Chemical Products and Pharmaceuticals

HOWWE FUND BUSINESSES IN THE
CHEMICAL PRODUCTS AND PHARMACEUTICALS

Our goal is to develop a competitive downstream chemicals industry (including plastics and pharmaceuticals) that will meet consumer demand in the local, regional and global markets. We aim to achieve this by investing in the development of projects/businesses that seek to create new or expand local manufacturing capabilities, replace imports and enhance competitiveness by lowering the cost of production through the introduction of new technologies.

 

The Chemical Products and Pharmaceuticals Strategic Business Unit offers funding, as well as industry and project development support, to businesses developing downstream chemicals, plastics and pharmaceuticals products. The manufacture of the following are key focus areas for the unit:

WHAT WE FUND

Pesticides and other agro-chemical products

Man-made fibres

Paints, varnishes and similar coatings

Plastic products, including plastics recycling

Pharmaceuticals, medicinal chemicals and botanical products

Medical devices

Soaps, detergents, perfumes and toilet preparations

OUTCOMES

We envisage that through the activities of this unit, we will achieve the following outcomes for the South African economy:

 

  • 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

Entrepreneurs that have developed a business proposal for the expansion of an existing manufacturing business or for the establishment of a new manufacturing venture in our key focus areas should apply for funding.

 

The unit assesses all aspects of a transaction relating to technical, commercial, financial, economic and management appraisal of businesses and projects to ascertain the sustainability and economic viability thereof.

 

New or existing projects or businesses that have a significant developmental impact, for example, rural development, empowerment, job creation, township development and value addition, creation of black industrialists as well as youth ownership, are encouraged to consider applying for support.

 

The funding assessment process entails the following:

 

  • Understanding the requirements of clients and preparing suitable financing structures.
  • Detailed due diligence.
  • Coordinating with lenders/investors to ensure timely sanction of facilities.
  • Harmonizing the terms and conditions among all lenders/investors.
  • Legal agreements and other necessary documentation.

WHO SHOULD APPLY FOR FUNDING?

We encourage new or existing companies within the downstream chemical products, plastics and pharmaceuticals sector that plan to create new or expand industrial capacity within the economy to apply. We can also consider the funding of expansionary BBBEE acquisitions in the sector where the majority of the acquisition funds remain within the target company for expansionary purposes (usually through an issue of shares).

FUNDING CRITERIA

For investments within South Africa:

 

  • Debt funding minimum ZAR 1-million.
  • Equity funding minimum ZAR 5-million.
  • Funding limits:
    • Start-up businesses: IDC maximum funding equates to 60% of the total funding requirement (for start-ups).
    • Expansion projects: IDC can fund a full expansion if the equity structure (equity/assets) at peak is a minimum of 35%.
    • Funding of historically disadvantaged persons: under special circumstances the IDC will be prepared to extend finance in excess of the limits above.
  • Preferred equity structure for start-up projects of at least 50% at peak.

 

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 South African capital goods.
    • Must develop and integrate regional value chains (source inputs/raw materials from elsewhere for processing in South Africa).
    • Must promote South African ownership (25% or more) on the rest of the African continent.

 

(Note that the above conditions could in some cases be relaxed for South Africa’s neighbouring countries)

 

  • The minimum size of the total project funding requirement must be:
    • ZAR 5-million for SACU-based investments.
    • USD 3-million for SADC-based investments.
    • USD10-million for investments in countries outside SADC.
  • The IDC will not fund more than 50% of the total funding requirement (for expansions not more than the existing asset base) – the funding amount will be a factor of the South African content/involvement.

 

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

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