30 Jun Alternative finance can assist in BEE deals
Alternative finance can assist in BEE deals
National policy is placing a strong emphasis on black South Africans taking a more active role in the economy. Both the State of the Nation and the 2017/18 Budget made clear calls for direct ownership and management from black South Africans in local businesses. The BBBEE Commission has also stated that it would be ramping up investigations into companies which are not compliant with empowerment requirements.
As an independent alternate lending company, we are seeing more and more requests from companies looking to secure funding to close BEE deals which will see companies on the right side of compliance and, better positioned to conduct business in the country. This includes a more balanced gender participation in shareholding and forms an important part of both local and global best practice.
While we play a role in finding the potential partners, we also work with a network of players in this capacity, as well as assist in securing funding to close the deals.
This funding can be structured to provide upside for both the investor and the company looking for a BEE partner. In some instances these can include new structures and mechanisms which protect the company and the investor in terms of exit options.
Looking at how best to approach deals ensure equity compliance, companies should first be comfortable with the partners they are choosing to work with. As in any deal, a good business fit remains a priority for sustainability and ethical business practice. Once this is in place companies, can begin to examine the many varied options to structure the deal. Having a good idea of the options means you can confidently begin looking for funding, knowing what awaits you, and ensuring you have gone through the permutations of the various means to structure the deal with the best terms possible.
Working with an independent lender, like Paragon, means you have access to both traditional and alternate funding and that you have every opportunity to create a solution which works for you, your company and your future business partners.
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