Big firms back fund for entrepreneurs

MORE than 50 of SA’s largest corporations have subscribed for shares in the new R1.5bn small and medium enterprise (SME) fund, earmarked to support the growth of entrepreneurs and create jobs.

The SA SME Fund is one of the projects the CEO Initiative has embarked on to help grow the economy. It is working with the government to help avert a ratings downgrade.

The fund has been incorporated as a private unlisted company but is expected to scale up and seek a listing on the JSE.

“We are hoping we can create the fund as a R10bn self-perpetuating instrument that can drive the venture capital industry and job creation,” said Discovery CEO Adrian Gore, who has led the initiative with Bidvest CEO Brian Joffe.

Some of the other big corporations include JSE-listed MTN, Barclays Africa, Sasol, Naspers, Adcock Ingram, Richemont, Kumba Iron Ore, Investec, Standard Bank Group and Old Mutual.

The fund will accredit existing fund managers and co-invest with them, rather than investing directly, according to a statement released on Sunday.

Gore said the accreditation process would help enhance quality and drive the growth of SA’s venture capital industry.

In addition to providing access to capital, the fund would also provide a mentorship panel of senior executives, connecting budding entrepreneurs to critical business and technical

skills. “This is ultimately about creating the next generation of national champions,” said Public Investment Corporation CEO Dan Matjila. “Entrepreneurs and businesses create jobs and by assisting them, we are building the future.”

The public sector is expected over time to contribute funds matching the R1.5bn in private money. SA has only about R2bn in venture capital funds under management, according to the South African Venture Capital Association’s latest survey of the private equity industry.

The association’s CEO, Erika van der Merwe, said the local economy would benefit from a wellrun and carefully structured programme to fund and support small and medium enterprises. Mentorship and strategic guidance were vital to the success of deploying capital in the sector, she said.

The SA SME Fund is in the process of recruiting a chief executive, and aims to start accrediting private equity and investment fund managers before the end of 2016, with the first money being deployed in the first quarter of 2017.