SME Fund to deploy money in 2017

• Boss of private sector initiative says money will start being pumped into businesses by the second half of the year

CEO of the R1.5bn SME Fund Quinton Dicks says the fund will start deploying money into the sector by the second half of 2017. Dicks is in discussions with some funds, but said no formal due diligence processes had yet begun.

Seasoned private equity executive Quinton Dicks, who has been appointed CEO of the R1.5bn SME Fund, says the fund will start deploying money into the sector by the second half of the year.

Dicks, who has worked at Metier, Brait and Old Mutual Private Equity, was in discussions with funds but said no due diligence processes had begun.

Established in terms of the CEO Initiative, the SME Fund will provide capital to existing fund managers already investing in small and medium-sized enterprises (SME).

The aim is that the private sector’s R1.5bn contribution is matched by the public sector over time.

Dicks said the fund was putting together a team with experience in fund-of-funds private equity investing.

Fund-of-funds investing involves holding a portfolio of investment funds rather than investing into asset classes directly. It is also called multimanager investing.

The SME Fund had elected to pursue this route in order to most effectively and rapidly leverage the skills and experience out there, Dicks said.

“We hope to start deploying money during the second half of the year; hopefully sooner,” he said.

“The broad mandate of the fund is to invest in businesses that are scalable and able to contribute to significant economic growth. This is not grant funding or purely social impact funding, although as a consequence of contributing towards growth, there is significant social impact,” he said.

The fund would tackle unemployment and give established businesses “extra firepower to grow in what is a challenging economic space”, said Dicks, a lawyer by training, with 20 years’ experience in corporate finance and private equity.

Start-ups would not be the focus, he said. “I don’t want to say we won’t go there at all, [but] the core focus is to create jobs and generate profit as quickly as we can.”

Agriculture and manufacturing would be among the sectors the fund, which had a developmental and transformational imperative, would support, Dicks said.

The fund would also establish mentorship programmes to benefit the SME sector as a whole. “We will strongly encourage all our funds to utilise mentorship and skills development programmes.”

Many existing funds also already had their own initiatives to add value to investee companies, he said.

The SME Fund is one of three major workstreams launched in 2016 under the CEO Initiative.

It was initially led by Discovery founder and group CEO Adrian Gore and Bidvest founder Brian Joffe.

The other two workstreams are one focusing on youth employment, which endeavours to create 1-million internships for unemployed youth across the private sector, and the investment workstream, which seeks to bring private money into sectors such as agriculture and tourism, while also developing black industrialists.

Various financial services companies have committed R100bn to the development of black industrialists.