Risk Capital Facility Programme

The RCF Programme is capitalised by funds provided by the European Community through the Department of Trade and Industry (the dti). The IDC co-manages this fund with the European Investment Bank (EIB).

The RCF Programme supports two critical areas of the South African economic landscape, namely job creation and black economic empowerment through an emphasis on the SME market. The primary focus of the RCF Programme is to provide risk finance to companies owned by historically disadvantaged persons (HDPs) who are active within the SME sector with significant job creation potential. This is achieved by using equity and quasi-equity finance instruments. Applicants must be South Africans with their projects located either in South Africa or in the rest of Africa.

Investment period

The fund’s investment term per transaction is not more than 12 years, but the appropriate term per transaction is determined on a case by case basis.

Location

Investments outside Gauteng and Western Cape will be preferred for projects inside South Africa, while cross-border investments can be located anywhere in Africa.

Women Empowerment

The fund targets women empowerment through targeting at least 30% of all HDP:

Jobs created must be held by women;
Shareholders supported should be women; and
Managers supported should be women.

Investment channels

There are two investment channels through which funding is disbursed, namely Direct Channel; and Niche Fund Channel.

Direct Channel

These funds co-invest alongside IDC’s mainstream business.

Niche Fund Channel

These are venture capital funds targeting a specific or priority sector or area of the market with a developmental focus.

Business Support

Business Support will be provided during pre- and post-investment phases in respect of all investment channels.

Investment criteria for the RCF Programme (all channels)

All applications must fulfill the following criteria:

Must demonstrate financial profitability, technical feasibility, and economic viability and be environmentally sound;
Must highlight job creation features and empowerment compliance;
Must demonstrate a bias towards women entrepreneurs;
All sectors of the economy are eligible (primary, industrial, commercial and service sectors);
A significant involvement of HDPs in management;
Compliance with South African environmental legislation; and
A programme for HIV/Aids prevention/awareness.

Investment guidelines per channel

Direct Channel

An applicant must be an SME;
Minimum HDP ownership must be 25% plus one share;
Where relevant, any RCF Programme equity stake in investee companies must be a minority stake with a maximum of 49% of voting shares;
Job intensity of an investment calculated on a cost per job basis may not exceed R60 000;
Minimum investment amount is R250 000 for township and rural areas and R500 000 for other areas;
Maximum single investment amount is R20 million; and
Funds will be applied to improving the financial structure of undercapitalised companies.

Niche Fund Channel

The fund

An applicant (niche fund) must invest in SMEs;
Maximum investment amount is R30 million per niche fund;
RCF Programme will always be a minority equity investor in a niche fund;
The exit period from investment will be determined on a case by case basis; and
Investees of the niche fund must meet overall objectives for the RCF Programme:
- Provision of sustainable employment opportunities to HDPs within the SME sector;
- SMEs with a minimum HDP ownership of at least 25% plus one share; and
- RCF funding provided in order to:
  - Improve the financial structure of the investee;
  - Strengthen the investee’s BEE shareholding; and
  - Attract other sources and/or types of finding.

The Fund Manager

Minimum HDP ownership must be at least 25% plus one share; and
Demonstrate a sound track record and/or competence in the field.

Who to contact

For more information on the Risk Capital Facility Strategic Business Unit, please click here to contact us or call us on 086 069 3888 or +2711269-3917. Alternatively, email our call centre at callcentre@idc.co.za

European Investment Bank (EIB) the dti