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.
Two comparative values:
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.
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.
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.
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.
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.
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.
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.
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 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.
Initial Fee Charges (VCC Investment Manager)
Annual Management Fees (VCC Investment Manager)
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.
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.