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To The Point Session - 30 August 2018
- 4. SHAWN THEUNISSEN Head of CSR, Growthpoint Head of Property Point
- 6. Vusi Mahlangu Founder and Managing Director of Tamela Holdings
- 8. Introduction 8 • Thank you for giving me the opportunity to address you and thank you for coming • Tamela is a black owned and managed financial services firm • Tamela was founded by Sydney Mhlarhi and Vusi Mahlangu in 2008 • Tamela was founded on the simple principles of trust, partnership and professionalism • My talk will cover the following • brief personal profile • business of Tamela • lessons learnt and still learning • we can have a discussion afterwards
- 9. Vusi Mahlangu’s profile 9 Education 1997-1998 MBA from Harvard Business School 1989-1992 Bachelor of Science degree in Chemical Engineering from University of Cape Town Work Experience 2008 - Founder and director of Tamela 2005–2008 Chief Executive Officer of Makalani Holdings Limited 1998 - 2004 Investec Bank Limited Head of Public Sector Finance (2001-2004) Investment Banker – Structured Finance (1998–2001) 1993-1996 Afrox Limited Production Manager (1995-1996) Process Engineer (1993-1995) Interest Running (Comrades and Two Oceans Marathons) Travelling and climbing mountains (Kilimanjaro and Drakensberg) Reading
- 10. Tamela Profile
- 11. 11 Over the past decade, Tamela has a built a niche corporate finance advisory business • The JSE approved and registered Tamela as a sponsor Tamela seeks to create a financial services group Principal InvestmentsAdvisory Services Tamela prefers investing in unlisted companies with strong management teams JSE sponsor Fund Management Tamela closes the Mezzanine Fund I Aug’ 08 Aug ’08 Jul’17 Q4 2018 Business of Tamela
- 12. Shareholding Structure Controlled by management with strong institutional shareholders Tamela and Partners The management and staff of Tamela own 80% of the company and the balance is owned, in equal proportion, by strategic partners Kagiso Tiso Holdings and Nedbank Capital, a division of Nedbank Management and Staff 80% KTH 10% Nedbank 10% 12
- 14. 14 Investments Creating value through partnerships Tamela is one of the shareholders in Cure Day. Cure owns and operates day hospitals Cure has eight operating day hospitals. Cure’s operating day hospitals are: Medkin; Midstream; Kloof; Paarl; Bloemfontein; Somerset West; Fourways and Belville Tamela led a consortium that acquired a 25.1% equity interest in Aon South Africa Aon South Africa is a leading provider of risk management, insurance broking and human resource solutions. With more than 500 offices in over 120 countries across the globe Tamela alongside Letsema acquired a 5% shareholding in Emira Property Fund, a diversified JSE listed real estate investment trust (“REIT”) Emira’s property portfolio, largely based in South Africa is spread across the office, retail and industrial sectors Tamela is a shareholder in Cincinnati SA Cincinnati SA imports equipment mainly from The Cincinnati Mine Machinery Co, a company based Ohio, in the United States Cincinnati SA supplies mainly the coal mining industry with conveyor chains, crawler chains, cutterchains & bars, cutterdrums, footshafts, ripperchains and sprockets used in continuous mining machines
- 15. 15 Investments Creating value through partnerships Tamela owns an equity interest in Roymec Global Roymec Technologies is an engineering and project management specialist company providing design and turnkey construction solutions and services in the field of solid liquid separation and allied processes Tamela led a management buy-out of Global Wheel Global Wheel is the largest manufacturer and distributor of: commercial, agricultural, earthmover and military steel and aluminium rims is Sub- Saharan Africa Tamela owns an equity interest in George Stott and Company George Stott and Company is a multi- disciplinary manufacturer, speciality steel wholesaler and project management company. The main products and services the Company offers are destined for use in the mining, electrification, telecommunication and heavy engineering industries. The company also supplies products to infrastructure projects conducted by large metropolitan councils and public infrastructure projects
- 17. Niche Corporate Finance Business • Tamela has built a niche corporate finance advisory capability over the last 10 years • Our transactions have ranged from R100 million to over R20 billion • Tamela’s advisory activities include providing corporate finance advice to selected clients on: Public private partnerships (PPPS) Equity capital markets (ECM) Capital raising M&A transactions Black economic empowerme nt 0 1 0 2 0 3 0 4 0 5 Project management Balance sheet restructuring JSE sponsor services 0 6 0 7 0 8 17
- 18. Credentials Concluded deals by Tamela’s advisory team Rights Offer Discovery Holdings Rights Offer ZAR5bn Financial Advisor 2015 Basil Read Rights Offer R300m Financial Advisor 2018 Listings MTN Zakhele Listing on the Johannesburg Stock Exchange ZAR6bn Corporate Advisor 2015 BEE Unwinding and Replacement Deals MTN Zakhele unwinding and delisting from the JSE R6 billion Corporate Advisor 2016 Exxaro Unwind of MS333 Corporate Advisor ZAR8bn Corporate Advisor 2016 Unwinding and new BEE transaction ZAR12.5bn Corporate Advisor 2017 ESOP replacement transaction R1.4bn Corporate Advisor 2017 18
- 19. Credentials Concluded deals by Tamela’s advisory team Capital Raising PPC Empowerment Transaction Equity Raise Corporate Advisor 2008 and 2012 Daimler Fleet Management Acquisition Corporate Advisor 2010 DCM Transaction Sponsor IDC Bond Issuances R1.5bn and R2bn Joint-arranger 2015 National Treasury International Bond Issue U$1.25bn and U$2bn Co-Lead Managers 2016 National Treasury International Dual Bond Issue U$1bn and € 500m Co-Lead Managers 2014 IDC Bond Issue R722m Joint-arranger 2016 Exxaro Refinancing of existing debt and Capital Raising Corporate Advisor 2015 and 2013 Basil Read Rights Offer R300m Sponsor 2018 19 Syndicated Bridge loan R650m Sponsor 2018
- 20. Credentials Concluded deals by Tamela’s advisory team General Corporate Finance National Empowerment Fund Acquisition Corporate Advisor 2011 Rainprop Valuation Corporate Advisor 2011 BEE Trading Platform MTN Zakhele Over the Counter trading Platform R10 billion Project Manager 2013-15 Increase in shareholding of Petratouch R1.2bn Corporate Advisor 2017 20
- 21. 21 Credentials DEALMAKERS AWARDS 2017 INVESTMENT ADVISERS RANKINGS BY FLOW (ACTIVITY) No Company No of Deals Market share% Deal value R’m 1 Tamela 3 13.04% 13 013 2 Rothschild 2 8.70% 34 330 3 Rand Merchant Bank 2 8.70% 25 830 4 Standard Bank 2 8.70% 13 599 5 BDO Corporate Finance 2 8.70% 1 000 RANKINGS BY VALUE N o Company Deal value R’m Market share% 1 Rothschild 34 330 27.73% 2 Rand Merchant Bank 25 830 20.86% 3 Deloitte 21 000 16.96% 4 Standard Bank 13 599 10.98% 5 Tamela 13 013 10.51% BLACK ECONOMIC EMPOWERMENT RANKING THE SOUTH AFRICAN TOMBSTONE PARTIES – 2017 GENERAL CORPORATE FINANCE
- 22. RANKINGS BY DEAL FLOW (ACTIVITY) No Company No of Deals Market share% Deal values R’m 1 Investec Bank 24 11.27% 26 011 2 PSG Capital 20 9.39% 5 317 3 Rand Merchant Bank 16 7.51% 75 725 Java Capital 16 7.51% 20 055 5 BDO Capital 15 7.04% 7 788 6 Nedbank CIB 10 4.96% 1 596 7 Standard Bank 9 4.23% 19 658 Questco 9 4.23% 1 939 9 Rothschild 7 3.29% 51 306 Sasfin 7 3.29% 2 007 11 UBS 5 2.35% 45 843 One Capital 5 2.35% 1 567 River Group 5 2.35% 195 14 Deloitte 4 1.88% 59 072 Tamela 4 1.88% 15 714 Qinisele Resources 4 1.88% 6 913 Mazars 4 1.88% 4 097 Macquarie Capital 4 1.88% 3 604 Coast2Coast Capital 4 1.88% 1 356 * Investment Advisers include Financial Advisers and others claiming this category Credentials DEALMAKERS AWARDS 2017 RANKINGS BY DEAL VALUE No Company Deal values R’m Market share% 1 Rand Merchant Bank 75 725 15.25% 2 Deutsche Bank 63 856 12.86% 3 Deloitte 59 072 11.90% 4 Rothschild 51 306 10.33% 5 UBS 45 843 79.23% 6 Goldman Sachs 34 600 6.97% 7 Investec Bank 26 011 5.24% 8 Java Capital 20 055 4.04% 9 Standard Bank 19 658 3.96% 10 KPMG 15 825 3.19% 11 Tamela 15 714 3.16% 12 HSBC 11 900 2.40% 13 BDO Corporate Finance 7 788 1.57% 14 Qinisele Resources 6 913 1.39% * Investment Advisers include Financial Advisers and others claiming this category RANKING THE SOUTH AFRICAN TOMBSTONE PARTIES – 2017 MEGERS & ACQUISITIONS 22
- 24. 24 • Upside participation via equity kickers such as warrants, profit participation, conversion features or additional interest linked to key operational variables • Exit structures via redemption features, prepayment premiums and/or put option to the borrower and refinancing • Alternative exit through an IPO or to a strategic investor (via the exercise of drag and tag rights) Debt Component (Downside risk exposure) • Debt with 5 – 7 year final maturity, generally subordinated • JIBAR linked plus a margin • Base coupons at higher rates than senior debt • Possibility of rolled up interest (partial) • Other terms and conditions typically include a) security (usually second liens on asset/pledge of shares); and b) covenant protection, some of which resemble bank covenants Equity Component (participation in the upside) Typically 2 components How mezzanine works
- 25. 25 The Fund will pursue: Investment Amount • R50 – R200 million Financial Metrics • Revenue greater than R100 million • EBITDA greater R30 million Will provide mezzanine debt instruments to the following types of transactions: The Fund will exclude: • Venture capital • Turnaround businesses • Primary agriculture • Primary resources • Mining, oil & gas exploration • Biotechnology Preferable business characteristics • Growing market opportunity that requires funding • Differentiating intellectual capital (i.e. IP) • Recurring revenue base and cash generative • Deep management team with strong corporate governance • Highly diversified customer base with low customer concentration Investment mandate and strategy Fund size: R2.0 billion
- 26. Tamela Team
- 27. Tamela Team Highly experienced team Head of Sponsor Services BBusSc (Finance) ̶ University of Cape Town PGDA ̶ University of Cape Town ̶ 21 years experience Amanda Markman CA (SA)Sydney Mhlarhi CA (SA) BCom ̶ University of the Witwatersrand BAcc ̶ University of the Witwatersrand ̶ 20 years experience Director Tshepisho Makofane CA (SA) BCom (Hons) ̶ University of Cape Town PGDA ̶ University of Cape Town H.Dip (Tax) ̶ Rand Afrikaanse Universiteit ̶ 18 years experience Director Vusi Mahlangu BSc Chem Engineering ̶ University of Cape Town MBA ̶ Harvard Business School ̶ 20 years experience Director 27
- 28. Tamela Team Highly experienced team Associate BCom ̶ University of Cape Town PGDA ̶ University of Cape Town ̶ 4 years experience Mathibe Hlapolosa CA (SA) Analyst BSc ̶ University of the Witwatersrand CERA ̶ Actuarial Society of South Africa ̶ 7 years experience Mpho Mtsi BCom ̶ University of Johannesburg CTA ̶ University of Johannesburg ̶ 4 years experience Mapule Mabija CA (SA) Analyst 28 Moeketsi Mukuoane CA (SA) BCom (Acc) ̶ Potchefstroom University B Com (Hons) ̶ Rand Afrikaanse Universiteit MCom ̶ University of the Witwatersrand 14 years experience Managing Partner - Fund
- 29. Executives Personal Assistant Andisiwe Nteyi Office Manager Pamela Zamisa Office assistant Beauty MagaqaNondumiso Mtshali Receptionist 29 Tamela Team Highly experienced team BCom Business Management and Marketing ̶ Damelin
- 31. 31 Lessons learnt and still learning lions hunt in packs (people, people, people) it takes time to create wealth and grow your company pole pole (this is not a sprint) observe plan acclimatisation aim high
- 32. 32 Kilimanjaro Sniper shooter Lions hunt in packs Comrades marathon Lessons learnt and still learning
- 33. 33 observe • study and know the market • easy to do before you start but harder when you are operating • operations vs business development plan – strategy • what is the business model • we use our skills and network • relationship with Exxaro started in 2006 • who are the customers • advisory work – management teams, directors, shareholders • Cure - doctors or patients • why do they buy/use our service • how should they use our product/service • do I have the right tools to deliver the product/service 1 2 Lessons learnt and still learning lions rely on stalking their prey 7 official routes on Mount Kilimanjaro snipers are adept in stealth & observation techniques training starts 1 year before and intense 6 months before
- 34. Who is the client BEE HOLDCO EyabantuBasadi Ba Kopane Dreamvisi on Eyesizwe Mining National Movement of Rural Women SA Youth Clubs EM Dev Trust IndividualNehawu Eyesizwe Holdings Individual Individual IndividualIndividual Individual Individual 54.1% 11.2% 9.7% 79.61 % 39.7% 18.33%26.67% 18.33% 18.33% 18.33% 2.5%21.2% 5.3%10.6% 5% 2.5 % Xiphemu Nozala National Movement of Rural Women SAWIMIHSAWIMA Malibongw e 25.7% 17%17%0.3% 20% 20% Individual Trust Trust SAWIMIHSAWIMA Eyabantu Capital 7.5% 5.1%13%5.1% 3.8% 46.6 % Trust Individual TrustTrust Individual 1.1% 33.4%1.1% 2.2% TrustIndividual IndividualTrust 1.1% 1.1% 12.9% 4.3% 7%%Anglo Youth Investmen ts Bokamoso 7.9 % 5.3 % South 32 11.2 % 9.2% Morningtid e Tiso Nozala Jay & Jayandra 9.7 % 15.4 % 82% 2.6 % IDC 15.3% TrustIndividual 8%4% Company 43% 34
- 35. Lessons learnt and still learning aim high • Sydney and Vusi pioneered specialised mezzanine funds South Africa raising R2.5 billion in 2005 • Tamela is the 1st black company to be approved as JSE sponsor • Exxaro BEE unwind was a R13.6 bn transaction and managed to unwind 52.6% of a JSE listed company without any adverse effect on the share price • Tamela is a boutique corporate finance house • fund management – 1st fund is SA focused, subsequent funds will be pan-African and sector specific pole pole • Toyota Kata – continuous improvement by taking incremental steps • it is not one thing that you do but a series of small things you do over time that add up acclimatisation • set backs are lessons to learn from and allow you time to reflect and re-strategise • Tamela previous mezzanine fund attempt was in 2010 • without losing focus on the big picture 3 4 highest mountain in Africa at 5,895m above sea level snipers can shoot up to 2.47 km away world’s largest and oldest ultra marathon and in 2018 was 90km long an elephant is lot bigger than a lion 5
- 36. 36 Lessons learnt and still learning lions hunt in packs • people, people, people • business with Sydney and Tshepiso since 2005 • Pamela was employed 10 years ago as receptionist - office manager, subsequently obtained a BCom in Business Management and Marketing • “get the right people on the bus. Find the right people and try them out in different seats on the bus (different positions in the company)” Jim Collins – Good to Great • “and the wrong people off the bus” (lessons learnt from portfolio companies) • company comprises more than equipment and assets • people will help you grow your company • if you had to sell, the new buyer will pay more if the company has the right people • can the business survive beyond you? 6 climbers are supported by a team of mountain crew – guides, cooks and porters there are 44 refreshment stations along the route & family & friends success rate is 1 in 3 (1 in 6 when alone) with larger prey single lions do not even bother spotter assists with securing location and condition
- 37. 37 Lessons learnt and still learning time • it takes time to build a business • building a company and wealth has different phases • foundation phase (3 - 5 years) • trying to survive, get clients, laying the foundation • build phase (5 – 15 years) • hiring additional people, new people test your culture, test of the foundation, choosing clients/products is important • harvesting phase (15 years +) • planning new phase of growth ??? • generating a return on capital invested??? 7 success rate is 1 in 3 (1 in 6 when alone) with larger prey single lions do not bother takes 4 to 9 days to summit fastest summit in just 4 hours 56 minutes 12 hours to complete Fastest run is 5:18 c.80% finish 10 & 12 hrs selected military members are selected for training
- 38. 38 In conclusion
- 39. Q and A session @eToThePoint #eTTP
- 40. PLEASE TAKE OUR SURVEY