Dutch Good Growth Fund
Notice proposed transaction 20141124 Grofin SGB Fund
Date of publication: November 24, 2014
Taking into account the provisions for governing bodies that apply under the
‘Freedom of Information Act’ (‘Wet openbaarheid van bestuur’) and the ‘Data
Protection Act’ (‘Wet bescherming persoonsgegevens’), the Fund manager of
the DGGF part ‘Financing local SMEs’ will publish its anticipated transactions.
Views
Parties can express their views on the proposed transaction to the Fund
manager by contacting ddgf@nl.pwc.com within 30 days after the publication
date of the notice. After the transaction has been closed, or after it has become
clear that the transaction will not take place, the Fund manager will respond as
soon as possible to these parties concluding on the expressed views by these
Parties.
DGGF 20141124 Grofin SGB Fund Pagina 1 (van 3) Description (English)
Part of DGGF
Financing local SMEs
Name Intermediary Fund (IF):
GroFin Small and Growing Business (SGB) Fund (Limited Partnership)
Domicile IF:
GroFin SGB Fund is domiciled on Mauritius.
Name of manager of the IF:
GroFin Managers (Private Company Limited by Shares), a regional organisation
with two head offices in South Africa and Mauritius, and operations in Africa and
the Middle East.
GroFin is one of the pioneers in SME financing with 10 years of active experience
in Impact Investing into Small and Growing Businesses at the base of the SME
pyramid. Its strategy is to work closely with the management of investee
companies while providing long-term mezzanine financing. GroFin is currently
active in nine African countries via two predecessor funds of SGB.
Nature of the activities of the IF:
The GroFin SGB Fund will offer long-term ‘mezzanine’ financing to relatively small
SMEs in nine African countries: Kenya, Uganda, Tanzania, Rwanda, South Africa,
Zambia, Ghana, Nigeria and Egypt. This mainly concerns start-ups and growing
SMEs in various sectors (e.g. agriculture, health, education, energy).
Size of proposed investment:
Approximately USD 15 Million / EUR 12 Million1
Intended transaction date:
The Fund manager aims to close the agreement with GroFin in December 2014.
Expected financial results:
A positive net financial return on the investment is expected.
Expected social and environmental impact:
1 Based on the exchange rate on the date of publication DGGF 20141124 Grofin SGB Fund Pagina 2 (van 3) The IF will invest in SMEs, which are largely underserved by existing lenders
(banks and PE funds). A positive social contribution of the SMEs the IF invests
in is expected: an increase in employment, in productivity, and in knowledge
transfer.
GroFin has a strong social focus, engaging with entrepreneurs in order to
increase their awareness of CSR and their CSR performance. This is particularly
true for social and governance aspects of CSR.
A significant proportion of the total investment portfolio of the IF is expected to
consist of female and young entrepreneurs. An expansion to additional
countries, including fragile states in particular, is intended.
Environment: a neutral environmental impact is expected. Grofin validates each
SME investment based on environmental criteria.
Risk of tax avoidance:
The Fund manager has assessed the risks of tax avoidance by the IF and will
monitor this annually. The outcome from the initial assessment confirms that
the IF is not making use of artificial constructions to lower tax in the developing
countries and the Fund manager posed conditions to the IF to ascertain this.
The country of domicile of the IF (Mauritius) is one of the few African countries
that meets the OECD transparency requirements and there are no artificial
structures in place. The IF requires SMEs that request financing to comply with
local laws and regulations, among others those in respect of tax, and will
monitor whether these SMEs meet their tax obligations.
DGGF 20141124 Grofin SGB Fund Pagina 3 (van 3)