PRESENTATION TO PORTFOLIO COMMITTEE
ON TRADE AND INDUSTRY
Khanya B Motshabi
Chief Executive Officer
12 March 2003
2
PRESENTATION OUTLINE
• Background
• Vision
• Current Status
• Strategy
• Structure
• Product Roll Out
• Corporate Targets: 2003/4
• Divisional Outputs
• Impediments to delivery
• Gearing for delivery
3
BACKGROUND
HISTORY• NEF Act 105 of 1998
• CEO appointed April 2001
• SOCE equity designated
CAPITALISATION
• Portfolio estimated at R2,1bn
• Assets not transferred
• Presented capitalisation proposals
NEF VENTURES
• NEF and IDC partnership
• Based on R200m
commitment
4
VISION
Vision
“Leading provider of innovative finance
and
investment solutions for an inclusive
economy.”
5
CURRENT STATUS
INFRASTRUCTURE
Physical and IT infrastructure
POLICIES AND CONTROLS
• Organisation polices, procedures and controls
• Disciplined and rigorous investment process
6
STRATEGY
• Guided by government policy
• Transformation sensitive sectors
• Government initiatives
• BEE procurement
• Routine transactions
• Market making
• Risk reduction
• Entrepreneurship
• VC, PE and ME
• Big and small
General Specific
7
STRUCTURE
Private EquityPrivate Equity Venture CapitalVenture Capital Investment ServicesInvestment Services
Corporate CentreCorporate Centre
8
PRODUCT ROLL OUT
VENTURE CAPITAL
Finance economic empowerment and black business development.
Progress and Prospects
Established February
2002
Launch smaller fund (R250 000 –
R3m)
July 2003
Launch R 250m Incubator Fund. Subject to
capitalisation
9
PRODUCT ROLLOUT
PRIVATE EQUITY
Finance economic empowerment and black business development.
Progress and Prospects
Established November
2002
Investment readiness April 2003
Capital for organic businesses and M &
A transactions through equity, quasi
equity and debt
Ongoing
Warehouse assets Ongoing
10
PRODUCT ROLL OUT
INVESTMENT
SERVICES
Promote savings and
investments by
offering mass
empowerment
Schemes backed by
targeted programmes
of investor education.
Progress and
Prospects
Established August 2002
Product design March 2003
Design delivery mechanisms March 2003
Design education programme March 2003
Implement product March 2004
Participate in state IPO’s and other IPO’s Ongoing
11
CORPORATE TARGETS: 2003/4
Venture Capital R80m investments in 2003/4
Private Equity R180m investments in 2003/4
Investment Services R100m retail offering in 2004
Corporate R1bn for mining over five years
R1bn for financial services over five years
Capitalisation assumption R2,1billion in annual tranches of R420
million over five years
Job creation spin offs Estimated at 9000 over 10 years
12
VENTURE CAPITAL OUTPUTS
•First deal of R5m approved.
• Four deals estimated at R25m in pipeline
• Target : July 2003
• Targeting additional ten deals by year end.
• Based on R170m portion of R200m.
• Leverage the R30m fund to raise additional R30m.
• Estimated 10 deals March 2004.
• Additional R250m for Incubator Fund.
13
PRIVATE EQUITY OUTPUTS
• Based on R1,5 billion fund.
• At least one deal per month estimated at
R20m.
• Targeting 9 deals for 2003/4.
• Total investment of R180m in year 1.
14
INVESTMENT SERVICES OUTPUTS
• R200m retail offering per annum over a five year period:
First retail offering of R100m targeted for 2004.
Estimated 300 000 subscribers per offering.
• Focus on fewer, but large size offerings initially:
Target LSM 1-6.
Long-term investment & partial capital
guarantee.
• Unitised portfolio investment ready 2004/2005.
• Warehousing of equity for future retail offers.
15
IMPEDIMENTS
• Delivery has been slower than anticipated.
• Integration of NEF Ventures into business.
• Staff turnover in NEF Ventures.
• Staffing capacity resulted in slow deal approval.
• PE CIO required to support NEF Ventures.
• Quality of received applications not optimal.
• Slow capitalisation resulting in one operating division.
16
GEARING FOR DELIVERY
• Building capacity to speed up deal through-put.
• Redesigned processes and systems to fast track deal approval.
• Reviewing mandate and redesigning products:
Address changing market needs.
• Planning for redeployment of larger capital pool.
• Valuable experiences from first fund to launch next phase.
• Partnering other DFIs to raise capital and access market.
17
Key Management
• Chief Executive Officer : Khanya B Motshabi
• Chief Operations Officer : Motlalekhomo Mokhobo
• Acting Fund Manager : NEF Ventures : Dineo Skwambane
• Chief Investment Officer : Private Equity : Alun Frost
• Chief Investment Officer : Asset Management : Forthcoming
• General Manager : Marketing: Themba Langalibalele
• General Manager : Retail : Vijay Ramluckan