Developmental Funds

The Futuregrowth Infrastructure & Development Bond Composite, a specialist yield enhanced bond portfolio, forms part of Futuregrowth’s suite of developmental investments.

For more information on this fund, please email fundinfo@futuregrowth.co.za.

The Composite targets high returns through a combination of moderate credit concentration limits, active interest rate risk management and active off-benchmark bets. The benchmark is the All Bond Index.

Objective

The Composite aims to outperform the ALBI by 1% per annum before the deduction of taxes and fees and with income reinvested over a rolling 3-year period.

Composition

The Composite may invest in a wide range of debt instruments including those issued by government, parastatals, corporates as well as securitised assets. The inclusion of assets is subject to credit committee approval.

The Composite is allowed to invest up to 50% in unlisted credit and in addition, to invest in up to 5% equity assets (primarily through the Development Equity Fund) subject to investment committee approval. The resulting effect is in good risk-adjusted alpha generation over time.

In order to retain adequate liquidity and flexibility, and in the course of managing new investments, asset maturities and sales and fund-flows, the Composite usually maintains a high degree of liquid and/or non-developmental assets.

Social Impact

The Composite aims to provide investors with a vehicle that facilitates infrastructural, social, environmental and economic development in southern Africa and delivers on a variety of social impact requirements such as job creation, affordable housing, access to services and healthcare.

The Futuregrowth Community Property Composite is a portfolio specialising in the acquisition of new and existing shopping centres which cater to the needs of underserviced communities throughout South Africa and forms part of Futuregrowth’s suite of developmental investments.

For more information on this fund, please email fundinfo@futuregrowth.co.za.

The benchmark is CPI + 4%.

Objectives

The Composite aims to outperform the CPI by 4% per annum before the deduction of taxes and fees and with income reinvested over a rolling 3-year period. The Composite seeks to provide investors with a low cost, high value property investment that focuses on emerging market retail property growth in underserviced rural communities and high density urban centres.

Composition

The Composite currently owns 37 shopping centres located in rural and township areas in seven of the nine provinces. These centres provide retail services and products to a primary target market of approximately 10 million people.

Find out more about our shopping centres.

The centres deliver retail services to low- to middle-income groups. They vary in size between 1 700m² and 40 000m² and are typically tenanted by supermarkets, clothing, banking and furniture retailers. Large, listed, national and franchise tenants occupy an average of 86.7% of the space across all the shopping centres.

Social Impact

The Composite aims to provide investors with a vehicle that offers service and consumer facilities to local communities, facilitates infrastructure and delivers on a variety of social impact requirements.

Each centre is a catalyst for the development of:

• Transport infrastructure (taxi ranks and bus terminals) and infrastructure such as electricity, water and sewerage services which benefit the community;

• Vehicular service stations, additional shopping centres and municipal services; and

• Municipal infrastructure through increased rate payments by the new shopping centre.

The Futuregrowth Development Equity Composite, a portfolio specialising in equity and related investments in socially responsible projects and businesses or developmental assets, forms part of Futuregrowth’s suite of developmental investments.

For more information on this fund, please email fundinfo@futuregrowth.co.za.

The benchmark is CPI + 10%.

Objective

The Composite aims to outperform the benchmark with a nominal return of 18-22% per annum before the deduction of taxes and fees and with income reinvested over a rolling 3-year period.

Composition

The Composite invests mainly in unlisted equity and participating instruments, but allows up to 20% in debt instruments. Although the Composite invests principally in unlisted transactions, relevant listed instruments are not excluded.

The Composite provides investors with a cost effective and flexible channel to participate in the infrastructure and development equity asset class. Investors benefit from the exclusive ability to access an existing pool of stable assets, access to a flow of developmental transactions, a lower than market fee and the ability to play a role in creating a new pool of risk capital for South African development.

In order to retain adequate liquidity and flexibility, and in the course of managing new investments, asset maturities and sales and fund-flows, the Composite usually maintains a high degree of liquid and/or non-developmental assets.

Social Impact

The Composite aims to provide investors with a vehicle that facilitates infrastructural, social, environmental and economic development in southern Africa, while maintaining a high degree of exposure to developmental assets, and delivers on a variety of social impact requirements such as job creation, affordable housing, access to services and healthcare.

The Futuregrowth Power Debt Composite, an investment portfolio specialising in energy-related industries and sectors, forms part of Futuregrowth’s suite of developmental investments.

For more information on this fund, please email fundinfo@futuregrowth.co.za.

The benchmark is the South African STeFI Composite Index.

Objective

The Composite aims to outperform the STeFI by 2.25% per annum before the deduction of taxes and fees and with income reinvested over a rolling 3-year period.

Composition

The Composite is largely invested/committed to invest in renewable energy deals that form part of the Department of Energy’s Renewable Energy Independent Power Producer Procurement Programme (REIPPPP). These include investments in solar photovoltaic (PV), concentrated solar power (CSP) and wind farms. Projects approved so far are located in the Northern Cape, Eastern Cape and Limpopo Provinces. All projects under the REIPPPP enter into an off-take purchase agreement with Eskom for power they will produce during the next twenty years and these revenue streams will be used by the projects to repay the debt finance.

This Composite has fairly high risk and concentration limits and good yield enhancement, and is not intended to be highly liquid given that the underlying transactions are unlisted, unrated and have relatively few co-creditors. The Composite will maintain only a small holding of liquid assets to facilitate transactions and/or client cashflow needs.

Social Impact

The Composite aims to provide investors with a vehicle that facilitates infrastructural, social, environmental and economic development in southern Africa through investments in energy related businesses and sectors. These include electricity generation from renewable, alternative and traditional sources, power distribution and reticulation, and supporting industries and sectors). The Composite delivers on a variety of social impact requirements such as:

• Job creation

  - Employing local labour to build and maintain the plants.

  - Short- and long-term job creation.

  - SMME development through employing contractors.

• High level of mentorship and skills transfer from international developers.

• Local technology and subcontractors which will be used in all projects according to

  Government’s minimum requirements.

• International developers partnering with local firms that have a strong knowledge of the South African market.

• BEE equity requirements - including participation by a trust representing the local community which will be implemented according to minimums set by Government.

• Investment by the projects into local socio-economic infrastructure and services.

• Compliance with the Equator Principles.

The Futuregrowth Development Balanced Composite, a balanced portfolio providing investors with social impact by investing in a range of developmental investments, forms part of Futuregrowth’s suite of developmental investments.

For more information on this fund, please email fundinfo@futuregrowth.co.za.

The Composite has exposure to a range of asset classes from listed equity (Old Mutual Responsible Investment Equity); bonds (Futuregrowth Infrastructure & Development Bond); unlisted property (Futuregrowth Community Property); unlisted equity (Futuregrowth Development Equity); inflation-linked bonds (Futuregrowth Power ILB) and cash. The benchmark is a composite weighting of the underlying funds’ benchmarks.

A brief description of some of the underlying funds:

Listed Equity

SRI Tracker

The Old Mutual Responsible Investment Equity Fund is a domestic equity portfolio of listed SRI equity investments whose benchmark is an appropriate responsible equity investments index.

Direct Holdings

From time to time the manager identifies specific shares that can be held directly. These opportunities will normally not exceed a total of 5% of the portfolio value.

Development Equity

The Futuregrowth Development Equity Composite specialises in equity and related investments in socially responsible projects and businesses or developmental assets. The benchmark is CPI + 10%.

Infrastructure & Development Bond

The Futuregrowth Infrastructure & Development Bond Composite is a specialist yield enhanced bond portfolio. The Composite targets high returns through a combination of moderate credit concentration limits, active interest rate risk management and active off-benchmark bets. The benchmark is the All Bond Index.

Community Property

The Futuregrowth Community Property Composite specialises in the financing and development of retail shopping centres catering to the needs of under-serviced communities throughout South Africa. The benchmark is CPI + 4%.

Power ILB

The Futuregrowth Power Inflation-linked Bond Composite is an investment portfolio that specialises in energy-related industries and sectors. The benchmark is the RSA Inflation Linked Government Bond I2038.

Futuregrowth Agri-Funds, portfolios specialising in the investment of agricultural land, biological assets, agricultural infrastructure and other related farming implements, form part of Futuregrowth’s suite of developmental investments. There are currently three funds in our suite of agricultural funds. Fund 1 is closed, Fund 2 is in drawdown phase and Fund 3 is open for investment.

For more information on this fund, please email srambhai@futuregrowth.co.za.

The benchmark is CPI + 10%.

Objectives

The funds aim to outperform the CPI by 10% per annum before the deduction of taxes and fees and with income reinvested over a rolling 3-year period.

Composition

The funds' investments are in the actual farmland and infrastructure, which is leased to an approved operator to manage and run the farm. The farmland will be developed and managed in partnership with these large-scale agricultural operators to further enhance its value. All farms acquired have further development potential. According to a planned expansion programme, the funds invest capital into farms to develop additional arable land. This may include the acquisition of adjacent farmland.

The funds invest mainly in equity and equity related instruments, but allows up to 10% in debt instruments.

The investments can be leveraged up to a maximum of 30%. Returns are generated from the lease fee (typically from 8% of the farms’ value), with the capital value increase realised upon final exit with the profit on the sale of the farmland.

The choice of assets is guided by increasing real value, realised by improving yield, efficiency and management.

Aside from the stable returns generated, the social impact is significant. The investment caters for a minimum of 0.5% of invested capital to be spent per annum on healthcare and educational programmes for workers.

The funds have fairly high risk and concentration limits and good yield enhancement, and are not intended to be highly liquid given that the underlying transactions are unlisted and unrated.

Social Impact

The funds aim to provide investors with a developmental vehicle that facilitates agricultural development, farming infrastructure, social, environmental and economic development in Southern Africa, and incorporates a proven investment model to address sustainable rural development and agricultural initiatives that lead to:

• Land development and conservation

• Environmental reform

• Employment

• Health care

• Housing

• Education

• Food security

• Skills transfer

The Futuregrowth Infrastructure and Development STeFI+ Composite, a specialist yield enhanced portfolio, forms part of Futuregrowth’s suite of developmental investments. The Composite targets high returns through a combination of moderate credit concentration limits, active interest rate risk management and active off-benchmark bets.

For more information on this fund, please email fundinfo@futuregrowth.co.za.

The benchmark is the South African STeFI Composite Index.

Objective

The Composite aims to outperform the STeFI + 1.25% per annum over a rolling 12-month period.

Composition

The Composite invests in a wide range of government, parastatal, corporate debt, securitised and money market assets, subject to credit committee approval and whose relative value is expected to increase over time. 100% of this Composite can be invested in unlisted credit.

The Composite is allowed to invest up to 55% in unlisted credit and in addition, to invest in up to 5% equity assets (primarily through the Development Equity Fund) subject to investment committee approval. The resulting effect is in good risk adjusted alpha generation over time.

In order to retain adequate liquidity and flexibility, and in the course of managing new investments, asset maturities and sales and fund-flows, the Composite usually maintains a high degree of liquid and/or non-developmental assets.

Yield enhanced strategy

Our yield enhanced strategy relies on maintaining strong relationships with market players. This allows us to see a large degree of deal-flow on a continuous basis and keep an eye on ever-evolving credit events in the market. In the unlisted space, our specialist structuring skills allow us to make loans that ensure lenders achieve the greatest degree of investor protection through loan terms, covenants and security while ensuring risk-adjusted returns with good diversification.greatest degree of investor protection through loan terms, covenants and security while ensuring risk- adjusted returns with good diversification.