BUSINESS PARTNERS LIMITED

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BUSINESS PARTNERS LIMITED

• South Africas leading investor in SMEs

SME Finance Workshop 26-27 June 2007 Dares
Salaam, Tanzania Paul Malherbe COO Technical
Assistance, Mentorship Consulting
Service Business Partners Ltd
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Who was Business Partners in 1981?

• Small Business Development Corporation
• Joint Venture between Government Private sector
• Capital base of US20million
• Focus on small business / entrepreneur
  development in SA

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Who is Business Partners in 2007?

• Unlisted public company and ISO 90012000
  certified
• Invests in viable formal SMEs requiring between
  US50 000 and 2,5million
• Invested more than 1billion in 30 900
  entrepreneurs in 26 years
• 23 offices throughout South Africa
• 2 International offices
• Antananarivo, Madagascar
• Nairobi, Kenya
• Expansion across Africa using the successful
  Business Partners model

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Business Partners 2007 Highlights

• Investment portfolio of approximately
  US210million
• Achieved net profit after tax of 22,5m
• 664 investments totaling 125m approved for the
  year
• Created in excess of 7 780 jobs in formal economy
• Properties under management of 682 000m² and 3
  475 tenants
• 521 Mentors completed 699 value adding
  assignments to SMEs

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Business Partners Investment portfolio 2007

• Investment portfolio of US210million
• Current base consist of 3 000 clients
• Net bad debts written off amounted to 950 000
• Arrear investments at 11, portfolio at risk at
  1,60
• 74 investment exits were done during 2007

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Business Partners product offering

• Structured loan funding
• Pure equity funding
• Quasi Equity with structured repayment
• Sharing of profit with entrepreneur
• Technical Assistance Mentorship to assist
  entrepreneurs

Project viability, Entrepreneur assessment,
collateral available and own contribution
determines funding structure
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Business Partners risk financing model

• Financing based on viability not collateral
  extensive due diligence
• Equity participation for fair deal
  (entrepreneur and BPL)
• Post Investment management investment team and
  mentors
• Operational teams add value through ongoing
  support

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Business Partners 5 ingredients for success

• 1 Sector Specific knowledge
• Expert database of SME sectors industry norms
• Industry Information base
• Deal directory
• This enables Business Partners to structure
  investments based on profitability of the
  business and not on collateral

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Business Partners 5 ingredients for success

• 2 Efficient processing
• Deal flow review process
• Streamlined due diligence evaluation documents
  task lists
• In-house implementation and legal teams
• Standardised legal documents
• Operational teams have a target of 1 deal per
  month per investment officer and can only achieve
  this through efficient processing

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Business Partners 5 ingredients for success

• 3 Unique product structures
• Basic investment products
• Pure Equity
• Risk based loan investments (Shareholding)
• Royalty based loan investment (No shareholding)
• Combination of Risk and Royalty
• Property investment transactions

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Business Partners 5 ingredients for success

• 4 Integrated Technical Assistance
• Business Partners evaluates each entrepreneur for
  
• Technical skills
• Business skills
• Entrepreneurs required to work with mentors in
  their ventures
• Aim is to improve value-added and profitability
• Cost of mentorship shared

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Business Partners 5 ingredients for success

• 5 Alignment of interests
• All operational staff assessed ito a Performance
  Scorecard
• This is aligned with various factors of
  importance for the Company
• Individual remuneration tied to Company
  performance
• Innovative merit incentives
• Carried interest scheme
• Employee share scheme

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Technical AssistanceBusiness Partners Mentors

• Agreements with 521 Independent Mentors as
  service providers
• Mentors are retired business / professional
  people available to SME entrepreneurs
• Business Partners manages the process evaluate
  quality and value added to SMEs
• 699 projects completed in FY07

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Technical Assistance as part of Strategy

• Business Partners vision mission encapsulates
  Value Adding
• Assessment of entrepreneur determines TA level
• Post investment management team involved in Value
  Adding
• TA not only for own clients manage TA funds for
  other parties

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Business Partners outside South Africa Key
elements for BPI

• Leverage off Business Partners processes,
  systems and knowledge
• Uses Business Partners funding model with
  integrated TA
• Working relationship with IFC
• Focus on Sub-Saharan Africa

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Business Partners outside South Africa Key
elements for BPI

• 1st Fund Madagascar
• 10million plus 2m TA
• Malagasy International investors
• Aims to invest in 120 businesses over 5 years
• Gender Indigenous investee targets
• 2nd Fund Kenya
• 14,1million plus 2,5m TA
• Kenyan International investors
• Aims to invest in 180 businesses over 5 years
• Gender Indigenous investee targets
• 3rd Fund Country being investigated

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Thank You
Business Partners Limited(An unlisted public
company incorporated in South Africa)5
Wellington RoadParktown, 2193Johannesburg,
ZA00 (0)11 480 8700pmalherbe_at_businesspartners
.co.za