• Garuda Capital primarily assists Overseas Investors in purchasing South African companies OR making investments into South African Projects > $15m. We source investors for projects, both locally and internationally, on specific instructions from clients
• Foreign Investors generally approach us via the Overseas Investment Bank (OIB) acting in terms of a Mandate (buy side mandate), from the investor
• SA Projects or companies, looking for funding, have to have an established record (or proven viability) with audited financials.
• The process we use is an internationally accepted Investment banking Process, which is rigorous. First phase is on a strictly “no-names-basis” where a Summary of the South African business/project is exposed to the OIB in terms of a two-page “tester.” Only if the OIB’s corporate client is interested in the business/project in SA do we proceed to phase 2.
• If not, the offer dies a natural death. Phase 2 requires a Mandate from the SA Company in favour of Garuda Capital (sell side mandate) for us to represent the SA Company/ project and to package the proposal to raise investments / funding. Please note: OIB’s only accept information from SA which has been the subject of a Due Diligence (to avoid reputational damage to their clients).
• The local company seeking funds / seller is required to bear the cost of this DD which normally approximates 0.1% of investment requested (min R100 000.00 on signature of mandate). This constitutes our Commitment Fee
• On successful completion, the investor funds pay our Success Fee 5% (of the total investment made / purchase amount), which amount is deducted from the vendor proceeds. This is designed not to impact the SA Company’s / vendor cash flow

• We utilize a Confirming House, based in Hong Kong, which can assist with Import Finance and got South African importers who have cash constraints. The practice in SA is for banks to issue letters of credit only against 100% cash paid into their bank. So, for an R1m import order, the SA importer has to have funds with his bank of R1m. Obviously, if they do not have this cash, they will not be able to import their material / goods. The facility we offer in our Hong Kong Confirming House will, for approved importers, issue a LC for 100% of the import value against a 33% cash flow i.e. not 100% cash requirement.
• This has obvious cash flow benefits. The balance up to 2/3 of the import bill) is financed by the HK Confirming House for the entire duration that the importer takes to land the goods, process at his factory, sell to his clients and wait for receipt of proceeds from his client (i.e. importer can now also offer his clients longer terms). Major benefit to importers and SMME’s.
• The principle security to cover the risk is Cession of Debtors by the importer.
• Please note that this needs to be First Rate Debtors for example JSE listed company, municipalities, governments etc. Other soft securities need to be offered e.g. personal surety of owners / directors, notarial bond over plant & equipment, first mortgage bond over land & buildings etc.
• The applicant will need to provide FULL financial information, audited financial statements, projections, management accounts etc. Cost of the facility is approximately 1.5% pm, plus the legal costs for registration of securities etc. The major benefit of this facility is that the importer can Triple his imports (with the same cash down payment), and hence triple his profits. The cost of the facility should therefore be viewed against this improvement in profits (rather than the cost of the funding) because of the significantly increased buying capacity and massive impact on bottom line profits.

• GF has international Trading companies who can absorb sizable quantities of mineral products & commodities.
• Gold procurement (> $10bn Company).
• Diamonds ($600m listed company + $10bn Company above).
• Chrome (projects $100m) & Coal; (projects from $30m-$100m).
• Prospecting Agreements & Finance.
• GF assists with MOU and legal documentation where required.

• Good connectivity with Development Agencies (IDC, DBSA & NEF).
• Good & quick access to commercial banks such as ABSA, Standard bank, Nedbank & FNB.
• Note; proposals must be at “the financing stage” for us to approach banks.
• All information must be complete, full business plans, details of borrower, all zoning approvals, plans & EIA’s etc.
• Smaller transactions do not have much appeal as the “cost/effort ratio” does not make it viable to borrowers.
• We can structure transactions from beginning to end (pricing, MOU, legal agreements and capital raising).
• Cash raising liquidity from BEE Listed Shares subject to “lock up clauses” >R20m

Garuda Capital has successfully assisted clients, on a “best efforts basis” with

• Distress Funding
• Debt Restructuring
• Business Rescue (in terms of the SA Companies Act)

• Our major connectivity is with Investment Banks & Investors out of: London, Jakarta, Mumbai & Hong Kong
• GF also has good connectivity with Private Equity Funds in London & Hong Kong. Size of transactions is $15m - $20m.
• Global Private Equity Fund (Beijing based) will consider investments > $100m in SA.
• Indian Investment Banks
• Domestically we deal for 3 SA Private Equity institutions in the following size categories Property transactions R200m – R1bn
• Industrial/ strategic investments > R750m
• General portfolio investor > R200m

• GF is able to assist with Country Entry Strategy for investments into South Africa.
• And also South African investments into India / Asia.
• This covers all areas of interest to investors.
• For example: country risk & market assessments, investor protection, legal clauses, Competition Board approvals, BEE requirements.
• Through our Associations in India (with management consultants, legal firms & renowned Indian Investment banks), we can also assist with outward investments & the investing Framework / legislation into India.
• Lobbying & Ministerial meetings on a case by case basis for SA 6

Garuda Capital is pleased to introduce and offer our BEE Liquidity Facility: a specialized financing product designed to release cash from JSE Listed shares, which are bound by a “lock in period”. We are not credit providers, but act as arrangers of structured financing facilities from certain banking institutions. This facility is designed to assist BEE groups or individuals to raise capital and release liquidity or cash from their listed shareholdings, which may be subject to a “lock in period” or other restrictive covenants.

Our consortium of local and international banks provide liquidity facilities to BEE parties who have realized value in their investments, but are still bound by the lock in clauses of their BEE agreements. Often there are BEE owners of large parcels of shares, whose shares have a few years to go before maturity, yet they require liquidity now, i.e., their personal requirements may have changed, or they may wish to finance other business ventures, or wish to take care of personal commitments now. There are a number of BEE investments that have restrictions out to 2015 and beyond, in addition the BEE parties typically do not have access to the underlying shares, as they are held as collateral by the banks that provided the original funding for the deals.

Requirements to qualify for this facility:

1. the BEE owners / SPV must have a large parcel of shares (a minimum of R20m and more);
2. the underlying interest must be JSE Listed Shares (or tradable shares or shares which are convertible into listed shares at a future date); and
3. these shares must be mature investments and must mature or become cashable in the next 5 years, i.e., medium term to release or redemption.

Typical Terms of Facilities:

1. If approved, the banks advance the BEE group cash, against those shares in terms of a facility. Shareholders do not have to exit their investment. The shares remain in their names, holders continue to retain their voting rights, and the funding is confidential.
2. The facility is priced at usual commercial rates, plus some margin. All facilities are assessed on a Case by Case basis.
3. The funders may share in the upside with the owners. And of course interest is payable on the funding to maturity or this may be rolled up.

Process:

1. The Client is required to provide Garuda Capital with full details of their holdings (number of shares, name of issuer / company, class of shares, current market value or valuation, termination or release date of agreement, copy of BEE subscription agreement, current cost of funding, amount of cash required to be released).
2. Based on the above, we obtain an in principle acceptance from the bankers consortium to fund your transaction. This will be in the form of a Draft Term Sheet, which will specify the approximate terms of the facility (subject to formal credit committee approval).
3. Should such a draft offer be attractive to you (or your BEE Group) and you wish to proceed, you are required to sign a Mandate with Garuda Capital to prepare and progress a formal application.
4. Our mandate will stipulate our fees, which shall comprise: a Commitment Fee + a Success Fee. The Success Fee is typically about 4% of the capital raised; this is deducted from the proceeds of the loan at source. Our pricing is dependent on a number of factors (may be discussed).
5. Once mandated, Garuda Capital shall conduct a full commercial and legal Due diligence of the assets to be financed, and prepare a Funding Proposal. After client approval and consent thereof, the funding proposal is presented to the banks, for formal credit approval.
6. Banks then provide the client with loan documentation for Board approval by the BEE Group or individual. On signature, funds are released to client.
7. Process should be complete within 3-4 weeks.

Examples of large deals coming up to maturity include: Exxaro, MTN, Tongaat Group, Sasol, Mediclinic & Spar. Further, there are shares that do not have expiry dates but have secondary or OTC markets that BEE shareholders can trade in (e.g. Multichoice). All of the funding deals we execute relate to companies that offer a direct or indirect method of valuation of the underlying. Our banks will not fund an unlisted entity that has no secondary market, or is not convertible. Our particular preference is listed, liquid companies on the JSE All-Share, usually in the top 50-60 by market capitalization.

We are happy to discuss individual requirements on a case by case basis. Please Note: all discussions are on a “no names basis” at all times, and completely confidential.

Other Funding Arrangements.
Where the BEE group owns shares in large, well established and profitable businesses which are UNLISTED, GF may be able to arrange general commercial financing facilities, to release cash. In addition, we are able to arrange Replacement Financing, for certain shares at interest rates which may be substantially lower than the original BEE funding (up to 10% saving in interest per annum). These savings may be huge, and very worthwhile.

Performance bonds and Guarantees

All projects introduced to the company, are evaluated on a Case by Case Basis. Evaluation and subsequent Acceptance of any assignment is always based on:

• Requirements of the Client
• Our ability to Raise the financing ,or meet Client Specific Requirements
• Agreement & signature of Client Specific Mandates (specify fees, specific client requirements, timelines, costs etc.) All assignments undertaken by the company requires:
• A written and legally binding mandate having been signed
• Minimum commitment fees having been paid.

• Non-Disclosure Agreements (NDA’s) and confidentiality NDNC agreements are signed with each and every one of our clients.
• In order to protect our client’s sensitive financial transactions, we NEVER advertise or publicize our transactions in any way.
• These details remain confidential, except if release is specifically authorized by clients.
• Accordingly, company policy is not to advertise in any manner. Above information is released to recipients on request only.

Kindly note that the information contained herein are general guidelines only. Enforceable rights and obligations are strictly in terms of individual Signed Mandates (which is assignment specific)

Our Approach is to utilize internationally accepted Investment Banking Processes, to successfully execute our Mandate on behalf of our clients. This rigorous process ensures the accuracy, completeness and validity of all information provided by us to Prospective Investors, by way of our Information Memorandum (IM). Our objectives are to supply potential investors with:

• Comprehensive information, together with an accurate portrayal of our clients businesses
• Provide a thorugh explanation of our clients requirements & expectations
• Ventilate the pertinent Risks & Rewards attached to making such an investment
• Thereby facilitating a detailed & proper assessment of the Investment Opportunity being offered.
• An additional objective is to limit reputational damage to any of the parties (risk of incomplete or inaccurate information)

In order to produce a comprehensive Information Memorandum (IM) for assessment by Potential Investors, the following steps are broadly followed:

1. A mini Due Diligence (DD) is conducted by GF. The DD has the effect of reducing the deal to “tangible values” in terms of historic performance. This provides a reasonable starting point to commence discussions between buyer & seller. The DD usually takesbetween 3 -6 weeks and is essential.
2. The information requirements from the client are per the earlier Template provided.
3. The Value Proposal is derived from the due diligence, yet is “forward looking”. It usually is developed by GF in conjunction with the client. This requires five year Profit Forecasts and has the effect of “building up the price” or underpinning the amount requested. A detailed Value Proposal is essential to support the Asking Price or capital investment requested by the vendors, especially in Second or third Round Discussions. The process usually takes about two weeks.
4. Specific attention is paid to the Application of Funds or its intended usage. Investors require detailed information as to what the investment will be applied towards & whether this is in fact reasonable. Where funds are required for Working Capital, detailed financial modelling will be utilised to ensure the Adequacy of Capital.
5. The due diligence, value proposal, and all other information, management details, country risk assessment, competitor analysis etc etc are all included in a comprehensive Information Memorandum (IM) which is forwarded to Investment Bankers/Investors for review andpreliminary questions. Please note that if we have in mind several investors, each IM is specifically tailored to meet that investors particular requirements / expectations. This is fairly time consuming.
6. Part of our service is providing suggestions regarding Deal Structuring. Consideration is given to: capital gains tax, debt : equity ratios, debt serviceability, financial structuring, “balance sheet engineering” or right sizing , to ensure successful Third Party Financing. This is important in all our transactions.
7. We assist our clients with the commercial terms for formal Commercial Offer Documents, Debenture Deeds, Preference Share Offers etc. Legal agreements to be drafted by clients / investors attorneys.
8. The banks analysts / investors management generally require two weeks to go through our IM & raise specific queries.
9. Followed by Investor Road shows.
10. Face to Face discussions between Vendors & Investors. Pricing & terms of deal decided on, which results in a MOU.
11. Investor conducts his Final Due Diligence & if satisfactory results in development of Purchase & Sale Agreements.
12. Our service extends to assisting with the commercial terms & structuring of:
    • Restraint of trade agreements
    • Shareholders agreements
    • Purchase & Sale Agreements (usually 3/ 4 drafts are required before signature, which we help with).
13. Clients are in all cases expected to seek and obtain their own independent tax, accounting, financial & legal advice. Their is no intention for Garuda Capital to replace or substitute the advise, of any of our clients own in house advisors. Such costs are for clients account.
14. Lodgement of guarantees, payment of deposit, or full purchase price & investment by investor.
15. Successful Closure of Transaction. The above processes usually consume our time & resources for between 3-6 months. All of the above processes where appropriate, are covered by our commitment fee. This is the only fee charged to the vendors.

Garuda Capital pricing is based on:

• The amounts to be raised (our preferred transactions > R100m)
• Availability of appropriate securities, nature & complexity of the transaction for debt raising
• Legal & Corporate Finance complexities (including specific structuring requirements of clients)
• Ready availability of all relevant & necessary documentation and information, with the right level of detail and accuracy.
• Project must be at “financing stage”. All zoning, EIA, legal approvals, licensing, engineering & technical details, business plans etc.
• Timing & expected completion dates
• Other client specific & critical conditions
• Our fees compirse a Commitment Fee plus Success Fee on completion (payable from Capital Raise)
• We do NOT work at risk