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Rian Coetzee - IDC
 

Rian Coetzee - IDC

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    Rian Coetzee - IDC Rian Coetzee - IDC Presentation Transcript

    • The Role of the Private Sector in Stimulating Agribusiness- Public Private PartnershipsRian CoetzeeHead: Agro-Industries17 October 2011
    • IDC - Corporate profile • Established: October 1940 • Corporate type: Development finance institution, mandated by Act • Shareholding: Government of South Africa = 100% shareholder • Reporting: SA Ministry of Economic Development • Funding: 100% self-financing • Objective: Support industrial capacity development • Activities: Provide risk capital (industrial finance or project finance) • Regional mandate: South Africa & the rest of Africa (since 1998) • Financial base: Total equity = ZAR 93 bn; profit = R2,7bn IDC Head Office, Sandton, SA Debt/Equity ratio = 7% • Funding: R8,4bn funding to SA companies • Governance: Follows normal company policy and procedures • Values: Partnerships, Professionalism & Passion 2
    • 2. An IDC perspective … operational model Sector specialization through … flexible application of a largeStrategic Business Units (SBUs) … variety of financial products • Agro-Industries • Equity • Mining & Beneficiation • Mezzanine debt • Chemicals & Allied Industries • Commercial debt • Metals, Transport & Machinery Products • Guarantees • Textiles & Clothing • Wood, Paper & Other … utilising two • Trade finance business channels… • Wholesale & bridging finance • Tourism • Media & Motion Pictures • Share warehousing • Industrial Finance • Techno Industries • Special funding schemes • Project development • Healthcare • Business support products • Strategic High Impact Projects • Project feasibility funding • Venture Capital • Venture Capital 3
    • 2. An IDC perspective … agricultural focus area The SBU focuses on the following areas: a) Agro-processing (food and non-food) • Agro-processing can include on-farm, first-tier processing (such as packing & sorting) • It can also include backward integrated agro-processing projects b) Beverages (alcoholic and non-alcoholic) c) Aquaculture 4
    • Importance of PPPs in AGRO-INDUSTRIALISATION Development of new and sustainable farmers & job creation Public sector Raw material Agro-Industry (processor) Products for Farmers distribution into value chain or retail Market access Skills Finance Private sector Commercial sustainability & profit making 5
    • Importance of PPPs in AGRO-INDUSTRIALISATION Establishment of the canola industry in the Western Cape Public sector+/- 200 farms Raw material Canola oil supplying Southern Oil Ltd products canola Market access Skills Finance Private sector 6
    • Requirements for successful DFI role … • An IDC perspective … • Element 1: The development of an industry-wide strategy • Element 2: Non-financial support • Element 3: Financial products • Element 4: Front-end customer experience 7
    • Element 1: The development of an industry-wide strategy Drivers IDC Focus areas Demand-side Global expansion• International demand• Local food demand• Other niche areas Agro- Horticultural value addition Industrialisation Grain surplus value Supply-side addition• Value addition• Improved Seed oil & cake competitiveness• Import replacement Malt production• Unique SA products Aquaculture Farmer linkage 8
    • Element 2: Non-financial support • Pro-active & reactive policy advice/support • Project bankability support – • Local Economic Development Agency Support • Support during project feasibility stages • Business support (matching) grants • Socio-economic advice to broad-based groupings • External entrepreneurial training • Support to & partnerships with other DFI’s 9
    • Element 3: Financial products … Funding• IDC standard sources of funding: IDC’s portfolio as at 31 December 2010 • Borrowings Finance and Other Agriculture, Transport, • Internal profitability communica- insurance 6% forestry and food tion and utilities 2% 4% • Exits from mature investments 7% Trade, catering and Mining• Portfolio approach (across sectors and asset classes) accommoda- 29% tion• Innovative alternative funding sources: 3% Other manufacturing • EU/EIB Risk Capital Facility 3% • Food sector Competition Tribunal penalties Metals and • Unemployment Insurance Fund machinery 21% Chemicals and• Segmenting IDC’s portfolio - customised funding petroleum 25% schemes as an enabler for development 10
    • Element 3: Financial products • Debt products • Long-term, capital/interest moratoriums, sculpted repayments • Mezzanine funding • Cash flow and not security linked • Equity instruments • For own account & share warehousing options • Bridging finance against contract • Wholesale finance • Other products – guarantees, trade finance, etc. Customised structuring of each transaction 11
    • Element 3: Financial products … special schemes • Agro-Processing Linkage (APL) Scheme • Disaster Relief Scheme • Pro-Orchards Scheme • Transformation & Entrepreneurial Scheme (TES) • Grow E (Employment scheme) • UIF Scheme • Distressed funding scheme 12
    • Element 4: Front-end customer experience • Importance of first-principle due diligence • Value adding experience • Improved customer service • Decentralised support & basic assessments • Pre-investment business centre • Improved turnaround & communication • Separation of deal-making & post-investment monitoring • Improved efficiencies (EYHETU) • Value driven approach (“I make it happen”) • Innovation • Knowledge management 13
    • Agricultural portfolio, include South Africa Sugar products Fruit - Citrus Nuts Meat - poultry Fruit - Grapes Agribusiness - wholesale Processing - Fruit Fruit - Subtropical Tea products Fibre Fruit - Berries Fruit - Stone Starch products Beverage - Juice Fruit - Various Processing - other Aquaculture Total exposure & commitments = R4,5bn Processing - Nuts Processing - fish Dairy products Fruit - Persimmon Beverages - juice Processing - vegetable Fruit - Apples Other Biotech Flowers Beverages - alcoholic Processing - confectionary Processing - Meat Fishing - 100 200 300 400 500 600 700 800 14
    • Existing portfolio – South Africa • Biotech • Processing - confectionary • Fruit - Citrus • Processing - diversified • Beverage - Juice • Dairy products • Processing - Peppers • Fruit - Stone • Flowers • Processing – dried mango • Agribusiness - • Beverage - Juice • Fruit - Subtropical wholesale • Sweets • Processing - Macadamia • Agri-services • Fruit – Various • Meat processing - • Processing – Achar • Fruit – Grapes 8% poultry • • Fibre - Cotton Processing - Nuts • Fruit - Citrus • Processing - Meat • Processing - 3% 1% • Nuts raisons 5% • Fruit - Various • Fruit – Citrus • Pecan nuts • Malt processing 7% • Wine 9% 37% • Fibre - Kenaf • Citrus • Fruit – Berries • Flowers (proteas) • Beverages - juice • Persimmon • Berries • Stone fruit 8% • Fishing • Processing - Fruit • Processing – fish • Fruit – Citrus • Grapes 22% • Fruit – Berries • Aquaculture (abalone) • Aquaculture (cob) • Pastas • Dairy products • Groundnut processing • Fruit packing • Walnuts • Dried fruit products • Fruit - Stone • Ostrcih processing • Meat - poultry • Fruit - Apples 15
    • Existing portfolio – Africa, excl. South Africa Fruit juice – Ethiopia Sugar - Kenya Sugar - Tanzania Tea & Macadamia nuts - Malawi Sub-tropical fruit - Mozambique Sugar - Mozambique Table grapes - Namibia Poultry processing - Namibia Cassava starch - Swaziland Africa, excl. RSA - 32% of total exposure 16
    • Case studies Grain Field Chickens Peppadew International Description –GFC will be a new sizable BBBEE Description –Peppadew is a unique SA brand basedin chicken abattoir in Reitz in the Free State. With a first Tzaneen in Limpopo Province. Sales did not materialise phase capacity of slaughtering 160 000 chickens per due to the financial crisis, which led to large stock write- day, it will be the fifth largest in the country; offs. IDC investment – R85m in debt and equity facilities IDC investment – R25m IDC role – Debt and equity through share warehousing IDC role – funding to support the company badly for workers trust affected by the global financial downturn Development outcomes – employment at end of 1st Development outcomes – thousand of jos have been phase = 780 people directly; Through the project, c.a. protected, due to the contract farming arrangement of 80 000 tons of maize will be beneficiated annually and the company imports of frozen chickens will be replaced. Workers’ Trust
    • Industrial Development Corporation 19 Fredman Drive, SandownThank you PO Box 784055, Sandton, 2146 South Africa Telephone (011) 269 3000 Facsimile (011) 269 2116 E-mail callcentre@idc.co.za