[pic]
NATIONAL ASSEMBLY
QUESTION FOR WRITTEN REPLY
QUESTION NO.: 1573
DATE OF PUBLICATION: 21 MAY 2010
Dr P J Rabie (DA) to ask the Minister of Economic Development:
What are the details of the criteria used by the Industrial Development
Corporation of SA Ltd to allow black entrepreneurs to get a R34 million
stake in abalone farms in the Western Cape?
NW1835E
REPLY
The IDC evaluates applications for funding from entrepreneurs wishing to
start new businesses, expand existing businesses, and buy into existing
businesses. In the case referred to by the Honourable Member, black
entrepreneurs approached the IDC seeking funding to buy into an existing
business. Part of the funding was set aside for the expansion of the
business.
The IDC applies the following criteria in such cases:
⢠The target company must fall within sectors covered by IDC's mandate;
⢠The target company must be profitable and its projections must show
economic viability;
⢠At least 50% of the IDC funding must be used to expand the capacity of
the target company;
⢠The BEE party must be operationally involved in the business;
⢠The BEE party must contribute to the transaction value;
⢠The value of the share purchase must be a fair value or at a discount;
⢠The transaction must show vesting of the BEE shares (the target
company's cash flows must be adequate to provide IDC its preferred
rate of return and leave value for the BEE party).
IDCâs due-diligence showed that these criteria were complied with and the
transaction was approved.