PRESENTATION TO PORTFOLIO COMMITTEE

ON TRADE AND INDUSTRY

Khanya B Motshabi

Chief Executive Officer

12 March 2003

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PRESENTATION OUTLINE

• Background

• Vision

• Current Status

• Strategy

• Structure

• Product Roll Out

• Corporate Targets: 2003/4

• Divisional Outputs

• Impediments to delivery

• Gearing for delivery

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BACKGROUND

HISTORY• NEF Act 105 of 1998

• CEO appointed April 2001

• SOCE equity designated

CAPITALISATION

• Portfolio estimated at R2,1bn

• Assets not transferred

• Presented capitalisation proposals

NEF VENTURES

• NEF and IDC partnership

• Based on R200m

commitment

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VISION

Vision

“Leading provider of innovative finance

and

investment solutions for an inclusive

economy.”

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CURRENT STATUS

INFRASTRUCTURE

Physical and IT infrastructure

POLICIES AND CONTROLS

• Organisation polices, procedures and controls

• Disciplined and rigorous investment process

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STRATEGY

• Guided by government policy

• Transformation sensitive sectors

• Government initiatives

• BEE procurement

• Routine transactions

• Market making

• Risk reduction

• Entrepreneurship

• VC, PE and ME

• Big and small

General Specific

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STRUCTURE

Private EquityPrivate Equity Venture CapitalVenture Capital Investment ServicesInvestment Services

Corporate CentreCorporate Centre

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PRODUCT ROLL OUT

VENTURE CAPITAL

Finance economic empowerment and black business development.

Progress and Prospects

Established February

2002

Launch smaller fund (R250 000 –

R3m)

July 2003

Launch R 250m Incubator Fund. Subject to

capitalisation

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PRODUCT ROLLOUT

PRIVATE EQUITY

Finance economic empowerment and black business development.

Progress and Prospects

Established November

2002

Investment readiness April 2003

Capital for organic businesses and M &

A transactions through equity, quasi

equity and debt

Ongoing

Warehouse assets Ongoing

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PRODUCT ROLL OUT

INVESTMENT

SERVICES

Promote savings and

investments by

offering mass

empowerment

Schemes backed by

targeted programmes

of investor education.

Progress and

Prospects

Established August 2002

Product design March 2003

Design delivery mechanisms March 2003

Design education programme March 2003

Implement product March 2004

Participate in state IPO’s and other IPO’s Ongoing

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CORPORATE TARGETS: 2003/4

Venture Capital R80m investments in 2003/4

Private Equity R180m investments in 2003/4

Investment Services R100m retail offering in 2004

Corporate R1bn for mining over five years

R1bn for financial services over five years

Capitalisation assumption R2,1billion in annual tranches of R420

million over five years

Job creation spin offs Estimated at 9000 over 10 years

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VENTURE CAPITAL OUTPUTS

•First deal of R5m approved.

• Four deals estimated at R25m in pipeline

• Target : July 2003

• Targeting additional ten deals by year end.

• Based on R170m portion of R200m.

• Leverage the R30m fund to raise additional R30m.

• Estimated 10 deals March 2004.

• Additional R250m for Incubator Fund.

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PRIVATE EQUITY OUTPUTS

• Based on R1,5 billion fund.

• At least one deal per month estimated at

R20m.

• Targeting 9 deals for 2003/4.

• Total investment of R180m in year 1.

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INVESTMENT SERVICES OUTPUTS

• R200m retail offering per annum over a five year period:

First retail offering of R100m targeted for 2004.

Estimated 300 000 subscribers per offering.

• Focus on fewer, but large size offerings initially:

Target LSM 1-6.

Long-term investment & partial capital

guarantee.

• Unitised portfolio investment ready 2004/2005.

• Warehousing of equity for future retail offers.

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IMPEDIMENTS

• Delivery has been slower than anticipated.

• Integration of NEF Ventures into business.

• Staff turnover in NEF Ventures.

• Staffing capacity resulted in slow deal approval.

• PE CIO required to support NEF Ventures.

• Quality of received applications not optimal.

• Slow capitalisation resulting in one operating division.

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GEARING FOR DELIVERY

• Building capacity to speed up deal through-put.

• Redesigned processes and systems to fast track deal approval.

• Reviewing mandate and redesigning products:

Address changing market needs.

• Planning for redeployment of larger capital pool.

• Valuable experiences from first fund to launch next phase.

• Partnering other DFIs to raise capital and access market.

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Key Management

• Chief Executive Officer : Khanya B Motshabi

• Chief Operations Officer : Motlalekhomo Mokhobo

• Acting Fund Manager : NEF Ventures : Dineo Skwambane

• Chief Investment Officer : Private Equity : Alun Frost

• Chief Investment Officer : Asset Management : Forthcoming

• General Manager : Marketing: Themba Langalibalele

• General Manager : Retail : Vijay Ramluckan