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BUSINESS PARTNERS LIMITED

BUSINESS PARTNERS LIMITED. South Africa ’ s leading investor in SMEs. SME Finance Workshop 26-27 June 2007 Dares Salaam, Tanzania Paul Malherbe COO: Technical Assistance, Mentorship & Consulting Service Business Partners Ltd . Who was Business Partners in 1981?.

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BUSINESS PARTNERS LIMITED

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  1. BUSINESS PARTNERS LIMITED South Africa’s leading investor in SMEs SME Finance Workshop 26-27 June 2007 Dares Salaam, Tanzania Paul Malherbe COO: Technical Assistance, Mentorship & Consulting Service Business Partners Ltd

  2. Who was Business Partners in 1981? • Small Business Development Corporation • Joint Venture between Government & Private sector • Capital base of US$20million • Focus on small business / entrepreneur development in SA

  3. Who is Business Partners in 2007? • Unlisted public company and ISO 9001:2000 certified • Invests in viable formal SME’s requiring between US$50 000 and $2,5million • Invested more than $1billion in 30 900 entrepreneurs in 26 years • 23 offices throughout South Africa • 2 International offices: • Antananarivo, Madagascar • Nairobi, Kenya • Expansion across Africa using the successful Business Partners model

  4. Business Partners’ 2007 Highlights • Investment portfolio of approximately US$210million • Achieved net profit after tax of $22,5m • 664 investments totaling $125m approved for the year • Created in excess of 7 780 jobs in formal economy • Properties under management of 682 000m² and 3 475 tenants • 521 Mentors completed 699 value adding assignments to SMEs

  5. Business Partners’ Investment portfolio 2007 • Investment portfolio of US$210million • Current base consist of ±3 000 clients • Net bad debts written off amounted to $950 000 • Arrear investments at 11%, portfolio at risk at 1,60% • 74 investment exits were done during 2007

  6. Business Partners’ product offering • Structured loan funding • Pure equity funding • Quasi Equity with structured repayment • Sharing of profit with entrepreneur • Technical Assistance & Mentorship to assist entrepreneurs Project viability, Entrepreneur assessment, collateral available and own contribution determines funding structure

  7. Business Partners’ risk financing model • Financing based on viability not collateral – extensive due diligence • Equity participation for “fair deal” (entrepreneur and BPL) • Post Investment management – investment team and mentors • Operational teams add value through ongoing support

  8. Business Partners’ 5 ingredients for success 1 Sector Specific knowledge • Expert database of SME sectors & industry norms • Industry Information base • Deal directory This enables Business Partners to structure investments based on profitability of the business and not on collateral

  9. Business Partners’ 5 ingredients for success 2 Efficient processing • Deal flow review process • Streamlined due diligence – evaluation documents; task lists • In-house implementation and legal teams • Standardised legal documents Operational teams have a target of 1 deal per month per investment officer and can only achieve this through efficient processing

  10. Business Partners’ 5 ingredients for success 3 Unique product structures • Basic investment products: • Pure Equity • Risk based loan investments (Shareholding) • Royalty based loan investment (No shareholding) • Combination of Risk and Royalty • Property investment transactions

  11. Business Partners’ 5 ingredients for success 4 Integrated Technical Assistance • Business Partners evaluates each entrepreneur for – • Technical skills • Business skills • Entrepreneurs required to work with mentors in their ventures • Aim is to improve value-added and profitability • Cost of mentorship shared

  12. Business Partners’ 5 ingredients for success 5 Alignment of interests • All operational staff assessed ito a Performance Scorecard • This is aligned with various factors of importance for the Company • Individual remuneration tied to Company performance • Innovative merit incentives – • Carried interest scheme • Employee share scheme

  13. Technical Assistance:Business Partners Mentors • Agreements with 521 Independent Mentors as service providers • “Mentors” are retired business / professional people available to SME entrepreneurs • Business Partners manages the process – evaluate quality and value added to SME’s • 699 projects completed in FY07

  14. Technical Assistance as part of Strategy • Business Partners vision & mission encapsulates Value Adding • Assessment of entrepreneur determines TA level • Post investment management team involved in Value Adding • TA not only for own clients – manage TA funds for other parties

  15. Business Partners outside South Africa: Key elements for BPI • Leverage off Business Partners’ processes, systems and knowledge • Uses Business Partners’ funding model with integrated TA • Working relationship with IFC • Focus on Sub-Saharan Africa

  16. Business Partners outside South Africa: Key elements for BPI • 1st Fund: Madagascar – • $10million plus $2m TA • Malagasy & International investors • Aims to invest in 120 businesses over 5 years • Gender & Indigenous investee targets • 2nd Fund: Kenya – • $14,1million plus $2,5m TA • Kenyan & International investors • Aims to invest in 180 businesses over 5 years • Gender & Indigenous investee targets • 3rd Fund – Country being investigated

  17. Thank You Business Partners Limited(An unlisted public company incorporated in South Africa)5 Wellington RoadParktown, 2193Johannesburg, ZA00 (0)11 480 8700pmalherbe@businesspartners.co.za

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