LionPride Agility VCC
A section 12J technology fund co-managed by LionPride and Newtown Partners.
On Friday, 1 February 2019, Newtown Partners and LionPride Investment Holdings announced plans to raise R500 million for a co-managed section 12J Technology Investment fund at the 12J Marketplace Conference, in Melrose Arch.
Deven Govender, LionPride CEO, outlined the fund structure at the conference: “The LionPride Agility VCC Fund is a single technology fund with a choice of two share classes providing the opportunity for a compelling risk-weighted return. The two unique themes to invest in are 1) Impact investing and 2) Emerging technologies”.
This structure enables investors to invest capital into one of two capital pools co-managed by LionPride and Newtown Partners. It also allows investors to gain balanced exposure to early-stage South African technology businesses, or concentrated exposure into a selected theme according to their desired risk allocation.
A major benefit of a section 12J investment fund is that investors can deduct 100% of their investment from their taxable incomes in the tax year in which the investments are made. This benefit effectively translates into an investment discount of up to 45% on the total investment amount.
“We believe that we’re taking a bold approach that will catapult economic transformation in South Africa. The tax-deductible ‘discount’ that a section 12J Fund provides is a great incentive for investors to invest in projects of a developmental nature that can positively impact employment in South Africa,” added Govender.
SMEs that fall within Fintech, Agritech, On-Demand Services, Business Process Outsourcing, Renewables, Healthcare, 4IR and EdTech will be the focus of the LionPride Agility VCC Fund.
Vinny Lingham, General Partner of Newtown Partners, emphasised that the Fund has enormous potential to build globally successful technology businesses from South Africa. Local investors have not had sufficient exposure to the classic Silicon Valley VC model of asymmetric returns versus capital deployed, this fund will create that opportunity.
“I’m looking forward to giving many more South Africans the opportunity to really make a dent in the global technology markets through this Fund. We’re also excited about the opportunity to positively impact economic empowerment in South Africa and the LionPride Agility fund is an important tool to achieve that”, said Lingham.
The two share classes of the Fund allow investors with varying risk appetites to invest. Impact Investing offers a lower risk profile, targeting SMEs with largely stable, predictable free cash flows and a defensible moat; whereas Emerging Technologies offer a higher risk profile associated with a classic Silicon Valley venture capital investment model and an asymmetric return profile.
“Our Board and the Fund Management team is incomparable amongst technology investors in South Africa. The wealth of experience of the team gives us confidence that the LionPride Agility Fund will perform exceptionally well for both its investors and for South African technology entrepreneurs”, concluded Govender.
Approved VCC and a licensed Financial Services Provider:
Lionpride VCC is an approved VCC and is a licensed Financial Services Provider (“FSP”) in terms of Financial Advisory and Intermediary Services Act, 2002 (Act No. 37 of 2002) under licence number 49378. LionPride VCC is also registered with SARS as a Venture Capital Company in terms of Section 12J of the Income Tax Act No. 58 of 1962 under reference number VCC-0129. Lionpride Agility Fund has obtained legal opinion that it does not fall within the ambit of the Collective Investment Schemes Control Act no. 45 of 2002.
|The LionPride Agility VCC||Details|
|Fund Manager & Promoter||LionPride Investment Holdings Limited and Newtown Partners (Pty) Ltd|
|Administrative Manager||Jaltech Financial Consultants|
|Subscription price per share||R10|
|Share classes||Share class B (Impact investing) and share class C (Emerging technologies)|
|Share class B minimum subscription per investor||R250 000 (25 000 shares)|
|Share class B maximum subscription per investor||R20 000 000 (2 million shares)|
|Share class B targeted returns||2.5 to 3 times over a 6-year period|
|Share class C minimum subscription per investor||R1 000 000 (100 000 shares), expect to reduce to R250 000 pending CIPC approval|
|Share class C maximum subscription per investor||20% of all VCC shares issued|
|Share class C IRR||35% over 5-year period|
|Capital raising fee||2.5% of funds raised|
|Management fee||2% per annum of total funds raised paid quarterly in advance|
|Performance fee||20% performance incentive available on exit of investment|
Deven Govender’s presentation from the 12J Marketplace conference on 1 February 2019: