The SME Equity Fund Ltd (SEF) is geared towards accompanying and supporting entrepreneurs by financing their projects and expansions.
This scheme provides several interesting features for SMEs. The period of repayment is seven years and there is no early repayment fee. However, it is important to note that the SEF may appoint its representative on the investee company board.
There are four key steps in order to benefit from the SEF. All applicants are first required to fill an application form and to write their project. At this stage, it is essential to determine the feasibility and cost effectiveness of the project. Once this step completed, the applicants are invited to submit their form and project to the investment committee and Board for Approval. If the project is approved, the SEF disburse the funds. The final step consists of the monitoring of the project.
Features:
– Period of repayment: up to 7 years.
– No early repayment fee policy.
– SEF may appoint its representative on the investee company board.
Exit structure:
– Company buys back/redeems SEF shares
– Existing shareholder buys back / redeems SEF shares
– Sale of SEF shares to a third
Corporate Services offered
– Preparation of constitution
– Directors and shareholders resolution
– Restructuring of share capital
– Allotment of shares
– Shareholders meeting facilities
Investment Process
Step 1 – Application form and project appraisal
Step 2 – Submission to Investment Committee and Board for Approval
Step 3 – Agreement of project and disbursement
Step 4 – Monitoring of Project
Eligibility to apply
- Entrepreneurs’ investment equal at least 51% of company total equity.
- Only viable and sustainable projects be considered.
- Promoters must be Mauritian Nationals
- SEF investments ranges from Rs500K to Rs25M
- SEF will not invest in real estate, trading, gambling and working capital needs.
Am I better off with a Loan or an equity investor?
| Criteria | Business Loan | Equity Fund |
| Debt to Equity Ratio | A Limit is applicable | Equity Financing improves the ratio. |
| Repayment
|
Immediate repayment | Flexible repayment |
| Guarantee
|
Guarantee mandatory | Flexible Guarantee |
| Risk | Risk mitigated by guarantee
|
Risk shared even if debts repayment capacity is reached
|
| Decisions | Take any actions and decisions | Limited by governance in investment agreement
|
| Shareholding | Remain the only shareholder | Shareholding diluted.
|