http://www.engineeringnews.co.za
  SEARCH
Login
R/€ = 16.31Change: -0.01
R/$ = 14.22Change: 0.03
Au 1292.99 $/ozChange: 1.84
Pt 1079.50 $/ozChange: 3.50
 
 
Note: Search is limited to the most recent 250 articles. Set date range to access earlier articles.
Where? With... When?








Start
 
End
 
 
And must exclude these words...
Close Main Search
Close Main Login
My Profile News Alerts Newsletters Logout Close Main Profile
 
Agriculture   Automotive   Chemicals   Competition Policy   Construction   Defence   Economy   Electricity   Energy   Environment   ICT   Metals   Mining   Science and Technology   Services   Trade   Transport & Logistics   Water  
What's On Press Office Tenders Suppliers Directory Research Jobs Announcements Letters About Us
 
 
 
RSS Feed
Article   Comments   Other News   Research   Magazine  
 
 
Sep 03, 2012

IDC looks to raise R65bn as dividend payments take strain

Back
Industrial Development Corporation CFO Gert Gouws outlines the group's plans for closing a R65-billion funding gap between 2012 and 2016. Camera Work: Nicholas Boyd. Editing: Darlene Creamer. Recorded: 3.9.2012.
Economic Development Minister Ebrahim Patel on the potential virtues of a Bric-level development bank. Camera Work: Nicholas Boyd. Editing: Darlene Creamer. Recorded: 3.9.2012.
previous next
 
 
 
 
 
Africa|ArcelorMittal South Africa|BHP Billiton|Business|Development Bank Of Southern Africa|Eskom|Finance|India|Industrial|Industrial Development Corporation|Kumba Iron Ore|PROJECT|Projects|Renewable Energy|Renewable-Energy|Sasol|Solar|Transnet|Unemployment Insurance Fund|Africa|Brazil|China|Russia|South Africa|Development Finance Institutions|Energy|Ebrahim Patel|Geoffrey Qhena|Gert Gouws|Infrastructure|Iron Ore|Iron-ore|R13|R8|South Africa|Southern Africa
Africa|Business|Eskom|Finance|Industrial|PROJECT|Projects|Renewable Energy|Renewable-Energy|Solar|Transnet||Africa||Energy|Infrastructure|Iron Ore|Iron-ore||
africa-company|arcelormittal-south-africa|bhp-billiton|business|development-bank-of-southern-africa|eskom|finance|india|industrial|industrial-development-corporation|kumba-iron-ore|project|projects|renewable-energy|renewable-energy-company|sasol|solar|transnet|unemployment-insurance-fund|africa|brazil|china|russia|south-africa|development-finance-institutions|energy|ebrahim-patel|geoffrey-qhena|gert-gouws|infrastructure|iron-ore|iron-ore-person|r13|r8|south-africa-region|southern-africa-region



South Africa’s State-owned Industrial Development Corporation (IDC), which is aiming to approve project and business funding of R102-billion between 2012 and 2016, indicated on Monday that it would probably need to borrow some R65-billion over the period to fund that aspiration.

These borrowings would be raised primarily on the domestic bond market and from other development finance institutions (DFIs). But the IDC was also considering other international sources, including the offshore capital markets.

CEO Geoffrey Qhena remained adamant that the R102-billion “stretch target”, which was reaffirmed by Economic Development Minister Ebrahim Patel, remained realistic. This, notwithstanding weaker-than-expected economic activity and approval levels, as well as growing pressure on its main current source of funding, which are currently dividends from companies listed on the JSE.

The IDC received R2.9-billion in dividends from companies such as ArcelorMittal South Africa, BHP Billiton, Kumba Iron Ore, Sasol and other listed entities in the year to March 31, 2012, as well as a further R781-million from unlisted holdings, such as Foskor. But in light of the prevailing downturn in the commodity cycle, dividend flows were expected to decline materially during the current financial year.

Therefore, CFO Gert Gouws confirmed that the group would rely increasingly on borrowings to fund its State-backed mandate. He stressed that the group’s balance sheet, with a debt-to-equity ratio of 11%, had borrowing capacity and indicated that the ratio was likely to rise to around 30% by 2016.

FUNDING PLAN

Given the lag between approvals and disbursements, the IDC was budgeting to disburse about R90-billion between 2012 and 2016, of which about R25-billion would be recovered through interest payments.

About R40-billion of the R65-billion shortfall would, therefore, be met through borrowings, with the R25-billion balance arising from profits associated with the sale of listed and unlisted shares – these sales would only be pursued once the commodity cycle recovered and would probably be timed towards the end of the five-year cycle.

About half the borrowings would be raised through bonds, with the IDC having already listed a R15-billion Domestic Medium-Term Note Programme, which it would start tapping in October.

A further 25% could be secured from international DFIs, as well as from local entities such as the Unemployment Insurance Fund and the Compensation Fund. The balance would be sourced from commercial banks.

Patel said that the proposed DFI involving the Brics-bloc countries of Brazil, Russia, India and China, could offer a new source of funding to domestic DFIs, such as the IDC and the Development Bank of Southern Africa.

Qhena was also not overly concerned about the group’s capacity to materially increase the level of approvals over the remaining four-year period, but acknowledged that it would require a major push from the bank’s staff.

In 2012/13, IDC approved a record R13.5-billion to fund start-ups, business expansions, ownership changes and to support firms in distress. The approvals were well up from the R8.7-billion approved in 2010/11, but fell well short of the yearly approval levels of around R20-billion that would be required to meet the outlined budget.

About 30% of the approvals were directed towards so-called ‘green economy’ investments, with the IDC participating in 12 of the 28 preferred projects selected during the first bid window of the Department of Energy’s renewable energy procurement programme.
It would also participate in subsequent bidding rounds.

The fact that only R8.4-billion of the R13.5-billion in IDC approvals was actually disbursed during the year was partly attributed to the well-publicised delay in closing the first wind and solar bids. These are expected to reach financial closure in the coming weeks.

Besides further green-economy-related investments, Qhena saw significant potential in supporting the localisation component of the capital programmes being pursued by State-owned companies such as Eskom and Transnet. All told, South Africa was expected to invest some R860-billion on infrastructure programmes until around 2015.

Edited by: Creamer Media Reporter

To subscribe email subscriptions@creamermedia.co.za or click here
To advertise email advertising@creamermedia.co.za or click here
 
Comment Guidelines (150 word limit)
 
 
 
 
 
 
 
 
Other Electricity News
The World Bank does not expect the recent rise in platinum prices to be sustained for the full year, with its latest ‘Commodity Markets Outlook’ report forecasting a 10% year-on-year price decline in 2016. The report, released on April 26, notes that precious metals...
Article contains comments
Public Enterprises Minister Lynne Brown argued in Parliament on Tuesday that, as a 60% offtaker of coal in South Africa, Eskom should be in a position to command better coal prices and lamented the fact that the State-owned utility’s coal costs were rising at levels...
Article contains comments
More
 
 
Latest News
Environmental Affairs Minister Edna Molewa
Cabinet has extended the contract of Department of Environmental Affairs (DEA) director-general Nosipho Ngcaba and approved the appointment of Limpho Makotoko as the new DEA COO.     “Under the leadership of Ngcaba, the DEA has consistently received clean and...
Mzwandile Masina
The Department of Trade and Industry (DTI) has invited companies to participate in a trade and investment mission to Ghana and Nigeria from August 8 to 12.   Companies in the agriculture and agroprocessing sectors, built environment professionals, automotive and...
Cabinet has approved the Industrial Policy Action Plan (Ipap) 2016/17 to 2018/19, which seeks to achieve a higher-impact industrial policy in difficult economic circumstances, including the difficulties faced by the domestic steel industry and the drought which has...
More
 
 
Recent Research Reports
Automotive 2016: A review of South Africa's automotive sector (PDF Report)
Creamer Media’s Automotive 2016 Report provides an overview of South Africa’s automotive industry over the past 12 months. The report provides insight into local demand and production, vehicle imports and exports, investment and competitiveness in the sector, as well...
Energy Roundup – April 2016 (PDF Report)
The April 2016 roundup covers activities across South Africa for March 2016 and includes details of a North Gauteng High Court Judge’s dismissal of a court application to postpone the 9.4% electricity tariff increase, which the National Energy Regulator of South...
Electricity 2016: A review of South Africa's electricity sector (PDF Report)
Creamer Media’s Electricity 2016 report provides an overview of South Africa’s electricity sector, focusing on State-owned power utility Eskom and independent power producers, electricity planning, transmission, distribution and the theft thereof, besides other issues.
Energy Roundup – March 2016 (PDF Report)
The March 2016 roundup covers activities across South Africa for February 2016 and includes details of the Department of Energy’s plans to announce the preferred bidders for the first tranche of the coal independent power producer procurement programme; the Council...
Steel 2016: A review of South Africa's steel sector (PDF Report)
Creamer Media’s Steel 2016 Report examines South Africa’s steel industry over the past 12 months. The report provides insight into the global steel market and and particularly into South South Africa’s steel sector, including production and consumption, main...
Construction 2016: A review of South Africa's construction industry (PDF Report)
Creamer Media’s Construction 2016 Report examines South Africa’s construction industry over the past 12 months. The report provides insight into the business environment; key participants; local demand; geographic diversification; corporate activity; black economic...
 
 
 
 
 
This Week's Magazine
The two spent-fuel pools at Eskom’s 1 800 MW Koeberg nuclear power station, in the Western Cape, will be full by 2018, increasing the urgency on the State-owned utility to begin pursuing alternative storage options. Koeberg has, over the past 32 years, accumulated a...
South Africa lacks the skills necessary to implement the government’s plan to build 9.6 GWe of new nuclear energy capacity, warns nuclear-qualified Quality Strategies International CEO David Crawford. “Apart from the concern about the affordability of the programme,...
DOROS HADJIZENONOS The 700-series devices provide network security monitoring, app control, URL filtering, VPN security, antivirus, antispam, antibot, and advanced intrusion prevention and detection functionality
Cybersecurity multinational Check Point has released its latest 700-series cybersecurity systems for small businesses, which draw on its international threat intelligence to provide up-to-date cybersecurity, says Check Point South Africa country manager Doros...
Daimler Trucks and Buses Southern Africa (DTBSA) saw a marked slip in new-vehicle sales in 2015 compared with 2014, with sales dropping from 5 897 units to 5 300 units. The decline came as the South African new truck and bus market declined from 31 558 units in 2014...
Group of 20 (G-20) economies threatened to penalise havens that don’t share information on their banking clients after the leak of the Panama Papers provoked a global uproar over tax evasion. The G-20 will consider “defensive measures” against financial centers and...
 
 
 
 
 
 
 
 
 
Alert Close
Embed Code Close
content
Research Reports Close
Research Reports are a product of the
Research Channel Africa. Reports can be bought individually or you can gain full access to all reports as part of a Research Channel Africa subscription.
Find Out More Buy Report
 
 
Close
Engineering News
Completely Re-Engineered
Experience it now. Click here
*website to launch in a few weeks
Subscribe Now for $149 Close
Subscribe Now for $149