A feasibility plan to develop a boutique sustainable private equity business to cater for ultra high net worth individuals
Thesis (MBA)--Stellenbosch University, 2013.
Sustainable Investors Capital (SiC) will capture a niche within the South African Private Equity industry in two ways. Firstly SiC is different by having a large network of selected members who help generate deal flow, offer their expertise if they choose in ex-post management, and who enjoy the benefit of relevant proprietary research and focused networking events. The second and main differentiating factor is the fact that the members as investors have the ability to invest on an opt-in basis. When joining SiC, members are offered the opportunity to commit capital to the Discretionary Fund. This is a fund managed by SiC in the typical private equity fashion where the member has limited to zero input in the investment decisions made. However, by committing capital to the Discretionary fund, members’ ipse facto get access to the opt-in investments made by SiC. The opt-in investments allow members to select on a deal-by-deal basis whether they want to invest or not. This has the benefit of increasing the flexibility and agility with which SiC can make investments, as well as granting the advantage to would be investors to optimise the returns on their capital which would be committed (and paying fees) but undrawn under normal private equity model circumstances. The amount that a member is allowed to invest in on an opt-in basis is directly proportional to the capital committed to the Discretionary Fund. This is done to enable SiC to actively and effectively pursue deals with the confidence that capital is available. It is reasonable to assume that the Discretionary Fund will be coinvesting with the opt-in funds.