Connect with us

Private Equity

PRESS RELEASE: COVID-19 RELIEF SHOULD REACH SMEs

Private equity industry asks Government to ensure COVID-19 Guarantee Scheme gets relief and stimulus to where it is needed most. Many small and medium-sized enterprises (SMEs) breathed a brief sigh of relief in April, when President Cyril Ramaphosa announced a R200 billion Government COVID-19 loan guarantee scheme intended to support businesses with an annual turnover…

The post PRESS RELEASE: COVID-19 RELIEF SHOULD REACH SMEs appeared first on SAVCA.

Avatar

Published

on

Private equity industry asks Government to ensure COVID-19 Guarantee Scheme gets relief and stimulus to where it is needed most.

Many small and medium-sized enterprises (SMEs) breathed a brief sigh of relief in April, when President Cyril Ramaphosa announced a R200 billion Government COVID-19 loan guarantee scheme intended to support businesses with an annual turnover of less than R300 million, as part of efforts intended to help keep the economy afloat.

Growing evidence, however, suggests this relief was short-lived, as many businesses in need were turned away or granted loans on onerous unworkable terms. The Supplementary Budget announcement indicated revisions would be made to make the relief more accessible, but the only change specified was that the turnover threshold will be lifted.

In response to this, CEO of the Southern African Private Equity and Venture Capital Association (SAVCA), Tanya van Lill notes that while COVID-19 relief is also needed for companies with a turnover in excess of R300m, it is vital that a mechanism is put in place to ensure funding is still allocated to SMEs – those with a turnover of less than R300m. 

“SAVCA surveyed members and found that although 43% of portfolio companies with revenues less than R300 million were in need of the COVID-19 loan facility, only 28% of those that applied for funding were granted and drew down on a facility – and many did not apply at all, given the onerous eligibility criteria.

“For the remaining 72% of companies that required funding, but have not yet been granted these facilities, the top reasons provided included the company not being profitable prior to COVID-19 due to a growth strategy, or not meeting the personal suretyship requirements for directors and shareholders.”

CEO of private equity firm, Sanari Capital, Samantha Pokroy adds that the lenders and lending criteria are far too risk-averse to be effective in saving businesses and jobs in this COVID-19-induced economic crisis.

“Although banks have extensive distribution, their inflexible credit models and conservative lending culture means they may not be best suited to the task at hand. This has been compounded by requirements of the Reserve Bank, in which the guarantee scheme backing can be pulled where credit processes have not been followed by the banks in their ordinary course.”

Pokroy states that, in her experience, there has been no difference between a normal loan and a COVID-19 Government-guaranteed loan, which defeats the object entirely. “The argument for personal surety in credit application processes is to test for alignment and commitment of owner managers. The philosophy is that owner management will know better than a bank, what the prospects are for their business and whether the loan can be repaid. But in these volatile times, this argument holds less water. Owner managers are unable to anticipate the market conditions any better than the rest of us, and therefore personal surety does not provide the type of reassurance it may have under other conditions.

“In fact, it requires individuals to decide between the risk of losing their homes and trying to keep their businesses open and staff employed. They would have to make this unviable trade-off based on conditions that are completely out of their control.

“Rather, the purpose of the guarantee scheme should be to underwrite this risk with the full knowledge of the likely costs arising from the fact that, notwithstanding best efforts by all parties, not every business will survive and not every loan will be recoverable. But jobs will be saved, families will be provided for, consumer and business expenditure will continue, and this will play a critical role in the recovery of our economy,” says Pokroy.

SAVCA recommends the following amendments to the loan guarantee scheme:

1.           Dedicate a minimum amount of loan funding deployment under the guarantee scheme for companies with turnover less than R300 million and implement targets and incentives for bank deployment;

2.           Include growth companies that are not yet profitable in the scheme;

3.           Remove the requirement for personal suretyships / guarantees; and

4.           Consider alternative lending channels and blended finance options, which may include first loss funding for private equity funding in businesses with turnover less than R300 million.

In order for South Africa to weather the COVID-19 economic crisis, and be able to create growth and jobs in the future, van Lill says that the country needs all the financial stimulus mechanisms that Government has put in place to be successful. “SAVCA urges Government to review the conditions and requirements included in the guarantee scheme, as set out above, to ensure that it provides the necessary relief to businesses in desperate need of assistance.”

“It is critical that this be done urgently as we believe a serious secondary impact is likely to be experienced across a wider spectrum of sectors in the coming months,” Pokroy concludes.

-ENDS-

About SAVCA:

The Southern African Venture Capital and Private Equity Association (SAVCA) is the industry body and public policy advocate for private equity and venture capital in Southern Africa. SAVCA represents about R184 billion in assets under management through 170 members that form part of the private equity and venture capital ecosystem. SAVCA promotes the Southern Africa venture capital and private equity asset classes on a range of matters affecting the industry.

SAVCA also provides relevant and insightful research, offers training on private equity and creates meaningful networking opportunities for industry players.

For more, visit our website: http://www.savca.co.za/

Follow us on Twitter @SAVCAssociation and LinkedIn

About Sanari Capital:

Sanari Capital is a private equity firm focused on high growth lower- and mid-market investments emanating mainly from South Africa with regional and global scalability. Founded in 2013, Sanari specialises in founder-run, owner-managed and family-owned businesses, bringing an emphasis on digital and human enablement to unlock business potential. Sanari is a Profit with Purpose firm, promoting inclusive growth whilst delivering superior returns to investors.

Visit www.sanari.co.za and follow us on LinkedIn and Twitter.

Source: https://savca.co.za/covid-19-relief-should-reach-smes/savca-in-the-news/

Private Equity

Boston startups expand region’s venture capital footprint

This year has shaken up venture capital, turning a hot early start to 2020 into a glacial period permeated with fear during the early days of COVID-19. That ice quickly melted as venture capitalists discovered that demand for software and other services that startups provide was accelerating, pushing many young tech companies back into growth […]

Avatar

Published

on

This year has shaken up venture capital, turning a hot early start to 2020 into a glacial period permeated with fear during the early days of COVID-19. That ice quickly melted as venture capitalists discovered that demand for software and other services that startups provide was accelerating, pushing many young tech companies back into growth mode, and investors back into the check-writing arena.

Boston has been an exemplar of the trend, with early pandemic caution dissolving into rapid-fire dealmaking as summer rolled into fall.

We collated new data that underscores the trend, showing that Boston’s third quarter looks very solid compared to its peer groups, and leads greater New England’s share of American venture capital higher during the three-month period.

For our October look at Boston and its startup scene, let’s get into the data and then understand how a new cohort of founders is cropping up among the city’s educational network.

A strong Q3, a strong 2020

Boston’s third quarter was strong, effectively matching the capital raised in New York City during the three-month period. As we head into the fourth quarter, it appears that the silver medal in American startup ecosystems is up for grabs based on what happens in Q4.

Boston could start 2021 as the number-two place to raise venture capital in the country. Or New York City could pip it at the finish line. Let’s check the numbers.

According to PitchBook data shared with TechCrunch, the metro Boston area raised $4.34 billion in venture capital during the third quarter. New York City and its metro area managed $4.45 billion during the same time period, an effective tie. Los Angeles and its own metro area managed just $3.90 billion.

In 2020 the numbers tilt in Boston’s favor, with the city and surrounding area collecting $12.83 billion in venture capital. New York City came in second through Q3, with $12.30 billion in venture capital. Los Angeles was a distant third at $8.66 billion for the year through Q3.

Source: https://techcrunch.com/2020/10/23/boston-startups-expand-regions-venture-capital-footprint/

Continue Reading

Private Equity

Alternative Investments/Real Estate: Housing Market Demand Is “Insane”

Speaking to CNBC on Power Lunch, Glenn Kelman, CEO of real estate brokerage Redfin (NASDAQ: RDFN), said he expected the current boom conditions in the housing market to last well into next year. He attributed the high demand to affluent professionals looking for remote homes as well as low interest rates. Also, he thinks some sellers will put their properties on the market only after the presidential election.

Avatar

Published

on

Alternative Investments/Real Estate: Housing Market Demand Is “Insane”

https://platodata.net/wp-content/uploads/2020/10/alternative-investments-real-estate-housing-market-demand-is-insane.jpg

Redfin CEO Glenn Kelman says the boom could last into next year.

Speaking to CNBC on Power Lunch, Glenn Kelman, CEO of real estate brokerage Redfin (NASDAQ: RDFN), said he expected the current boom conditions in the housing market to last well into next year. He attributed the high demand to affluent professionals looking for remote homes as well as low interest rates. Also, he thinks some sellers will put their properties on the market only after the presidential election. (CNBC)

Kelman: Too good to last forever

“This level of demand is absolutely insane. I would expect it to last into 2021, at least,” Kelman said.

Recent data from the National Association of Realtors shows up the strength in the housing market.

Existing home sales shot up 9.4% in September beating expectations. Even though the median purchase price of a home rose approximately 15% year over year, there is just a 2.7-month supply of for-sale homes, showing tight market inventory conditions.

The 30-year fixed-rate mortgage averaged 2.80% for the week ending Oct. 22, down from 2.81% in the previous week and 3.75% a year ago, according to the Freddie Mac Primary Mortgage Market Survey. Therefore, mortgage rates crept even lower in the latest week.

However, “there’s no way it can last forever,” Kelman warned of the bullish conditions.

Canada: Off the charts

Meanwhile, at the northern neighbor, home sales activity in September is described as “off-the-charts.”

Housing data released by the Canadian Real Estate Association (CREA) last week showed a nationwide year-over-year increase in sales of 45.6%.

This was a new all-time monthly record for the third month in a row.

“This is starting to sound like a broken record (about records being broken), but Canadian home sales and prices set records once again in September … as they did in July and August,” said Shaun Cathcart, senior economist at CREA, in a statement.

Real Estate ETFs in the U.S.

The year-to-date performance of some real estate ETFs is shown below:

iShares U.S. Home Construction ETF (ITB)              +24.61%

SPDR S&P Homebuilders ETF (XHB)                          +20.83%

Vanguard Real Estate Index Fund ETF                      -13.91%

It may be noted that despite the boom conditions in housing, real estate ETFs and stocks have declined in recent days.

According to Barron’s, this may be due to yields on the 10-year and 30-year Treasuries moving higher in recent weeks.

Other reasons could be fears of inflation ticking up in the future amidst an improving economic situation.

Nevertheless, the view is that interest rates are likely to remain low for longer. So demand may remain strong.

“Part of what is fueling this boom is that the economy has just split into two and rich people are able to access capital almost for free, so, of course, they’re going to use that money to buy homes,” said Redfin’s Kelman.

Related Story:   Mortgage Rates Set Another Record Low; Real Estate ETFs Could Benefit

Free Industry News

Subscribe to our free newsletter for updates and news about alternatives investments.

Shape

Latest Alternative Investment News

Source: https://dailyalts.com/alternative-investments-real-estate-housing-market-demand-is-insane/

Continue Reading

Private Equity

Asda’s new owner EG Group seeks new leadership ahead of IPO – report

EG Group is owned by the billionaire Issa brothers and the private equity firm TDR Capital, who teamed up for a £6.8 billion takeover of Asda last month

Avatar

Published

on

UK grocer Asda Group’s new owner EG Group is looking for a new chairman and independent directors as it prepares for a £10bn initial public offering, The Timesreports.

EG Group is owned by the billionaire Issa brothers and the private equity firm TDR Capital, who teamed up for a £6.8 billion takeover of Asda last month.

The move comes after Deloitte resigned last week as the company’s auditor because of concerns over the group’s governance and lack of internal controls, according to the publication.

A decision on candidates will be taken before the end of this year, although roles haven’t been finalised yet as the company is in the process of deciding whether to float in the UK or the US, The Times reports.

Write to Barcelona editors at barcelonaeditors@dowjones.com

From Dow Jones Newswires

Source: https://www.penews.com/articles/asdas-new-owner-eg-group-seeks-new-leadership-ahead-of-ipo-reports-20201023

Continue Reading
Saas31 mins ago

Saas31 mins ago

Saas31 mins ago

Saas31 mins ago

Saas31 mins ago

Saas31 mins ago

Saas31 mins ago

Saas31 mins ago

Saas31 mins ago

Saas31 mins ago

Press Releases50 mins ago

RAI Finance Successfully Raises $1.5 Million in Funding Round

Press Releases2 hours ago

SmallRig kündigt Zubehör für DJI RS 2/RSC 2 Umgebung an

Press Releases2 hours ago

SmallRig annonce des accessoires pour l’écosystème DJI RS 2/RSC 2

Press Releases2 hours ago

ROSEN, TOP RANKED INVESTOR COUNSEL, Announces Filing of Securities Class Action Lawsuit Against Credit Acceptance Corporation; Encourages Investors with Losses in Excess of $100K to Contact Firm – CACC

Press Releases2 hours ago

2020 Chinese Opera Culture Week Is Inaugurated Wonderful “Dramas” Are Coming in Droves

Venture Capital3 hours ago

Next Week’s Earnings Traffic Jam: The Information’s Tech Briefing

Saas4 hours ago

Saas4 hours ago

Saas4 hours ago

Saas4 hours ago

Saas4 hours ago

Saas4 hours ago

Saas4 hours ago

Saas4 hours ago

Saas4 hours ago

Saas4 hours ago

Press Releases4 hours ago

ROSEN, A LEADING LAW FIRM, Reminds Coty Inc. Investors of Important November 3 Deadline in Securities Class Action; Encourages Investors with Losses in Excess of $100K to Contact the Firm – COTY

Press Releases4 hours ago

ROSEN, A LEADING LAW FIRM, Continues to Investigate Securities Claims Against Bayerische Motoren Werke AG – BMWYY, BAMXF

Press Releases4 hours ago

WeissLaw LLP Reminds USAU, CIT, and CBMG Shareholders About Its Ongoing Investigations

Press Releases5 hours ago

RAI Finance Successfully Raises $1.5 Million in Funding Round

Press Releases5 hours ago

Planned Parenthood of Greater Texas abre centro de salud en Lubbock

Press Releases5 hours ago

Yusuf / Cat Stevens

Press Releases5 hours ago

Pixieset Ranks No. 50 on the 2020 Growth List

Press Releases5 hours ago

Hanadi Al Jarman Marketing Announces Launch Offering Brands High-Level Global Exposure

Press Releases5 hours ago

New CopperJoint Ankle Support Provides Utmost Protection, Stability, and Relief for Basketball Players and Other Athletes

Press Releases5 hours ago

Tuko “The King of All Apps” Launches Offering an All-Inclusive Experience With Access to Over 1000 Services

Press Releases5 hours ago

Florida Hip Hop Star VBAE Releases new Track “Keep Up” Featuring ClicKlak

Press Releases6 hours ago

Amplo Global Inc. Named as HFS Research ‘Hot Vendor’

Private Equity6 hours ago

Boston startups expand region’s venture capital footprint

Venture Capital7 hours ago

The Information’s 411 — Quibi, We Hardly Knew Ye

Trending