View
6
Download
0
Category
Preview:
Citation preview
Industrial Development Corporation
2
• IDC in the South African Development Finance Institution landscape
• Introducing IDC
• IDC Strategy and Alignment with Government Priorities
• IDC Funding: Financing Process and Options
• Corporate Social Development
• Regional Integration
• Climate Change Response
Contents
3
Economicmerit ofdeals
Duediligenceprocesses (risk manag.)
Portfolio diversification
Corporategovernance
Skillsbase
IDC’s successes are built on strong pillars …
4
INTRODUCTION
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: R121.3 billion (31 March 2016 - group)
o Total liabilities: R36.5 billion (31 March 2016 - group)
o Funding status: Fund operations and growth from investments, pay dividends and income tax
o Credit rating: Baa2 (Moody’s)
o Main business area: Providing funding for entrepreneurs and projects contributing to industrialisation
o Geographic activities: South Africa and the rest of Africa
o Products: Custom financial products above R1m to suit project’s needs including debt, equity, guarantees or a combination of these
o Small and Micro enterprise coverage: sefa (fully owned subsidiary)
o Stage of investment: Project identification and development, feasibility, commercialisation, expansion, modernisation
o Number of employees: 848 (March 2016)
Operational Footprint:
o Head Office -Johannesburg
o 20 Regional and Satellite offices
5
The South African DFI LandscapeCore Mandates of South Africa’s National DFIs
Core Mandate DFI
• Industrial Development Corporation (IDC), est. 1940Industrial development
• Development Bank of Southern Africa (DBSA), est. 1983Infrastructure development
• Land and Agricultural Development Bank (Land Bank), est. 1912• Independent Development Trust (IDT), est. 1990
Agriculture, land reform and rural development
• National Empowerment Fund (NEF), est. 1998Black economic empowerment
• Small Enterprise Finance Agency (sefa), est. 2012• Small Enterprise Development Agency (seda), est. 2004
SMME development
• Rural Housing Loan Fund (RHLF), est. 1996• National Housing Finance Corporation (NHFC), est. 1996• National Urban Reconstruction and Housing Agency (NURCHA), est. 1995
Housing development
• National Youth Development Agency (NYDA), est. 2009Youth development
In addition to national DFIs, there are also a number of provincial DFIs/investment promotion agencies including Ithala Development Finance Corporation (KwaZulu-Natal), Eastern Cape Development Corporation, North West Development Corporation, Free State Development Corporation, Limpopo Economic Development Agency.
6
IDC
DBSA
Land Bank
IDT
sefa
NEF
NHFC
RHLF
-
20
40
60
80
100
120
140
160
180
200
0 200 400 600 800 1000
Ass
ets
per
em
plo
yee
(R
'm)
Number of employees
Relative Sizes of South African National DFIs
Size of the bubble indicative of total asset
size
Comparison of National DFIs by Assets and Number of Employees (March 2014)
• The IDC, DBSA and Land Bank control 95% of the total assets of the national DFIs depicted in the graph, indicative of these DFIs’ dominant position in the DFI space.
Source: IDC, data obtained from company annual reports
Number of Employees and Total Assets per DFI
(March 2014)
Number of employees
Total Assets (R’m)
IDC 828 128 681DBSA 425 63 826Land Bank 568 36 819NEF 146 6 032NHFC 84 3 134sefa 194 2 227
7
Summary of IDC’s Main Activities
Activities CustomersBusiness lifecycle
Sectoral involvement
Funding products
Regional involvement
�Provision of development finance
�Project development
�Research and policy inputs
�Fund management
�Non-financial forms of business support
�Capacity building
�Business
�Government
�Other DFIs
�Conceptual
�Pre-feasibility
�Feasibility
�Product commercialisation
�Establishment
�Expansion
�Mature
�Manufacturing
�Agricultural value-add
�Mining and mineral beneficiation
�Green industries
�Industrial infrastructure
�Tourism, ICT, cultural industries and other productive services
�General debt
�Quasi-equity
�Equity
�Export/import finance
�Short-term trade finance
�Bridging finance
�Guarantees
�Venture capital
�Wholesale funding through intermediaries
�South Africa
�Rest of Africa
�Global imports of South African capital equipment
• IDC’s main activity is the provision of industrial finance to businesses throughout the business lifecycle in various sectors aligned with industrial policy priorities as well as developing projects in these industries.
• In addition, it is involved in other activities such as research, policy inputs and fund management for government departments; non-financial support for business; and capacity building for other DFIs.
8
PILLARS
Increasing Industrial
Development Impact
Ensuring LongTerm Sustainability
Financial CapitalHuman, Social, Natural and
Manufactured Capital
• Strengthen sector development objectives and strategies
• Align IDC with the sector objectives of Govpolicies
• Increased project development and implementation
• Provide industrial finance to further achievement of sector
� Plan investment return and risk
profile to ensure sufficient
growth to replace existing cash
generators
� Structure investments to
increase direct equity returns
� Human resources
o Ensure appropriately skilled and
capacitated human resources
� Stakeholders
o Improve customer service
o Build partnerships with other
financiers to leverage off different
strengths and mandates
o Increase engagement with sector
players to identify opportunities
o Develop black industrialists
o Strengthen IDC expertise to shape
and influence policy
o Build strong communities around
projects that IDC fund
9
PILLARS CONT…Increasing
Industrial
Development
Impact
Ensuring LongTerm Sustainability
Financial CapitalHuman, Social, Natural and
Manufactured Capital
• Increase regional industrial integration through the development of value chains
• Ensure effective and efficiently operating sefa
� Manage risk through
appropriate investments,
pricing and management of
the portfolio
� Natural environment
o Reduce IDC’s negative
environmental impact
o Reduce industry’s negative
environmental impact
� Utilisation of resources
o Improve efficiencies through
improved systems and
processes
10
• IDC in the South African Development Finance Institution landscape
• Introducing IDC
• IDC Strategy and Alignment with Government Priorities
• IDC Funding: Financing Process and Options
• Corporate Social Development
• Regional Integration in Africa
• Climate Change Response
Contents
IndustrialDevelopmentSectorFocus:alignedtogov programsNDP,IPAP,NGP(economicgrowth,jobs,regionaldevelopment)
Cultural industries: Craft and film
Green and energy saving industries
Bio fuels
Metals fabrication, capital and transport
equipment
Automotives, components, medium and heavy commercial
vehicles
Plastics and chemicalsClothing, textiles,
footwear, leatherForestry, paper &
pulp, furniture
Advanced manufacturing
Agro-processing
Downstream mineral beneficiation
Tourism
Business process services
Logistics
New Growth Path
IPAP
Legend: Gov Program alignment
Pharmaceuti-cals
ICT
Healthcare
Mining related technologies
Biotechnology
Mining Areas not specifically part of
NGP or IPAP2
Industrial infrastructure
12
IDC seeks to be at the centre of industrial capacity development
Proactive industry developer
• To take greater leadership, forging strategic partnerships for developing the most important parts of the productive economy
• To decide how to actively engage with other sectors of the economy to drive outcomes
Relevant industry
body
Industry partners
Value Chains
Producers
Govt.
RoA
Enablingactivity
Commercial banks and other financial
institutions
13
INDUSTRIAL INFRASTRUCTURE -IDC’s contribution to SDGs
SDGs IDCs contribution
1: No Poverty
2: Zero Hunger
3: Good Health and Wellbeing
5: Gender Equality
6: Water & Sanitation
7: Affordable & Clean Energy
8: Decent Work
9: Industry, Innovation & Infrastructure
10: Reduce Inequalities
13: Climate friendly action
15: Partnerships for the Goals
IDCs funding and involvement in key critical
sectors of the economy directly and indirectly
impacts on almost all SDGs:
• Facilitate (direct and indirect) job creation
impacting on poverty, hunger an decent
work
• Targeted funding and support for black
industrialists, women and youth businesses,
priority regions towards reducing
inequalities
• Support for industries in agroprocessing
and agriculture, chemicals &
pharmaceutical sectors also contributing on
reducing hunger, good health and wellbeing
• IDC also provides funding , coordinates and
collaborate with a number of roleplayers
on critical infrastructure enablers to
industrialisation such as affordable and
14
Key Trends
Funding activity
13,513,1
13,8
11,5
14,5
8,4
16
11,2 10,911,4
0
2
4
6
8
10
12
14
16
18
2012 2013 2014 2015 2016
R’b
n
Approvals Disbursements
15
Key Trends (continued)
Number of direct jobs facilitated Funding to black-empowered companies
34.7
88
18.9
22
18.2
24
14.5
37
1183
3
11.1
68
3.95
0
1.36
9
5.85
1
3439
3.36
9
0
5.000
10.000
15.000
20.000
25.000
30.000
35.000
40.000
45.000
50.000
2012 2013 2014 2015 2016
Nu
mb
er
New jobs through linkages toinformal economySaved jobs
New jobs
2,9 3,3 3,2 3,2
1,1
2,7 2,3
1,9 2,7
3,9
0,0
1,0
2,0
3,0
4,0
5,0
6,0
7,0
2012 2013 2014 2015 2016R
’bn
Black-empowered Black-owned
16
• IDC in the South African Development Finance Institution landscape
• Introducing IDC
• IDC Strategy and Alignment with Government Priorities
• IDC Funding: Financing Process and Options
• Corporate Social Development
• Regional Integration in Africa
Contents
17
Financial model
Equity funding
Loan funding
Capital growth
Interest repayments
IDC relies on borrowings, internal profitability, capital growth and exits from mature investments to maintain and expand its funding ability
Capital repayments
Dividend paymentsExits of mature
investments
IDC Funds• Borrowings• Balance sheet• Mature investments• Retained earnings
The balance between the corporation’s developmental role and financial performance is maintained by relying on proceeds from mature equity investments (both dividends and capital growth) to cross-subsidise
higher risk activities and the loan portfolio.
Subsidy
18
R4.9bnApproved for black-empowered companies (excluding subsidiaries)
15 272Jobs expected to be created and saved
IDC Results Announcement for the year ended 31 March 2016
FINANCIAL PERFORMANCE – FY 2015/16 .
R14.5bnApproved in 180 transactions
R2.9bnApproved for black-industrialists
R11.4bnTotal funding disbursed
R8.9bnApproved for manufacturing
R970mApproved for businesses with youth ownership of more than 25%
R1.2bnApproved for businesses with women ownership of more than 25%
R14.8bn breakdown - Funding Instruments
Senior
Debt…
SubDebt
3%
Equity
18%
BEE
10%
BBBEE
18%
R7.5bn
R2.7bn
R1.6bn
R2.6bn
R0.4bn
R14.8bn breakdown - Funding Instruments
IDC Diversification – Renewable Energy Technologies
Wind
30%
Hydro
1%CSP
55%
PV
14%
IDC Total Investment
R14.8bn
• 11 Projects, 213MW, R2.0bn
• 8 Projects, 975MW, R4.4bn
• 5 Projects, 450MW, R8.1bn
• 1 Projects, 10MW, R204M
JOBS JOBS AND LOCAL CONTENTLOCAL content
148 139
706
88
38%
78%
41%39%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
0
100
200
300
400
500
600
700
800
Wind Hydro CSP PV
Avg Jobs Avg Local Content
• CSP has the highest potential for job creation
• CSP also offers opportunity for localisation
Av
g J
ob
s
Loca
l co
nte
nt
%
22
Corporate Social Development
23
EDUCATION AND SKILLS DEVELOPMENT
Support scarce skills development
24
ECONOMIC DEVELOPMENT
We see economic development as the support of income-generating projects aimed
at poverty alleviation through job creation. Although we have funded various projects
benefiting more than 2 000 individuals since 2007, we continue to channel our efforts
towards food security, business skills development and craft development
Trade Test Instrument Board
TVET COLLEGES SUPPORT
WOMEN’S LEGACY
DO CARE
I Do Care is an employee giving fund that allows its members to contribute a portion of their
salaries to the fund on a monthly basis. The corporation matches each contribution 3:1 and
allows its members to nominate a charitable organisation of their choice to benefit from the
fund.
Regional integration in Africa
29
MOZAMBIQUE
• Mining & Beneficiation
• Agroprocessing
• Energy
• Forestry
• Transport equipment
• Tourism
• Cement
NIGERIA
• ICT
• Cement
•Media
•Hotel
GHANA
• Energy
•Hotels &
Accommodation
• ICT
TOGO
• Financial services
•Transport
NAMIBIA
• Agric. / agroprocessing
• Mining
•Metal products
•Financial services
• Cement
•Energy
BOTSWANA
•Hotel &
Accommodation
MALAWI
• Food and
Agriculture
• Franchising
(Tool Hire)
SUDAN
• Infrastructure
(Water)
KENYA
• Energy (Wind)
• Sugar
• Financial
services
UGANDA
•Hotels &
Accommodatio
n
• Infrastructure
TANZANIA
• Sugar
MAURITIUS
•Communications
ZAMBIA
• Storage
and
warehousi
ng
• Healthcare
• Energy
• Mining
• Metal
products
• Chemicals
SWAZILAND
• Basic chemicals
• Wood products
• Agroprocessing
• Financial services
D.R. CONGO
• Mining
•Franchise
(Fast Foods)
LESOTHO
• Energy
ANGOLA
• Energy
ETHIOPIA
•Agro
processing
• Cement
ZIMBABWE
•Mining
•Telecommunication
s
•Energy
•Financial services
•Healthcare
•Metal products
•Plastic products
Sierra Leone
• BioEnergy
Commitment: ca R14.9 billion; in 67 projects in 21 countries. Exposure: ca R10.5 billion
SENEGAL
•Airport
• Port
development
Côte d’Ivoire
• Financial
services
MALI
•Wood
products
RWANDA
•Wood and
wood
products
The IDC’s rest of Africa portfolio (as at July 2016)
Climate Change Response
31
32
CARBON FOOTPRINT
Prospects
Thank you
Industrial Development Corporation19 Fredman Drive, SandownPO Box 784055, Sandton, 2146South AfricaTelephone 011 269 3000Facsimile 011 269 2116E-mail callcentre@idc.co.za
Recommended