INCENTIVES ROADSHOW

Date: 4th March 2013

Venue: GEORGE Presenter: Errol

Gardner Contact Details:

021 418 0126 errolg@sefa.org.za

Profile

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Merger between the South African Micro-Finance Apex Fund (samaf) and Khula

Incorporating IDC’s SME mandate

Purpose: provide finance and related services (business support and properties) to the

SMME sector

Wholly owned subsidiary of the IDC

Initial capitalisation: IDC = R921m and EDD R535m

Independent Board of Directors

National footprint (Head Office; Regional; Branch and Satellite offices)

Mandate and Focus

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Foster the development of SMMEs and co-operatives

Job creation

Entrepreneurial drive

Priority areas (rural and semi-rural)

Post investment mentorship support – only to financed SMMEs

Capacity building support to financing intermediaries

Access to industrial and retail properties (rental)

Equitable balance between financial sustainability and developmental impact

Market Position

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Institution Primary Mandate Range

sefa SMMEs Retail: R10K– R3m

Wholesale: Up to R100m

IDC Industrial Development Minimum = R1m

NEF Broad Based Black Economic

Empowerment

Minimum = R250

Land Bank Agricultural Sector Finance Maximum Unsecured Facilities =

R25k

NYDA Youth Development Programmes R1000 – R10m

DBSA Infrastructure Development Minimum = R10m (average)

seda Non-Financial Support (Business Support Services)

Distribution Network (Future)

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Regional Offices = 9 (in all provinces)

- SEFA branded offices

Branch Offices = 26

- Collocation with strategic partners

Satellite Offices = 24

- Kiosks (loaded with basic assessment software)

Funding Model

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sefa

Financial Intermediaries

SMMEs & Co-Operatives

Wholesale

Micro Finance & Niche Markets

sefa

SMMEs & Co-Operatives

Retail

General Finance

Pricing Principles

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Cost of funding

Risk

Developmental impact (jobs, priority sectors, gender equity, etc.)

Scale (impact)

Innovative funding instruments

Target Market – Direct Lending

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South African citizens

Owner managed businesses.

Adequate business skills or access thereto

Creditworthiness – NCA Compliant

Satisfactory basic feasibility study

Some level of contribution (cash and/or assets)

Desire for development finance – means test

Loan Range – R50K – R3 million

All Races with emphasis on Women, ruaral and Peri-urban

All entrepreneurs with a viable or potentially viable FORMAL business will be considered

for fiancing

Market Offerings – Direct Lending

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Term Loans

Asset Finance

Bridging Finance

Revolving Credit Facilities

Guarantees (available soon)

Loan range: currently R10k - R3m (will go to R5m in due course)

Business Support (Post Investment Mentorship)

Exclusions – Direct Lending

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SIN Industries (Tobacco, Liquor, Gambling, Sex trade, etc.)

Manufacturing and selling of Armaments

Speculative real estate

Property development

Leverage buy-out funds

Illegal trade

Non-profit organisations and Political Parties

Persons under debt review

Technically insolvent businesses and individuals

Un-rehabilitated insolvent shareholders and/or directors of applying entities

Primary agriculture

CHECK LIST BRIDGING APPLICATIONS

Application Forms – Principal Debtor and Surety

Certified Copies of Identity Documents of all concerned

Marriage Certificate or Copy of Ante-nuptial Contract

Short CV of Members/Directors/Shareholders/trustees

Proof of Residence – Utility Bill not older than 3 months

Valid Tax Clearance Certificate

Company or Close Corporation Documents

Company Profile

Last 6 Months Bank Statements of Both Principal Debtor and sureties

Copy of Contract or Order

Loan Breakdown on Applicant Letterhead

Supporting Quotations to Include Supplier Contact Person and Banking Details

Proof of Payment of Annual Fees (CIPC)

CHECK LIST TERM LOAN APPLICATIONS

Business Plan

12 Month Cash Flow Projections

Historical Annual Financial Statements - 3 years if applicable

Up-to-date Management Accounts

Debtors Aged Analysis

Creditors Aged Analysis

Lease Agreement

Franchise Agreement

TOP TEN TIPS

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Be realistic, prepare thoroughly and be confident

Balance of power and timing

Clarity of information: current clear concise

Articulate what you are looking for in an investor

Clearly set out the investment proposition

Clarity of strategy and track record – explain variances

Identify key competitors, their strengths and weaknesses

Management team – Large part of what people invest in

Present the business in best possible light but be realistic

Map out the process and follow it

DO

Demonstrate that you understand your market (market size, purchase criteria, market

needs

Provide a realistic analysis of the strengths and weaknesses of your main competitors and

substitutes

Explain precisely how you will gain market share (sales and marketing strategy)

Provide detailed financial forecasts – profit and loss, as well as ket assumptions

Ensure the funding structure selected is appropriate to the business

Be prepared to have ‘skin in the game’ (cash, collateral, personal sureties, assets, time

and energy)

Be realistic in terms of expectations (valuation, sales levels, expenses, margins)

Emphasise relevant knowledge, experience & Track Record

DO’S AND DON’T’S

DON’T

Make inconsistent statements, representations or exaggerate

Try to over gear the business (take on more debt than the business can afford)

Give an unprofessional presentation

Be vague about how you will obtain sales

Confuse profit and free cash flow

Forget to shop around, there are many prospective sources of financing to choose from

DO’S AND DON’T’S

Contact Details

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Contact Person: Errol Gardner

Telephone: 021 418 0126

Fax: 021 421 9934

E-mail: errolg@sefa.org.za

Physical address: 12th Floor, Main Tower.

Standard Bank Centre

Heerengracht

CAPE TOWN

Thank You