Automotive and Transport Equipment

AutomotiveHOWWE FUND BUSINESSES IN THE
AUTOMOTIVE AND TRANSPORT EQUIPMENT SECTOR

A National Development Finance Institution Set Up to Promote Economic Growth and Industrial Development, The IDC Aims to be the Primary Driving Force of Commercially Sustainable Industrial Development and Innovation in South African and African Markets.

 

The IDC Automotive and Transport Equipment Strategic Business Unit (SBU) is focused on ensuring both domestic and global competitiveness in the downstream manufacturing of automotive, transport equipment and related components. It prioritises funding and support to automotive and transport equipment manufacturing entities that offer high developmental impact on return while playing a significant role in growing the country’s economy.

 

Through funding, industry and project development support to businesses involved in developing the automotive, rail, aerospace, and maritime industries, the SBU supports competitive local automotive and transportation sectors that manufacture or assemble a significant portion of automotive and transport equipment in South Africa for both the domestic and export markets.

WHAT WE FUND

Manufacture of motor vehicles, trailers & semi-trailers

Manufacture of aircraft and spacecraft

Manufacture of parts and accessories for motor vehicles and their engines

Manufacture of motorcycles and bicycles

Manufacture of rail locomotives and rolling stock

Building and repairing of boats and ships

OUTCOMES

We envisage that through our funding and project development activities, we will have the following impact on the South African economy or will achieve the following outcomes:

 

Increased capacity in the assembly industry driving demand for local component manufacturers.

Expand and extend existing industries in order to create and/or preserve jobs and drive sustainable economic growth.

Enable the local industry to achieve its potential and become globally competitive.

DOING BUSINESS WITH THE UNIT

While each proposal submitted to us for funding is considered on its individual merits, preference is given to:

Financing fixed assets and the fixed portion of growth in working capital requirements; and

New or existing projects or businesses that have a significant developmental impact, for example, black industrialists, job creation, women owned businesses, youth owned businesses, localisation and increased foreign currency earnings.

FUNDING CRITERIA

Our main funding requirements are:

 

  • A minimum of R1-million;
  • Security, the form and nature of which relates to your specific circumstances;
  • Compliance with international and local environmental standards; and
  • A reasonable financial contribution from the owners of the business along the following broad guidelines, although the circumstances of each business will be carefully evaluated to arrive at an acceptable contribution level:
    • 33% of total assets for going concerns;
    • 40% for start-ups, depending on industry norms and risk profile;
  • We prefer that our exposure does not exceed that of the owners of the business;
  • Contribution of historically disadvantaged persons under special circumstances may be lowered, in which case the IDC will be prepared to extend finance in excess of the owner’s contribution;
  • The project or business must exhibit economic merit in terms of profitability and sustainability; and
  • Risk sharing through co-funding (other parties such as banks or DFIs) is preferred.

 

 

For acquisitions, IDC BEE acquisition policy will apply. In the case of take-overs and buy-ins by historically disadvantaged partners, we require:

 

  • A comprehensive business plan.
  • A signed Offer to Purchase agreement between the seller and the buyer or a signed Letter of Undertaking from the seller indicating the buyer’s preferred bidder status.
  • The Offer to Purchase should be valid for at least three months and give the IDC an exclusivity period of at least two months.
  • Detailed information on the partners, such as the group structure and business activities.
  • An independent valuation (including underlying assumptions) of the target company.
  • Details of IDC funding and the application thereof.
  • Details of the contribution by the purchaser.
  • A signed draft plan explaining the involvement of historically disadvantaged persons in operational and/or executive management.
  • Proof of limited scope of due diligence performed by historically disadvantaged persons on the seller’s business.
  • The latest audited financials, management accounts and financial projections for the target company.
  • A covering letter with details of the finance required from the IDC.

 

 

In the case of expansions by existing businesses, we require:

  • A comprehensive business plan.
  • Your latest audited and actual financials, signed by the finance director, MD or CEO.
  • Your updated business plan, focusing on the proposed project/expansion; and
  • A detailed description of the nature of expansion, its related costs and revenues.

 

 

In the case of small, medium and start-up businesses we require:

  • A comprehensive business plan.
  • Latest management accounts and financial projections; and
  • A covering letter with details of the finance required from the IDC.

FOR INVESTMENTS IN THE REST OF AFRICA

The project must be of direct benefit to South Africa in any of the following ways:

 

  • Must promote regional economic development with linkage to SA
  • Upstream / Downstream businesses within IDC value chains
  • Must develop and integrate regional value chains in line with IDC priority sectors
  • Must support the implementation efforts of the AFCFTA in order to entrench the development of regional VCs and a move away from a reliance on offshore supply chains
  • The minimum size of the total project funding requirement must be:
    • R5-million SACU-based investments
    • USD 3 million for SADC-based investments
    • USD10-million for investments in countries outside SADC
    • Rand, US Dollar and Euro-based funding are available.

HOW TO

APPLY FOR FUNDING

Application for funding should be in writing and should include an executive summary and a business plan.

STEP 1

BUSINESS PLAN

Draw up a well-researched business plan, stating a compelling case for funding

STEP 2

REGISTER ONLINE

*Applications can also be submitted at the IDC office

STEP 3

UPLOAD APPLICATION

Upload your application with the relevant documents, certificates and business plan

STEP 4

PROCESS APPLICATION

IDC will confirm that it has received your application. While processing we may ask you to supply extra information or documentation

STEP 5

APPROVAL STATUS

IDC will give you feedback on the outcome of your application, in writing. If your application is successful, due diligence will be conducted on your business.

STEP 6

LOAN CONTRACT

Once the IDC has satisfied itself of your bona fides, you will be asked to sign a loan contract

OTHER INDUSTRY SECTORS

WE FUND