFinancial instrumentsIDC offers a wide array of financial instruments, including :
- 18. Equity
- 19. Quasi-equity
- 20. Commercial debt
- 22. Venture capital
- 23. Guarantees
- 24. Export and import finance
- 25. Credit lines to DFIs
- 26. These may be provided singly or in combinationFlexible deal structuring
- 27. Automotives, Components, Commercial Vehicles1.2 million units produced locally by 2020 and doubling of local content in componentsIndustry GoalsTo increase local content of locally produced vehicle IDCGoalsLocal EV IndustryCommercialisation of JouleKey StrategiesMHCV, Buses & TaxisComponents ManufactureAutomotives Assembly
- 28. Other Special Funds in IDCDistress Funds
- 29. UIF Funds
- 30. Grow E Scheme Assisting companies in distressConsumer confidence lower, spending lessThe economic crisis is impacting businesses on various levelsUnable to source finance from traditional sourcesLower demand for products and servicesFinancial institutions tightening credit criteria, extending less creditFirmBusiness confidence lower, cutting costs and investing lessInternal cash flow pressuresCreditors and debtors under financial pressureLower levels of foreign demandExcess stock build-upThe IDC is assisting in filling the gap in the market left by financial institutions extending less credit to businesses and in so doing ensuring that jobs and capacity of viable businesses are being retained.The IDC is budgeting R11.4 billion of funding for approvals in the current financial year, R2.9 billion specifically to assist distressed businesses.
- 31. Assisting companies in distress (continued) R6.1 billion set aside to assist distressed companies over the next two yearsApproach to funding companies in distress:To ensure long term sustainability of enterprises: interventions on a firm by firm basis.Focussed on companies that are experiencing difficulties/distress due to cyclical downturnBusiness must prove historical viability, and demonstrate structural improvements that will enhance long term competitiveness.Business should demonstrate that the business case re-emerges within a reasonable timeframe, once global/domestic conditions improve. Interventions should be to the benefit of the company being assisted and not relieve existing shareholders or other financiers from their obligations. Distress Funds recipients should seek to save jobs, without sacrificing viability, and proper consultative procedures must be observed where job losses are unavoidable. Risk sharing must be demonstrated between all stakeholders (viz. shareholders, creditors, debtors, employees and management) – enable the IDC to leverage its balance sheet further
- 32. “UIF” FundFund size is R2 billion, ring-fenced;The Fund’s main objective is to contribute towards sustainable job creation and retention;IDC will through this facility be able to enhance its developmental mandate by passing concessionary funding to job creating transactions;All eligible IDC transactions in South Africa with cost per job of up to 450,000 will be eligible; Pricing will be approximately between 7.0% - 10.0% fixed; to revert to floating after 2015A maximum of R100m per transaction /business partner; Only debt instruments will be considered; The Fund will invest either on a standalone basis or on a co-funding basis with IDC or other financial institutions;Client is expected to drawdown within 7 monthsafter approval;
- 33. Grow E Scheme – Growing the Economy and Employment SchemeKey objectiveTo encourage employment creationSize of SchemeR10 bnring-fenced on-balance sheet fundsDuration of Sheme5 years availability or until funds are exhaustedDevelopment PricingPrime less 3% for loan products, for 5 years, thereafter reversion to normal IDC pricingEquity to attract rate of return and/or upside sharing depending on development impact of businessQualifying CriteriaEconomic meritCost per job created/saved during funding period must not exceed R500 000 Drawdown to occur within 12 months of approval, or reversion to IDC normal pricingMinimum funding amount R1 million, and Maximum R1 bn
- 34. Non-financial forms of business supportTraining of entrepreneursBusiness support to entrepreneurs: IDC Business Support Programme was established to assist where appropriate: potential clients in preparing a business plan; and existing clients where e.g. shortcomings in the management capacity has been identified, if a short-term intervention is required, if it experiences financial difficulties. The funding for the business support is borne partly by IDCSupport for community groupsEncouraging investments to address certain goals through incentives
- 35. Re yalebogaMoroasereme NtsoaneHead: Metals SBUMoroaseremen@idc.co.za011 269 3174078 604 6745