“I’s” are being dotted and “T’s” crossed in preparation for the first two Defence Industry Fund (DIF) loan transactions since the specialist fund was established 20 months ago.
According to Crede Capital Partners, the fund managers appointed by the Department of Defence (DoD) to run the DIF, the first two small and medium-sized enterprises (SME) to benefit will have capital of between R2.4 and R6 million “in the next two to three weeks”. The money has been approved for Armscor contracts for specialised technical equipment in the wider defence sector.
Responding to defenceWeb questions, Crede indicated “numerous applications” have been received and are being evaluated.
The DIF is currently operating with secured seed funding of R45 million from institutional investors, but Crede notes the fund has not been financially supported by the defence industry to date. This applies to both enterprise funding and retirement investment.
“We hope money for enterprise funding and investment from defence sector companies will be forthcoming,” a Crede spokesman said.
The DIF is currently under evaluation by potential investors which could see the pool of capital increase to R200 million.
The fund manager has established an approved legal structure and appointed service providers for fund administration and settlement as well as auditors and a bank.
Launched in July 2018, the DIF has as its raison d’etre the raising of funds for disbursements to SMEs in the wider defence industry sector via a contract finance fund and similar funds for trade finance and annuity to provide sale and lease back finance.
When it was launched the fund manager said it was targeting a R1 billion fund with a maximum loan size of R50 million and a minimum of R100 000. Loan terms would be from one to 36 months.