overview... corporate profile financial activities idc’s bee mandate idc’s position on...
TRANSCRIPT
Overview...Overview...
Corporate Profile
Financial activities
IDC’s BEE mandate
IDC’s position on Empowerment
IDC’s Empowerment policy
IDC’s Empowerment portfolio
Empowerment in mining
Future initiatives in mining
IDC’s role in IDC’s role in BEE Mining SectorBEE Mining Sector
Corporate Profile ...Corporate Profile ...
Self-financing state-owned development finance institution (Act No 22 of 1940)
Provides financing to entrepreneurs engaged in competitive industries
Follows normal company policy and procedures in its operations
Pays income tax at corporate rates and dividends to its shareholder
Independent Board of Directors
Reports on a fully consolidated basis, with its Annual Report freely available to the public
IDC Head OfficeSandton
Vision ...Vision ...
“To be the primary driving force of commercially sustainable industrial
development and innovation to the benefit of South and
southern Africa”
Mission ...Mission ...
Contribute to the generation of balanced, sustainable economic growth in South Africa and Africa
Economically empower the South Africa and African population
Promote entrepreneurship through the building of competitive industries and enterprises based on sound business principles
Core Strategies ...Core Strategies ...
Providing risk capital to widest range of industrial projects
Maintaining its financial independence• internal profitability• divestments from mature
assets• borrowings
Identifying and supporting
opportunities not yet addressed by the
market
Establishing local and global involvement &
partnerships in projects that are rooted in or
benefit SA and Africa
Building upon and investing in human capital in ways that systematically and increasingly reflect the
diversity of SA’s society
Financing Products ...Financing Products ...
Equity and Quasi equity
Venture Capital funds (egVenture Capital funds (egNew Africa Mining Fund)New Africa Mining Fund)
Commercial loans Commercial loans
Wholesale financeWholesale finance
Export/Import financeExport/Import finance
Share warehousingShare warehousing
Commercial GuaranteesCommercial Guarantees
Mostly combination of aboveMostly combination of above
Financing Criteria ...Financing Criteria ...
Greenfield projects, expansions & rehabilitations
Relatively sizeable
Economic merit (profitability & sustainability)
Fixed assets and the fixed portion of growth in working capital
Reasonable financial contribution from owners
Security
Environmental requirements
IDC’s BEE Mandate …IDC’s BEE Mandate …
The support of (BEE) process of the general
population through:
Continuing to implement procurement and
outsourcing policies and programs that
encourage the economic empowerment of the
historically disadvantaged people (HDP),
emerging businesses and entrepreneurs; and
Encouraging the entry of black empowerment
entrepreneurs into the new sectors of the
economy as well as the traditional industries and
sectors where entry barriers are noticeably high.
IDC’s position on empowerment…IDC’s position on empowerment…
The BEE policy was approved by the board and reflects IDC’s fundamental BEE funding practices and mandate
To augment these BEE objectives and remain a significant player in BEE funding, BEE must remain an overarching factor in all our funding activities
IDC’s Role , as SA’s largest DFI remains fundamental to the national agenda to realise BEE objectives (Skills and equity transfer)
Empowerment policy imperatives…Empowerment policy imperatives…
The IDC’s participation in BEE funding is guided by the following imperatives :
Creation of ownership of businesses for HDP’s;
Management capacity and entrepreneurship through transfer of skills
Advancement of HDP employees through share and/or profit participation; and
Adherence to the national BEE agenda affirmative action and procurement policies;
Empowerment funding guidelines…Empowerment funding guidelines…
BEE Funding at the IDC is limited to :
South African citizens and residents
Who (themselves or their parents) could
not vote prior to 27 April 1994; and
Who are essentially black, Indian and
coloured people..
A company or group of two or more
individuals or a consortium where:
The ultimate economic beneficiaries
and control include the racial categories defined.
Funding Considerations…Funding Considerations…
IDC takes risk primarily on the underlying operations, not on the BEE parties
BEE parties should demonstrate commitment through:
Cash contributions
Sureties/put options may be requested
Reasonable ability of BEE party to remain
a shareholder post IDC exit
Funding Considerations…Funding Considerations…
IDC’s role is limited to facilitation of
transaction where BEE company and
target company agreed to a deal
IDC prefers to warehouse shares on
behalf of BEE party and confer
shareholder rights during the period of
funding
During the term of funding IDC remains
significantly involved until shares are
beneficially transferred to the BEE
company
IDC’s Empowerment Portfolio…IDC’s Empowerment Portfolio…Number of approvalsNumber of approvals
27%73%
69%32%
19981999 2000
2001
Worth R 56.4m Worth R 62 m Worth R 322 m
Worth R 1.2 bn
14%86% 19%81%
37%63%
2002
Worth R 2 bn
Of the total number of approvals, 38.4% were empowerment deals
worth R5.1 billion between 1998 and 2002
In value terms these amounted to 25.4% the total value of approvals
Empowerment Trends in mining…Empowerment Trends in mining…IDC’s empowerment approvals in mining
0
100
200
300
400
500
600
98/99 99/00 00/01 01/02
Financial Year
R m
illion
0
2
4
6
8
10
12Value R'mNumber
Number
In 2001/2002 IDC funded 12.5% of the total value of BEE deals in SA,
15% of which was in mining
Some recent BEE mining deals…Some recent BEE mining deals…
Kgumo Bathong Holdings acquires a warehoused majority stake worth R100 million in Crown Gold Recoveries - Feb 2002
Purchase of East Rand Proprietary Mines by Crown Gold Recoveries – Nov 2002
R24.3 million facilities for evaluation and exploitation of the Kamferdam Dumps, and R10 million facility for development of Schmidtdrift Mine to New Diamond Corporation- May/ June 2002
Some recent BEE mining deals cont…Some recent BEE mining deals cont…
R112 million participation in New Africa Mining Fund – May 2002
R85 million facility for purchase of CIL plant for Afrikaner Lease by the Afrikander Lease Employees Empowerment Trust – Nov 2002
Simane Security Investment purchased 10% warehoused stake of ordinary shares and preference shares in Harmony Gold Mining Company Ltd. – Mar 2001
R150 million participation in syndicated debt funding of ARM Mining Consortium’s participation in the Modikwa Platinum Project – Nov 2001
50 million preference share holding in ARM Mining Consortium for participation in the Modikwa Platinum Project – Nov 2001
Some recent BEE mining deals cont…Some recent BEE mining deals cont…
Future initiatives in the mining sector…Future initiatives in the mining sector…
IDC is working on a new strategy for
engagement with BEE partners in the
mining sector – in line with Government’s
the new mining charter
IDC will partner with mining companies,
financiers and international agencies in
realising effective empowerment in the
SA mining sector
IDC will endeavor to play a higher profile
and catalytic role in the mining sector
Concluding Remarks...Concluding Remarks...
Together we can turn big ideas into
big business!
Concluding Remarks...Concluding Remarks...
Questions Questions and and
AnswersAnswers