Industrial Development Corporation

22 February 2013

David McGluwaRegional Manager: North West ProvinceCell: 078 804 4636

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Introducing IDC

o Established: 1940o Type of organisation: Development Finance Institution (DFI)o Ownership: State owned company, 100% owned by the SA governmento Total assets: R115 billion (30 September 2012 - group)o Total liabilities: R24 billion (30 September 2012 - group)o Funding status: Self financing, pays dividends and income taxo Credit rating: Baa1 (Moody’s) in line with sovereign ratingo Main business area: Industry development through the provision of

funding resulting in job creationo Geographic activities: South Africa and the rest of Africao Products: Custom financial products to suit a project’s needs

including debt, equity, guarantees or a combination of theseo Stage of investment: Project identification and development,

feasibility, commercialisation, expansion, modernisationo Number of employees: 804 (December 2012)

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Tourism, creative industries and high-level services

IDC Strategy: Sector allocations for the next 5 years

Green and energy saving

industriesBio fuels

The green economy

Agro-processing

Agricultural value chain Tourism

Business process services

Craft and film

ICT

HealthcareMining related technologies

Biotechnology

The mining value chainDownstream mineral

beneficiationMining

Logistics, infrastructure and cross-sector projects Industrial

infrastructureLogistics

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

Manufacturing activities

Pharmaceuticals

Oil and gas

Green industry components Other funding areas :

Venture Capital: R500 millionFunding to distressed companies: R2.5 billion

R22.4 billion

R7.7 billion

R20.8 billion

R22.1 billion

R11.1 billion

R14.8 billion

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Sectoral focus areas

Agro and New Industries DivisionAgro-Industries Green Industries Strategic High Impact Projects Venture Capital

Internationalisation – Globalising SA brands and incorporation of SA companies into global supply chainsValue addition – Horticultural and grain surplus value additionImport replacement – Seed oils and oil cake; malt productionEmerging industries – Marine aquacultureRural/poor linkages – Rural agricultural linkage scheme; one-stop, agri-business support initiative

Non-fuel power generation – Wind, concentrated solar and photo-voltaic solar power generationEnergy efficiency – Heat, electricity & buildings; cleaner production / industrial processesFuel based energy – Waste to energy; co-generationBio-fuels – Bio-ethanolEmission and pollution mitigation – Waste management/recycling; clean stovesRelated services – ESCOs

Cross sectoral/new sectors – localisation project; bamboo; sisal; green transport; gypsum; battery; titanium; rolling stock; theme parkIndustrial infrastructure – Power generation; toll roads in rest of AfricaHigh impact logistics – Railways; maritime

Commercialisation of South African intellectual property – Universities and research institutions; private sector (i.e. entrepreneurial inventors / innovators)

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Focus areas currently being revised

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Sectoral focus areas (continued)

Mining and Manufacturing Industries DivisionMetals, Transport &

Machinery Forestry and Wood

ProductsClothing and Textiles Chemicals and Allied

IndustriesMining and Mineral

Beneficiation

Fabricated metal, capital and transport equipment – SOE capex programmes; tooling, die and mould industry; foundriesAutomotive and MHCV – Assembly; EV; components; MHCV, buses and taxisComponents for green industries – energy saving technologies; wind; solar componentsAdvanced manufacturing – nuclear; aerospace

Forestry value chain – forestry, sawmilling, pulp and paper, furniture, other value added products

Building a conducive environment – Leading role in development of national strategy, including refinement of incentives for the sectorCompetitive local / regional value chain –Regional projects; linkages between manufacturing and retail; value chain projects; wool & mohair cluster; leather and footwear clusterStabilise major IDC investments

Establish clusters of production for local beneficiation – Titanium, zirconium, hydrogen fluoride production, plastics, petro-chemicalsAddress market imbalances – Glass, import substitution opportunitiesSecurity of supply for key inputs into infrastructure, food and energy needs – Fertiliser & fertiliser inputs, gas, building products

Steel prices – Establish new steel plant; partner in other steel related projectsEarly stage projects – Project initiation; junior mining companies in selected minerals; Address food security concerns e.g. potash, potassiumRest of Africa –Local linkages; rehabilitation of sector in Zimbabwe‘New age’ minerals – Rare earth elements

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Sectoral focus areas (continued)

Services Industries DivisionTourism Media and Motion Picture ICT Healthcare

Properties in distress and consolidation of the industry – Assist appropriate establishments until economic conditions improveUnderdeveloped Tourism Nodes in SA – Backpackers, adventure & sports tourism, natural attractions, heritage attractions, avitourism, beach tourism, arts & crafts, enabling tools e.g. tourist routes, transportationRest of Africa – Refurbishment of existing properties; new properties; business hotels

Motion picture value chain – film production (low, medium and high budget); production facilities (Jhb studios, post-production); audience development (digital cinema, rural and township cinema, channel aggregation for export); animation hubNatural history documentaries – Production of Natural History documentariesBroadcasting – Pan African television broadcasters (expansion of SA broadcasters); Regional and community radio stations; Community television stations

Telecommunication – Undersea; national backhaul; metro; last mile in underserviced areas; Terrestrial fibre in rest of AfricaShared services – Knowledge Process OutsourcingDigital migration – Set-top boxes; digital TVse-Waste – Creation of an e-waste hubElectronics – Niche low volume electronic manufacture; smart metersInformation technology – software and hardware

Pharmaceuticals – ARV pharmaceuticals; anti-diabetic extract; codeine from medicinal poppiesMalaria – ACT extract and pharmaceuticals, impregnated bed nets; sterile insect technologyMedical devices – Surgical instruments; HIV test kits etc.Hospitals – Hospital PPPs; private wards in public hospitals; private hospitals (acute and sub-acute); day clinics; PHC centres focusing on maternal health

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Origination Scoping Pre-feasibility Bankable Feasibility

Pre-implement

ation

Implementation

Post-investment

Activities:• Logging of ideas and

applications on SAP• Initial screening• Submit

recommendation

• Conduct a scoping study

• Write a scoping report• Submit report &

recommendation (inclusive of funding for PFS)

• Set-up project management structures (steering committee or project development company)

• Conduct PFS• IDC due dilligence on

PFS• Write and submit IDC

PFS submission report (inclusive of funding for BFS)

• Conduct BFS via project management structures

• IDC due dilligence on BFS

• Write and submit IDC BFS submission report (inclusive of funding for pre-implementation and/or actual investment)

• Set-up final project structures with required policies and procedures

• Fund raising & finalisation of funding agreements

• Address all conditions precedent of shareholders and debt agreements

• Start with basic engineering

• Project achieves financial closure

• Continue with detailed engineering

• Procurement of capital items

• Construction• Commissioning /

Commercial Operation• Technical completion

• Monitoring of investment

Outcomes:• Request to accept

application/idea on IDC project system

• Desk-top, techno-economic study

• IDC Project Scoping Submission

• Pre-feasibility study• IDC Project Pre-

feasibility Submission

• Bankable feasibility study

• IDC Project bankable feasibility submission

• Financial closure = project fully funded + unconditional funding agreements (debt and equity)

• IDC Pre-implementation memo

• Technical completion = completion test is met abd completion guarantee released

• IDC Implementation Memo

• Repayment of IDC funding

• IDC exit

Ojective / Definition• Project ideas and

applications are classified as Projects in the IDC

• An initial desk-top, techno-economic study of a specific project idea or application to determines IDC’s interest to pursue the project further

• A limited study to determine the economic and commercial viability of the project under different scenarios/options.

• A detailed study to provide levels of confidence in the capital and operating expenditure within approximately +/- 10% and to assess the viability to move to the pre-implementation.

• All activities are conducted that is required for financial closure

• Start with the design and basic engineering activities

• All activities are conducted that is required for technical completion

• The project development is complete and the IDC now awaits a return on investment

Project development process

Funding process

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

MonitoringStructuring of funding

depending on client’s needs

Approval of viable transactions at appropriate committee

Ongoing monitoring of client performance after funding is

made remaining

Interventions in businesses experiencing difficulties

• Business support• Restructuring of facilities• Etc.

More emphasis being placed on early stage

involvement and development of projects

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On-line tools

• 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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Special funding schemes

– Gro- SchemeƐ– UIF Fund for job creation

– Distressed funding

– Transformation and Entrepreneurial Scheme (TES)

• Women Entrepreneurial Fund

• People with Disabilities Fund

• Development Fund

• Equity Contribution Fund

• Community Fund

– Risk Capital Facility (RCF)

– Isivande Women’s Fund

– Natural Disaster Relief Initiative

– Clothing and Textiles Competitiveness Programme (CTCP)

– Support Programme for Industrial Innovation (SPII)

– Clothing, Textiles, Footwear and Leather Competitiveness Scheme

– Energy Efficiency/Renewable Energy Fund

– Agro-processors Linkage Scheme

Cross sectoral schemes/funds

Managed on behalf of the dti

Sector specific schemes/funds

Government incentives - www.investmentincentives.co.za

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Regional presence

• 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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• Since opening the IDC office in the North West in 2008 – IDC’s exposure grew from R1,4 billion (2008) to R4.8 billion (2012)

• In the last 3 years North West approvals amounted to R4,3 billion to 34 companies creating 18 598 direct jobs

• North West approvals amounted to over R3,6 billion in the last financial year (31 March 2012)

• Created and saved 11 489 direct jobs during the last financial year alone

• Fully fledged office opened in Mahikeng in November 2012

Provincial Highlights

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NW – Best Performing Region outside Gauteng

• 63% of funding approvals outside Gauteng, Western Cape and KwaZulu-Natal;

• Examples of industries supported by province:Eastern Cape• Wind energy generation• Assembly of televisions• Production of automotive

glass• Dairy productsFree State• Concrete articlesGauteng• Bus bodies• Soaps and detergents• ClothingKwaZulu-Natal• Metal products• Textiles• Sugar processingLimpopo• Coal mining• Citrus processing• Hospital PPP

Mpumalanga• Coal mining• Metal products• TourismNorth West• Platinum mining• Solar power generation • HealthcareNorthern Cape• Solar power generation • Agriculture disaster relief• Agro-processingWestern Cape• Wind power generation• Tourism• Agro-processing

Provincial Distribution of Funding Approvals

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Key Focus Areas

• Engage and partner with Commercial Banks in the Province to further extend

IDC’s impact in the Province• Deliver the NW Provincial Renewable Energy Strategy and Implementation

plan during this financial year• Continue to work towards an integrated, coordinated approach to Economic

Development via the NW CEO’s Forum• To ensure that businesses & communities in the North West benefit from IDC

interventions and financing schemes• To be proactive in identifying investment opportunities that will create and

save jobs.• Renewable energy projects

• Agriculture• Manufacturing in line with the New Growth Path and National Development Plan

• To continuously consult and collaborate with key stakeholders.

Thank you

Rustenburg1st Floor, Sunetco Building32b Heystek StreetRustenburg(014) 591 9660

BritsSuite 108,28 Van Velden StreetBrits(012) 252 0007

MahikengOffice 1B Mikro PlazaCnr First and Bessemer Mahikeng(018) 397 9943