The objective of the Automotive and Transport Equipment SBU is to ensure both domestic and global competitiveness in the downstream manufacturing of automotive and transport machinery and related components. The SBU wants to see a competitive local automotive and transportation industry that manufactures or assembles a significant portion of automotive and transportation equipment in South Africa for both the domestic and export markets and is a key global player for select components.
The SBU offers funding, industry and project development support to businesses involved in developing the automotive, rail, aerospace and ship industries, and especially the following:
- Manufacture of motor vehicles, trailers & semi trailers.
- Manufacture of parts and accessories for motor vehicles and their engines.
- Manufacture of rail locomotives and rolling stock.
- Building and repairing of boats and ships.
- Manufacture of aircraft and spacecraft.
- Manufacture of motorcycles and bicycles.
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 particular 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; and
- The project or business must exhibit economic merit in terms of profitability and sustainability.
For acquisitions, IDC BEE acquisition policy will apply.
In the case of take-overs and buy-ins by historically disadvantaged partners, we require:
- 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.
- A business plan.
- 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:
- 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.
Applying for funding
Application for funding should be in writing, including a funding request letter, an executive summary and a complete business plan. Please make sure you comply with all the criteria listed above. Click here to apply online.
