Moderate Risk Fund III

MeTTa Capital facilitates investment by removing the current barriers of entry that investors face when considering Section 12J investing. It is an all-encompassing pre-investment and post-investment solution. This allows investors to invest in the most risk-mitigated investment strategies within the asset class – with no additional fees accruing to the investment within the platform structure.

Government’s Incentive to South African Taxpayers

Originally introduced into South Africa’s tax legislation in July 2009, Section 12J is based on the widely successful Venture Capital Trust (VCT) legislation introduced in the United Kingdom in 1995. The legislation is designed to encourage the provision for growth capital to small and medium sized enterprises.

The amendments passed in 2015 have made Section 12J the attractive investment vehicle it is today. It has seen a rapid growth in investment within the asset class.

The Section 12J Effect

Two comparative values:

Return assumptions:

R1 million Standard Investment – 7% after tax dividend return p.a, original capital returned in year 5.

R1 million Section 12J investment – 7% after dividend tax return p.a, original capital returned in year 5 post exit tax implications.

Assumptions:

20% dividend tax, 45% marginal tax rate, 18% capital gains tax, investment return before tax 7%.

These assumptions are for illustrative purposes only and are not an indication of future returns.

Section 12J Universe of Funds

Section 12J Benefits Explained

Whilst your investment earns returns on the full amount, your immediate tax saving/refund means than your actual capital at risk can be as little as 55% of your investment amount.

Uncorrelation benefits to your existing investment portfolio at a scale influenced by micro-economic factors as opposed to macro-economic factors.

Make a lasting impact by providing growth capital that is used to scale business, create employment and ignite economic activity within high growth sectors of the South African economy.

Building MeTTa Capital Moderate Risk Fund III

155 VCC’s
Obtains the SARS approved Section 12J supplier list and embark on the desktop level screening process in evaluating each VCC’s ability to meet the portfolio’s investment mandate.

66 VCC’s
Through the completion of initial screening process and consultation to prior investment process results, a shortlist of VCC’s are invited to participate within the formal investment process.

14 VCC’s
Through requests of additional information MeTTa Capital then apply their strict investment mandate criteria to the second layer of screening to obtain a shortlist of VCC’s to be invited to present to the Investment Committee.

6 VCC’s
MeTTa Capital’s Investment Committee evaluates the due diligence and investment packs generated for each shortlisted VCC and, following the completion of all VCC interviews, compile and weight the strongest possible investment portfolio based on the portfolio’s specific investment mandate criteria.

Composition: Holdings at 28 February 2020

Westbrooke STAC

GAIA Venture Capital

Optomise Ventures

Sunstone Capital

Nesa Investment Holdings

Bright Light Solar

Sectoral Diversity: Asset Allocation 28 February 2020

Renewable Energy/Solar

Hospitality/Student Accommodation

Agriculture/Infrastructure

Industrial Rental/Moveable Asset

Hospitality/Tourism

Underlying Fund Discussion

Anticipated Return Proﬁle

This represents the forecasted cash flow profile of a R1 million investment using the assumptions outlined below.

These represent the forecasted returns, gross of all taxes, of a R1 million investment using the assumptions as outlined below.

Assuming a natural person paying tax at the maximum marginal rate of 45% and subject to dividend withholdings tax of 20% where applicable.
Returns are forecasted by applying the marketed returns of each VCC to their weighting within the MeTTa Capital Risk Fund III portfolio.
All returns shown are net of all fees charged by the investment managers, including their specific performance fees.

The cash flow profile and cash return chart demonstration may not necessarily reflect the actual returns that will be earned by MeTTa Capital Moderate Risk Fund III.

Fees for your Investment

Fees to MeTTa Capital Managers
There are no fees payable to MeTTa Capital. This means that whether you invest directly into the VCC or through MeTTa Capital’s platform, your fees will remain the same.

Fees paid to Approved Distributors/Advisors
Fees paid to advisors and wealth managers do not impact investor returns and are directly paid from MeTTa Capital.

Fees to the Investment Managers of the underlying Section 12J Funds
Investment Managers charge fees to our and their own investors. These are the only fees payable by investors. Below is a compiled, weighted disclosure of the fees payable on MeTTa Capital Moderate Risk Fund III.

Fee Details

Initial Fee Charges (VCC Investment Manager)

0.96%

Annual Management Fees (VCC Investment Manager)

1.54%

Performance fee (VCC Investment Manager): Performance Fee Terms – Underlying Funds within MCP III

Westbrooke STAC:
20% in excess of returning risk capital plus CDI to investors.

GAIA Venture Capital Limited:
25% of the distributions above capital invested in a qualifying investments plus an after-tax hurdle rate of 10%.

Sunstone Capital Limited:
Participation by way of 20% “A” shares in VCC after returning risk capital to shareholders.

Optomise Ventures:
The Investment Manager, through holding of the “A” shares of the company, will receive 20% of all proceeds that exceed investors’ original investment amount.

Nesa Investment Holdings:
The Investment Manager, through holding of the “A” shares of the company, will receive 20% of all proceeds that exceed investors’ original investment i.e. stated ordinary share capital of the company.

Bright Light Solar:
The Investment Manager is entitled to 17.5% of the net income of the qualifying companies.

The MeTTa Capital Investor Experience

Personalised client experience
One of the attractive features of Section 12J is the investment into private companies where visibility is enhanced. We believe the investor experience needs to speak to this, and hence each investor is given a personalised investment statement showcasing their exact investments and not just a fact sheet of performance. Investing is about trust and nothing builds trust more than a personal and transparent relationship.

Peace of mind that comes from being adequately diversified
R500k minimum investment providing an affordable diversification option into multiple Section 12J funds.

House and track your investment in one place
A clear picture at all times of your investment’s performance allows you to track the developments of each investment in the portfolio, and be part of each journey as these investments start to produce tangible results and returns.

User Friendly Application Process

Complete and Submit Application and Mandate Form The investor and/or their mandated wealth manager can complete and submit the MeTTa Capital Moderate Risk Fund III application and mandate form, along with the required FICA documents to investors@mettacapital.co.za. If there is no application form within your investment pack.

FICA Review, Approval and Investor Registry Update Our fund administrator will conduct, and FICA review the submission and then send a request for payment upon approval. Once payment has been received, this will trigger the update of the investor registry and MeTTa Capital will proceed in the subscription of shares per the set portfolio weighting from the underlying VCC’s.

Share and Tax Certificate Collection and Distribution MeTTa Capital will collect, collate and distribute to you the investor and/or your advisor all your certificates along with an onboarding statement of your investment.

Claim your Section 12J Tax Deduction With your tax certificates as proof, claim your Section 12J tax deduction at the start of the online tax season and receive your SARS refund.

AFFORDABLE

DIVERSIFICATION

Investors for R500k can subscribe for shares within multiple Section 12J VCCs and bypass these funds own minimum investment limits, which can range from R200k to R500k per fund.

NO ADDITIONAL

FEES

Investors are not charged any additional fees by MeTTa Capital and are only subject to the fees charged on their investment within the underlying 12J companies in the portfolio.

SINGLE POINT

OF INQUIRY

MeTTa Capital collects and distributes all share and tax certificates as well as fields all investment related inquiries from the investor and/or their wealth manager.

MONITORING & REPORTING

SERVICE

Each Investor and/or their Wealth manager with their own personalised quarterly investment statement and newsletter through our reporting and distribution partner, Prescient Fund Services.

Walk through our processes and see for yourself.

Who selects and monitors my client’s investment?

Meet the team that has made this all possible.

Experience what our approved distributors experience?

Experience firsthand our partnership in action.