JP Morgan and the Department of Trade, Industry and Competition of South Africa (DTIC) have announced an R340 million ($20 million) investment fund to help small enterprises. The program aims to provide immediate and long-term finance to the industrial and green economy sectors.
“The funding is intended to support small and medium-sized businesses in sectors of significant public importance, ranging from transactions in the green economy to funding for firms with manufacturing operations. South Africa needs more jobs for young people and deeper levels of industrialisation. This transaction will give a boost to the country’s localisation efforts, creating employment and helping to strengthen economic output. I welcome the commitment to the creation of 1 000 new jobs and the focus on supporting a segment of the market that is not adequately served by the financial system,” said Ebrahim Patel, South Africa’s Minister of Trade, Industry and Competition.
Here Is What You Need To Know
- JP Morgan will be the first multinational investment bank in South Africa to implement an Equity Equivalent Investment Programme (EEIP) that has been approved by the DTIC.
- The Abadali EEIP will include the Abadali Fund, which will be a black company growth fund, as well as the Abadali Grant.
- JP Morgan will contribute R300 million to the Fund and R40 million to the Grant through the Fund.
“The South African private sector has great capacity to multiply impact through partnerships, as we are aiming to do with the dtic,” JP Morgan Senior Country Officer, Kevin Latter said.
“Although the current growth rate in South Africa is low and the impediments in the economy well known, now is the time to reinforce and increase our commitment to equality and inclusive growth and work harder across our business to better serve our people, our clients and the communities of South Africa.”
Which Businesses Would The New Fund Support?
- The program will assist firms with little or no initial revenue with short-term finance. They must have a minimum capital requirement of R250 000 spread out over one to twelve months.
- It will also enable enterprises with revenue of less than R1 million with medium to long-term financing at subsidized rates. Businesses who require capital for two to five years and are primarily black-owned will be considered.
- Meanwhile, the Abadali Grant will support the development of black businesses. It will emphasize entrepreneurship and the advancement of employment and skills in high-demand fields.
- Over an eight-year period, JP Morgan and the DTIC expect the program to generate R2 billion in financing transactions and 1 000 jobs.
- The Abadali EEIP aims to have a good economic and social impact in South Africa by filling a vital funding gap for small and medium-sized businesses that do not match typical commercial banking underwriting criteria. It will provide early-stage entrepreneurs with not only finance, but also business and mentorship help. The industrial and green economy sectors will be the primary targets.
How To Access The Fund
The Abadali Fund will be managed by Masakhe Partners, a joint venture between Edge Ventures, an established fund manager, and ProfitShare Partners, a successful fintech short-term financing solutions partner, both of which are majority black owned and controlled, and will be overseen by J.P. Morgan. The Abadali Grant will be managed by J.P. Morgan.
JP Morgan Fund South Africa JP Morgan Fund South Africa
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning writer