Wednesday, October 9, 2013

Business Partners, Leading Investor in SMEs, SACCI Convention 2013

Business Partners
Leading Investor in SMEs

David Morobe, Regional General Manager
SACCI Convention 2013

Economic trends & discontinuities
Africa - booming economies; is the 21st century the dawn of Africa era?
South Africa:
  • fragile recovery from the 2008 GFC and 2009 recession
  • vulnerable to European economic malaise and slow growth in North America (which, together accounts for >50% of SA exports)

Overview of the SA SME market
1.5 - 2 million SME and SMMEs operate in South Africa
Confidence level: 35% extremely confident

Business Partners is a specialist investment group, providing finance and mentorship for small and medium enterprises in South Africa. Now growing to English speaking parts of the continent
A risk financier, founded in 1981 by Anton Rupert
31 offices around the country
300 to 600 investments per annum in SA

Property finance and management
Manage funds

69,000 businesses financed
R12.5bn rotated
R1bn finance available

The target market:
Mainly family owned, SME
E.g. Wimpy franchises, manufacturing plant

Procedures we follow:
  • work in small teams
  • Do proper due diligence
  • Prepare an approval report
  • Committee decision
  • Implementation follow
  • Post investment action

Viability based financing:
Focus on business
Entrepreneurial ability

Business Partners Venture Fund (R400 million)
Early stage investments, after research
investment period: normally 5 years
Exit strategy: preferably trade sale

Buying vs renting:
Decide to buy own premises
Normal bank principals
Entrepreneur has no deposit
can lose opportunity

Normally bank will require 30% deposit, Business Partners fund 100% of building. By year 4 to 5 break even

Investment capital of between R500,000 and R25million

George, lab doing tests for foodstuffs

Property investments: R787 million with 2,000 tenants

Graduate internship program
Schools entrepreneurship program
SME Tool kit
Business Mechanics and home website

Deal generation:
accountants, bankers, brokers, consultants, attorneys, agents as intermediaries 54.5%
Existing clients 36.3%
Marketing action 9.2%

What makes us different?
The approach
Personal contact
Funding flexibility

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