Overview of the IDC Loan Application Process requirements

Overview of the IDC Loan Application Process & requirements Presentation to the IOT Industry Council Presentation by – Zandile Fuyane Date - 5 December 2019

About the IDC o Established in 1940 to promote economic growth and industrial development o The IDC is committed to facilitating job creation by stimulating local economies in the regions in which it operates o Adopted a value chain approach in 2015, with emphasis on development of long-term sustainable industries, localisation and job creation o IDC funds all clients however due to our mandate the key targeted groups include women, youth and black entrepreneurs

IDC Focus Areas Metals Value Chain § Basic Metals and Mining § Machinery and Equipment § Automotive and Transport Equipment Chemicals Value Chain § Basic and Specialty Chemicals § Chemical Products and Pharmaceuticals Special High Impact Sectors Agro Value Chain § Agro-processing and Agriculture High Impact Sectors § Heavy Manufacturing § Light Manufacturing & Tourism Enablers § Industrial Infrastructure § New Industries § Clothing & Textiles § Media & Motion Pictures Value Chains are earmarked for special attention including proactive project development, whilst High Impact Sectors are exclusively reactive

New Industries SBU • The SBU’s primary objective is to establish new globally competitive value chains that will make a meaningful contribution to economic growth in South Africa and thus facilitate future jobs rich industrialization and the achievement of other IDC development objectives • In executing this mandate the SBU undertakes activities aimed at the creation of enabling environments (mainly through stakeholder engagement/ lobbying/ collaboration) and the provision of funding across all stages of the business development within targeted industries • The NI SBU is differentiated from the Value Chain SBUs in that the SBU: – Focuses on identifying and developing industries of the future; and – Should take higher risk, but also aim for higher returns (financial and developmental) • The NI SBU initially identified eight key focus areas which were subsequently refined to four key focus areas • • Cleane Energy Soulutions 4 IR Natural Products Gas Beneficiation

Start up Financing Cycle IDC SBUs

Where IDC Funds IP Value Low value High value IDC SBU’s Commercial Banks Private Enterprise Development Funds – Anglo, Eskom, etc. Funds IDC New Industries SPII TVC TIA CSIR THRIP NRF Basic Research Early stage Applied Research Prototype Development Market Development Stage Commercial Development Maturity stage

Standard IDC Finance Criteria o New projects, expansions, rehabilitation of existing projects, acquisitions; o Projects must exhibit economic merit; o IDC finances fixed assets, operational costs and working capital requirements o Shared Risk i. e. reasonable contribution expected from shareholders/investors; o R 1 million minimum funding requirement and up to R 1 billion, o Financing to be within IDC mandate & Legislative requirements

Key Business Plan Aspects o Overview - keep the business plan focused – business background, start-up year, core operating activities, etc. In the case of an acquisition, background information to be split between the target company and the acquiring company; o Financial – preferably five years of financial projections. In case of acquisition, audited historical financials of target company and latest management accounts; o Shareholding – ownership structure, i. e. Shareholder’s details and % ownership; o Funding need - total funding required from IDC; breakdown of the funding required – how the funding will be utilised (i. e. working capital, plant and equipment, acquisition, etc. ) o Marketing - properly explain the sales/revenue, marketing and distribution strategies; details of contracts/letters of intent or off-take agreements, including value thereof and tenure; o Technical – indicate equipment required (quotations, invoices, etc. ); premises (leased/owned); production process, jobs/number of staff, etc. Details raw materials and suppliers, etc. o Management - who is on the management team - brief CV’s of key operations team;

IDC Funding Model

IDC Financing Process Submission of a Comprehensive Business Plan to IDC registers application on system Disbursement Desktop assessment (screening for Conditions Precedent (CPs) - met before disbursement mandate, info, viability, etc. ) Approval by Credit Committee Agreements drafted & Due diligence (Detailed assessment & deal structuring)

Access to IDC Financing o Access to IDC has been improved via an on-line application portal. An on-line platform to assist businesses to develop business plans is currently being enhanced; o Besides IDC has Regional Offices in other 8 provinces as well as satellite offices in some of the provinces;

How to Apply Make an enquiry… Walk-in Centre at Sandton Head Office Regional Offices Call Centre 0860 693 888 Email callcentre@idc. co. za