Asset management group Ninety One SA has established a R10 billion investment fund to assist South African businesses affected by the COVID-19 pandemic.
Ninety One, formerly known as Investec Asset Management, said on Monday that its SA Recovery Fund has been established in partnership with Ethos Private Equity.
It said the Fund’s aim is to help preserve South Africa’s productive capacity and economic recovery by investing in companies that are critical to the country’s economy.
Sustain operations, save jobs
The Fund’s investments will help companies sustain operations over the next two years and save jobs, the group added. It will nevertheless seek commercial return on its investments.
“Ninety One believes the longterm savings industry has an important role to play in supporting the recovery of the South African economy by fortifying the balance sheets of otherwise competitive businesses to cope with the risk of a deeper or longer recession than initially anticipated,” the group said.
Ninety One said the Fund’s elements will include senior and subordinated debt, preferred equity, listed equity and private equity. These will be deployed over an 18 to 36-month timeframe.
CEO Hendrik du Toit added, “The lockdown, while necessary to protect the nation’s health, has been akin to putting the economy into an induced coma. South Africa faces a once-in-a-generation economic challenge.”
The SA Reserve Bank has forecast that the economy could contract by up to 7 percent in 2020, with investments, exports and imports expected to decline sharply.
Ninety One’s Fund follows a series of other initiatives, including the Oppenheimers’ R1 billion SA Future Trust (SAFT) established in March.
According to its website, SAFT’s aim is to “enable SMMEs to significantly reduce their cash outgoings and continue operations during this time of crisis, while retaining their employees – affording these companies much-needed breathing room to make long-term decisions.”
Billionaire Johann Rupert similarly established a R1 billion COVID-19 Sukuma Relief Programme in April. Business Partners is administering the donation in the form of grants and loans.
The Department of Small Business Development also established a R500m SMME Support Intervention, which consists of a Business Growth/Resilience Facility and a Debt Relief Fund.
In April, President Cyril Ramaphosa announced the establishment of a R200 billion loan guarantee scheme in partnership with the major banks, National Treasury and the SA Reserve Bank to assist enterprises with operational costs such as salaries, rent and the payment of suppliers.