Cape Town SMME ‘uniquely positioned’ for export-led growth

July 17, 2019

ENGINEERING NEWS / 15 JULY 2019 - 17.09 / SIMONE LIEDTKE

 

 

Cape Town-based Cape Mohair is uniquely positioned for export-led growth following an “innovative” deal that addressed its need for new machinery and additional working capital.

 

The mohair sock manufacturer is the latest in a long list of small, medium-sized and microenterprises (SMMEs) to benefit from the Section 12J tax incentive scheme, it said in a statement last week.

 

 

 

“Our acquisition of a 46% interest in Cape Mohair is one of many investments aimed at generating long-term shareholder value by matching capital with carefully selected business opportunities,” Anuva Investment co-founder Neill Hobbs commented.

 

He explained that the Section 12J compliant venture capital company paid for its stake in Cape Mohair with a combination of cash and assets, chipping in new working capital alongside state-of-the-art sock machinery bought out of a competitor firm’s insolvency.

 

“Anuva initially approached us to manage the sock plant they had purchased out of the Impahla liquidation,” Cape Mohair founder Denys Hobson said, adding that it “soon became clear that moving [the] sock manufacturing operations into the newer plant made business sense, despite the respective product ranges and target markets being different”.

 

The focus, post-acquisition, has been on exiting unprofitable retail contracts, repurposing the new plant and machinery for high-end sock manufacture and expanding the Cape Mohair product range.

 

“We want to grow off our current base into the high-end of the market where we see a lot of potential, especially in exports,” Hobson said.

 

Further, Hobbs noted that the Cape Mohair acquisition illustrated the versatility of the Section 12J scheme in structuring innovative business deals.

 

“In this case, our Section 12J investment was made in support of a company that was already in the sweet spot; we contributed much needed working capital and ensured that Cape Mohair was adequately capitalised for its immediate needs”.

 

According to Hobson, this type of tax incentive has a lot of merit as it takes much of the risk out of SMME investments, with the net result being extremely positive.

 

He concluded that he had ambitious plans to fully use the new sock manufacturing facilities for high-end production by 2022 and to double Cape Mohair’s turnover by 2025. 

 

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LINK : https://www.engineeringnews.co.za/article/cape-town-smme-uniquely-positioned-for-export-led-growth-2019-07-15/rep_id:4136

 

Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER

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