Why Partner with IVI? Reason #8:
Invest in a Country’s Economic Restructuring

South Africa underwent dramatic changes due to the fall of apartheid and the country’s subsequent re-integration into the world economy. During South Africa’s isolation, local companies were unable to invest overseas, and accordingly financed non-core businesses to diversify return/risk. As sanctions lifted and the economy opened up, domestic companies unbundled tangential assets to focus on core areas. Entrepreneurial growth increased to take advantage of these new business opportunities, as did liquidity in the public markets to finance their activities.

IFC, the investment arm of the World Bank, engaged IVI to define the strategy for a new venture capital scheme to participate in South Africa's economic restructuring and advance social development as black managers began acquiring business and equity ownership. IVI accomplished several objectives:

1. Rationalized the strategy for the South African ‘Succession Fund’, and its purchase of minority stakes in white-owned businesses by black managers. Target opportunities include management buy-outs in privatizations, unbundling of assets from state-owned enterprises and large corporations, management buy-ins and expansions of existing businesses.
2. Recommended the fund's capitalization at US$30MM based on the market size and availability of transactions. Completed due diligence and valued the transactions (US$16MM) to demonstrate the financial merit of the strategy.
3. Assessed the regulatory, legal and tax affects on deal structures, minority shareholder rights and lender liabilities, liquidation strategies through ESOPs, IPOs, M&As or sale to third party and repatriation of returns. Defined the offshore and domestic fund management structure that provided limited liability and tax neutrality to institutional co-investors with IFC.
4. Identified, screened, and recommended Capital Partners, a domestic private equity investor, as the local manager since IFC and World Bank procurement rules prohibit advisors like IVI from fund management in advisory assignments to avoid conflict of interest.

Most exciting is the creation of a US$5MM technical assistance (TA) training fund to support the costs of developing tomorrow’s pool of black venture managers. The TA fund institutionalizes the social objectives of the Fund by upgrading the skills of black managers so they participate in the decision making process of the investee company, and are net contributors to its prosperity. Investment risk is not of color, but of adding new managers and layers of management to support the high rate of enterprise growth needed to attract VC.

Consider IVI as your investment advisor and partner in planning and executing international private equity schemes. We can help you avoid the learning curve costs that skilled investors inadvertently incur when executing new investment programs.

Contact IVI to discuss your needs.

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