IDC Chemicals Strategic Business Unit Presentation to

Women in Oil & Gas of South Africa Workshop

Lerato Monyake

Ntokozo Tshabalala

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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: +-R120 billion

o Total liabilities: +-R24 billion

o Funding status: Self financing, pays dividends and income tax

o Credit rating: Baa1 (Moody’s) in line with sovereign rating

o Main business area: Industry development through the provision of funding

resulting in job creation

o Geographic activities: South Africa and the rest of Africa

o Products: Custom financial products to suit a project’s needs

including debt, equity, guarantees or a combination of these

o Stage of investment: Project identification and development, feasibility,

commercialisation, expansion, modernisation

o Number of employees: +- 800

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Val

ues

V

isio

n

To be “the primary driving force of commercially sustainable industrial development and innovation to the

benefit of South Africa and the rest of the African continent”

Mis

sio

n

The IDC is self-financing national development finance institution whose primary objectives are to contribute

to the generation of balanced, sustainable economic growth in Africa and to the economic empowerment of

the South African population, thereby promoting the economic prosperity of all citizens. The IDC achieves this

by promoting entrepreneurship through the building of competitive industries and enterprises based on

sound business principles.

Ob

ject

ive

Passion Professionalism Partnership

Ou

tco

mes

Lead industrial capacity development

Primary: Facilitate sustainable direct and indirect employment

Secondary:

• Improving regional equity, including the development of South African rural areas, poorer provinces and industrialisation in

the rest of Africa;

• Growing the entrepreneurial and SME sectors

• Transformational impact on communities and growing black industrialists

• Environmentally sustainable growth

• Growing sectoral diversity and increased localisation of production

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• Non-commercial focus

• Fiscal transfers and grants

• Development objectives (social)

Government / NGOs

• High commercial focus

• Private sector capital

• Financial objectives

• Known risks

Commercial Financiers

• Commercial and development focus

• Sharing risk

• Internally generated funds, government funds, loans

DFIs

Greater importance on financial objectives

Greater importance on social and developmental objectives

IDC does not directly compete with other institutions, but encourages cooperation with a variety of these

institutions to achieve its goals

• Industrial Development Corporation

(IDC)

• Development Bank of Southern

Africa (DBSA)

• sefa

• National Empowerment Fund (NEF)

• Etc.

• ABSA

• Standard Bank

• First National Bank

• Nedbank

• Etc.

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•Agro-Industries

•Green Industries

•Venture Capital

•Strategic High Impact

Projects Ag

ro &

New

Ind

ust

ries

Vac

ant

•Textiles

•Metals, Transport and

Machinery Products

•Wood, Paper and Other

•Chemicals and Allied

Industries

•Mining and Beneficiation

Min

ing

an

d

Man

ufa

ctu

rin

g

Ind

ust

ries

A M

alin

ga

•Tourism

•Media and Motion Pictures

• ICT

•Healthcare

•Africa Unit

•Operations Head Office

Ser

vice

s

Ind

ust

ries

an

d

Reg

ion

s

K S

chu

man

n

•Financial Management

•Corporate Funding

•Corporate Treasury

•Development Funds

•Support Services Fin

ance

an

d

Fu

nd

ing

G G

ou

ws

•Risk Management

•Evaluations

•Environmental Health and

Safety

•Capacity Building

Ris

k

G v

an W

yk •Research and Information

•Corporate and Structured

Finance

•Agency Development and

Support

•Africa Unit Pro

fess

ion

al

Ser

vice

s

L M

on

di

•Human Capital Strategic

Partners

•Operational Training

• Learning and Development

•Systems and Payroll

•Remuneration and Benefits Hu

man

Cap

ital

J G

aven

i

• Legal Services & International

Finance

•Post Investment Monitoring

•Workout and Restructuring

Leg

al a

nd

Po

st

Inve

stm

ent

B M

akw

ane

• Internal Audit

•Corporate Secretariat

• Innovation Dir

ect

Rep

ort

s

G Q

hen

a

•Corporate Strategy and

Portfolio Management

•Asset and Liability

Management

• Information Technology

•Procurement

•Corporate Marketing

•Customer Relationship

Management

Co

rpo

rate

Str

ateg

y

S M

eer

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Green and

energy saving

industries

Bio fuels

Agro-

processing

Tourism Business process

services

Craft and film

ICT

Healthcare Mining related

technologies

Biotechnology

Downstream mineral

beneficiation

Mining

Industrial

infrastructure Logistics

Metals fabrication,

capital and

transport

equipment

Automotives,

components, medium

and heavy commercial

vehicles

Plastics and

chemicals Clothing, textiles,

footwear, leather

Forestry, paper &

pulp, furniture

Advanced

manufacturing

Pharmaceuti-

cals

Oil and gas

Grreen industry

components

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• Funding can be structured utilising a wide array of instruments including:

• Debt;

• Equity;

• Quasi-equity;

• Guarantees;

• Trade finance;

• Bridging finance;

• Venture capital.

• The funding will be structured in a way that will suit the business’ needs most appropriately. Structuring

options include:

• Term of the funding: Short, medium and long-term loans are available;

• Grace periods for repayment : Repayments can be structured to suit cashflows and allow for periods

where no payments need to be made on either capital or interest;

• Special funding schemes are available that offer more attractive terms and targets cross sectoral issues

such as job creation or development of specific sectors. Also include funds managed on behalf of other

organisations, largely the dti;

• IDC’s business support programme addresses non-financial support to entrepreneurs.

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Scheme/Fund Description Sources of Funds

Gro-E Scheme Assist companies that create jobs at < or = R500 000 IDC balance sheet

UIF Fund Assist companies that save and/or create jobs at < or = R450 000 IDC balance sheet – borrowing from UIF

Women Entrepreneurial Fund Assist female entrepreneurs to start or expand their businesses IDC balance sheet

People with Disability Fund Assist entrepreneurs with disabilities to start or expand their

businesses or to acquire businesses

IDC balance sheet

Development Fund Assist marginalised poor communities to acquire meaningful stakes in

IDC funded transactions

IDC balance sheet

Equity Contribution Fund Assist new entrant black entrepreneurs with their equity contributions

w.r.t. IDC funding requirements

IDC balance sheet

Green Energy Efficiency Fund

(GEEF)

Stimulate energy efficiency and renewable energy investments in the

commercial and industrial sectors

IDC balance sheet – borrowing from KfW

Scheme/Fund Description Sources of Funds

Risk Capital Facility (RCF) Assisting with equity type funding to BEE-SMEs that create jobs DTI – EU grant

Support Programme for Industrial

Innovation (SPII)

To fund the development of new technologies for the SA economy DTI

Technology Venture Capital Commercialisation of innovative products, processes and technologies DTI

Manufacturing Competitiveness

Enhancement Program (MCEP)

Working Capital Fund

To assist manufacturers under SIC 3 to access more affordable working

capital facilities

DTI

Manufacturing Competitiveness

Enhancement Program (MCEP)

Niche Fund

To stimulate new or underdeveloped manufacturing sectors DTI

On-Balance Sheet Funds

Funds Managed on Behalf of 3rd Parties

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Scheme/Fund Description Sources of Funds

Green Industries BBBEE Assist communities to access stakes in renewable energy projects under REPP IDC balance sheet

Forestry Grant Assist communities to develop forestry projects and business plans IDC balance sheet

Pro-forestry Scheme Support new afforestation and transformation IDC balance sheet

Agro-processing Linkages

Scheme

Agro-processing and rural development by linking established agro-processors

with resource poor farmers

IDC balance sheet

Clothing, Textiles, Leather and

Footwear Scheme

To fund local players to upgrade their plant and equipment to become globally

competitive

IDC balance sheet

Scheme/Fund Description Sources of Funds

Agro-processing

Competitiveness Fund

Facilitate increased competition, growth and development in agro-processing

sector; through provision of finance to non-dominant players

EDD

Clothing and Textiles

Competiveness Programme

To improve the competitiveness of the local clothing and textiles sector

DTI

National Craft Fund Development of the craft industry DTI

Vuth'Umlilo Fund (RIDS) Regional Industrial Development Strategy Funds DTI

On-Balance Sheet Funds

Funds Managed on Behalf of 3rd Parties

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Development Agencies

– Attempts to address economic growth in rural areas, underdeveloped provinces, townships and mining towns;

– Unlocking investment potential by

leveraging unutilised local municipality

assets for development;

– Exploiting comparative advantages

in area;

– Capacity building for third-tier

government;

– 34 agencies in various stages of

implementation:

– 8 pre-establishment,

– 18 establishment,

– 10 operational phases;

– Social enterprises:

– 4 projects approved: African honey Bee;

Moeletswai Recycling and Waste

Management; Kat River Citrus

Mechanisation; Scabazini Agri-Coop

– Spatial Interventions

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• IDC has offices in all provinces;

• Regional offices are fully fledged

operational offices that form part

of the IDC’s deal origination

process;

• Satellite offices do not have

permanent staff and are manned

at specific times by employees

from the regional office. These

offices are generally shared with

other DFIs or agencies;

• Access to IDC funding has been

improved by allowing on-line

applications and an on-line tool to

assist businesses to develop

business plans.

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• Access to IDC funding is being improved by allowing on-line applications and the introduction of

an on-line tool to assist businesses to develop business plans.

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Applications from

existing/

prospective

businesses

Proactive

identification and

development of

projects

Pipeline Assessment and decision

Detailed due-diligence/feasibility

study assessing development

impact and sustainability of

opportunities: • Development outcomes

• Market for products/services

• Technical viability and

competitiveness

• Financial viability

• Management

• Legal

• Environmental impact

• Etc.

Implementation and

monitoring

Structuring of funding

depending on client’s needs

Approval of viable transactions

at appropriate committee

Ongoing monitoring of client

performance after funding is

disbursed

Interventions in businesses

experiencing difficulties • Business support

• Restructuring of facilities

• Etc.

Legal agreements

Meeting conditions

Disbursement

Screening

Basic assessment

Pre-feasibility

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Board

• The counterparty exposure is above R7 billion;

• The investment is of a strategic nature; or

• There might be a conflict of interest through a director’s involvement in transaction (after taking advice from the Governance and Ethics subcommittee).

Board Investment Committee

• IDC transaction exposure is above R250 million or the counterparty exposure is between R1 billion and R7 billion; or

• A sector, transaction and/or regional limit is breached.

Special Credit

Committee

• Considers transactions where IDC transaction exposure is between R25 million and R250 million and the counterparty exposure is below R1 billion;

• Considers additions/changes to the Delinquent Register;

• Consider related party transactions involving directors, irrespective of the quantum of the application, but recommends to the Governance and Ethics subcommittee, Board Investment Committee and/or Board for approval;

• Consists of executive management and an external member – chaired by CEO.

Credit Committee

• Considers transactions where the IDC transaction exposure is less than R25m and the counterparty exposure is below R250m;

• Consists of executive management (excl. CEO) and an external member – chaired by non-operational executive.

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Maintenance & Repair Services

- Maintenance, repair, upgrade and conversion of rigs and other

vessels (floating repairs, dry docking)

- Repair of parts and structures

- Inspection, certification

Fabrication Services

- Structures, subsea manifolds

- Spare parts

Communal Services

- Property development

- Customs clearance

- Marketing & administrative functions

- Security, medical, food & retail

- Utilities, waste management, transport

- Road and quay access

Supply & other Services

- Bonded warehousing / storage

- Scheduling & forecasting

- Logistics and transport – sourcing and forwarding (air, ship, rail and

road)

- Lifting, stacking, moving

- Fuel bunkering

- Pipe coating & upsetting

- Tugging / piloting

- Project and engineering services (eg. EPC)

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Project Location Phase

Approximate

CAPEX

R billion

Approximate

Jobs

LPG Terminal Saldahna Detail Engineering 0.7 49

Crude oil storage and

Blending Terminal Saldahna Pre-feasibility 1.6 1200

Angola Zambia Pipeline Cross border Pre-feasibility Est. at US$ 2,500

million

Off-shore Supply Base Saldahna Pre-feasibility 2

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Industrial Development Corporation

19 Fredman Drive, Sandown

PO Box 784055, Sandton, 2146

South Africa

Telephone 011 269 3000

Facsimile 011 269 2116

E-mail callcentre@idc.co.za