HELL TO PAY

Share­hold­ers burn af­ter be­ing tempted into un­listed ven­ture cap­i­tal schemes

Finweek English Edition - - Cover - BY MARC HASEN­FUSS

IT’S BEEN 12 YEARS since the first un­listed ven­ture cap­i­tal projects pressed the purses of pub­lic in­vestors but – fi­nally – the ugly and painful truth has emerged about this much-hyped in­vest­ment seg­ment. Es­sen­tially, un­listed ven­ture cap­i­tal projects – and we’ve seen at least two dozen con­tenders since the late Nineties – were punted as port­fo­lio en­hancers for well heeled and so­phis­ti­cated in­vestors that could af­ford to take a higher than usual risk.

The first projects were punted by Pres­tige Ven­tures in the late Nineties and con­tenders in­cluded Es­sen­tial Wa­ters, Jab­u­lani Tourism & Leisure, Penta Di­a­monds, John Daniel Con­tain­ers, Pi­rate Snacks, Reinet Dis­tillers, Agave Dis­tillers, Askari Min­ing, Pri­mary Paints, Su­per­tow In­ter­na­tional, Nexus, Ne­o­logic and SA Or­gan­ics. Later, we saw projects such as Za­gal Di­a­monds, Or­bis, APMI Hold­ings, Mo­bile Events Mar­ket­ing, Glob­alJewel, Garek, Wealth 4 U, Global Call Cen­tre So­lu­tions (GCCS) and May­fair Min­ing.

To date, not one of those projects can prove a tan­gi­ble re­turn of any sort to share­hold­ers. Many sim­ply snuffed it and the few that man­aged a list­ing quickly withered away (Es­sen­tial Wa­ters and Irma En­vi­rotec) or were left for dead (John Daniel Hold­ings and Beget Hold­ings).

Be­cause so­phis­ti­cated in­vestors quickly saw through the prom­ises of high re­turns from weird and won­der­ful ven­ture cap­i­tal projects, much of their ag­gres­sive mar­ket­ing ef­fort was even­tu­ally aimed at un­so­phis­ti­cated in­vestors. Par­tic­i­pants were of­ten teach­ers (es­pe­cially those looking to grow re­trench­ment pack­ages), farm­ers and doc­tors – of­ten cold called by share ped­dlers promis­ing su­perb re­turns from a lim­ited of­fer in­vest­ment. Lis­ten to the pod­cast on Fin24.com

http://www.fin24.com/ mul­ti­me­dia/pod­casts.aspx

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