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BUSINESS PARTNERS LIMITED South Africa ’ s leading investor in SMEs SME Finance Workshop 26-27 June 2007 Dares Salaam, Tanzania Paul Malherbe COO: Technical Assistance, Mentorship & Consulting Service Business Partners Ltd
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Who was Business Partners in 1981? Small Business Development Corporation Joint Venture between Government & Private sector Capital base of US$20million Focus on small business / entrepreneur development in SA
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Who is Business Partners in 2007? Unlisted public company and ISO 9001:2000 certified Invests in viable formal SME’s requiring between US$50 000 and $2,5million Invested more than $1billion in 30 900 entrepreneurs in 26 years 23 offices throughout South Africa 2 International offices: Antananarivo, Madagascar Nairobi, Kenya Expansion across Africa using the successful Business Partners model
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Business Partners’ 2007 Highlights Investment portfolio of approximately US$210million Achieved net profit after tax of $22,5m 664 investments totaling $125m approved for the year Created in excess of 7 780 jobs in formal economy Properties under management of 682 000m ² and 3 475 tenants 521 Mentors completed 699 value adding assignments to SMEs
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Business Partners’ Investment portfolio 2007 Investment portfolio of US$210million Current base consist of ±3 000 clients Net bad debts written off amounted to $950 000 Arrear investments at 11%, portfolio at risk at 1,60% 74 investment exits were done during 2007
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Business Partners’ product offering Structured loan funding Pure equity funding Quasi Equity with structured repayment Sharing of profit with entrepreneur Technical Assistance & Mentorship to assist entrepreneurs Project viability, Entrepreneur assessment, collateral available and own contribution determines funding structure
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Business Partners’ risk financing model Financing based on viability not collateral – extensive due diligence Equity participation for “ fair deal ” (entrepreneur and BPL) Post Investment management – investment team and mentors Operational teams add value through ongoing support
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Business Partners’ 5 ingredients for success 1Sector Specific knowledge Expert database of SME sectors & industry norms Industry Information base Deal directory This enables Business Partners to structure investments based on profitability of the business and not on collateral
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Business Partners’ 5 ingredients for success 2Efficient processing Deal flow review process Streamlined due diligence – evaluation documents; task lists In-house implementation and legal teams Standardised legal documents Operational teams have a target of 1 deal per month per investment officer and can only achieve this through efficient processing
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Business Partners’ 5 ingredients for success 3Unique product structures Basic investment products: Pure Equity Risk based loan investments (Shareholding) Royalty based loan investment (No shareholding) Combination of Risk and Royalty Property investment transactions
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Business Partners’ 5 ingredients for success 4Integrated Technical Assistance Business Partners evaluates each entrepreneur for – Technical skills Business skills Entrepreneurs required to work with mentors in their ventures Aim is to improve value-added and profitability Cost of mentorship shared
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Business Partners’ 5 ingredients for success 5Alignment of interests All operational staff assessed ito a Performance Scorecard This is aligned with various factors of importance for the Company Individual remuneration tied to Company performance Innovative merit incentives – Carried interest scheme Employee share scheme
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Agreements with 521 Independent Mentors as service providers “ Mentors ” are retired business / professional people available to SME entrepreneurs Business Partners manages the process – evaluate quality and value added to SME ’ s 699 projects completed in FY07 Technical Assistance: Business Partners Mentors
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Business Partners vision & mission encapsulates Value Adding Assessment of entrepreneur determines TA level Post investment management team involved in Value Adding TA not only for own clients – manage TA funds for other parties Technical Assistance as part of Strategy
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Business Partners outside South Africa: Key elements for BPI Leverage off Business Partners ’ processes, systems and knowledge Uses Business Partners ’ funding model with integrated TA Working relationship with IFC Focus on Sub-Saharan Africa
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Business Partners outside South Africa: Key elements for BPI 1 st Fund: Madagascar – $10million plus $2m TA Malagasy & International investors Aims to invest in 120 businesses over 5 years Gender & Indigenous investee targets 2 nd Fund: Kenya – $14,1million plus $2,5m TA Kenyan & International investors Aims to invest in 180 businesses over 5 years Gender & Indigenous investee targets 3 rd Fund – Country being investigated
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Thank You Business Partners Limited (An unlisted public company incorporated in South Africa) 5 Wellington Road Parktown, 2193 Johannesburg, ZA 00 (0)11 480 8700 pmalherbe@businesspartners.co.za
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