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 [email protected]