Directory Of Section 12J Companies - CCP 12J Fund
|COMPANY NAME||CCP 12J Fund|
|NUMBER OF SARS APPROVED SECTION 12J FUNDS||
- CCP 12J Fund Limited
|ABOUT||CCP 12J gives investors the first ever opportunity to invest:
• In an attractive (on a risk-adjusted, stand-alone basis) investment opportunity that can be enhanced via the Section 12J incentive;
• Alongside DRA, a leading African mining engineering firm which has committed its own capital of up to R150 million. The Mary Oppenheimer family interests’ private equity activities own a significant stake in DRA;
• In a fund that first and foremost will focus on capital preservation, with a conservative investment mandate targeting attractive de-risked mining projects;
• With an Investment Committee comprising highly regarded individuals in the mining industry that have significant experience and track records of allocating capital successfully;
• In what is likely to be the leading mining focused 12J fund, which should have the benefit of 10x the investment capacity relative to 12J funds focused on any other sector;
• Whilst enjoying the benefits of upfront tax deductibility;
• On terms that represent one of the more investor friendly 12J fee structures.
Capital preservation is of paramount importance to CCP 12J. Traditional new mine development projects involving underground resources/operations are inherently high risk. CCP 12J will not typically seek to invest in these projects and will not provide high-risk capital or fund early stage development projects unless such investment is carried out in a manner that results in attractive risk-adjusted returns. CCP 12J will pursue mining related equity investment opportunities which meet all of the following criteria:
• the transaction meets the criteria of a Qualifying Investment under section 12J of Income Tax Act, including the definition of “mining production or exploration”, where applicable;
• the DRA Group has a high level of confidence in the underlying project;
• the transaction involves a high calibre (bankable) project owner and/or product off-taker;
• substantially all other material identified underlying project risks can be significantly mitigated or transferred; and
• the Investment Committee has a high level of confidence that an appropriate risk adjusted return could be earned by the Investors.
Tailings and dump retreatment projects and the expansion of existing high-quality mining operations would typically, but not exclusively, meet the above criteria.
Q&A With CCP 12J Fund
Let's hear a little more about the company, some history, where you are now, and what you see for the future?
CCP 12J was founded by DRA and Stockdale Street in late 2017.
DRA Group is a global engineering, project management and processing plant operations business with capabilities right across the mining value chain, employing in excess of 3,000 people (>1,000 engineers) and revenues in excess of R6.0 billion per annum.
Stockdale Street (“Stockdale”) is the company that advises the Mary Oppenheimer family interests’ South African private equity activities. In 2016, a partnership advised by Stockdale acquired a significant shareholding in DRA
Over the last few years, DRA has utilised a subsidiary, Concentrate Capital Partners (CCP), to make strategic non-controlling investments into mining projects. Opportunities for CCP to invest in a risk-mitigated manner have materialised due to funding gaps that now exist due to a lack of appetite for banks to fully fund South African projects. The Section 12J incentive allows CCP to effectively allow third party investors to benefit from its deal-flow whilst also providing an enhancement to the attractive risk-adjusted returns that it already achieves.
To ensure independence from DRA, several leading mining investors/experts have been recruited to help oversee CCP 12J’s capital deployment process. These individuals are required to invest any fees received for doing so back into the fund to ensure that they are always aligned with investors. These individuals include:
• Tom Borman – Over 20 years mining finance and operational experience, senior executive positions with BHP Billiton and lead the integration when BHP merged with Billiton
• Michael Golding – Over 20 years of mining finance and corporate finance experience. Previously head of corporate finance for Billiton, has advised on in excess of 100 mining transactions
• Jean Nel - Previously CEO of Aquarius Platinum Limited and CEO of Platinum Division of Sibanye Stillwater
• Nigel Townshend - Founded consulting engineering giant TWP Consulting in 1982 which was eventually acquired by WorleyParsons
The R150 million commitment from DRA, a focus on attracting capital from both individuals and corporates as well as the ability of CCP 12J to invest 10x the amount into each opportunity should allow CCP 12J to achieve scale benefits that few other 12J VCCs can hope to achieve. This may allow CCP 12J to achieve diversification benefits whilst hopefully also achieving superior returns for investors.
What type of investor should invest in your funds?
Unlike most VCCs, CCP 12J is a public company which results in greater levels of disclosure but also allows it to raise smaller amounts of capital from each investor.
The Section 12J regime requires investors to hold their investment for at least 5 years and therefore CCP 12J’s investments will be structured to provide a return that both matches and adequately compensates investors for this illiquidity.
Investors in CCP 12J will need to have a high level of taxable income, have at least R150,000 of cash available to invest and be willing to wait at least 5 years for their investment and profits to be returned. CCP 12J is incentivised to make sure that the best balance between obtaining higher returns and returning cash to investors sooner rather later is achieved.
What sets you apart from other venture capital companies?
Very few other founders of VCCs have committed their own capital to the same extent as DRA and very few VCCs established to date have focused on mining – a sector that was specifically targeted by Section 12J legislation. DRAs involvement has been critical to getting CCP 12J up and running.
Through CCP, Stockdale Street and the experience of the Investment Committee, investors are also able to benefit from partners that have a track record of successfully investing in South Africa.
In summary - DRA’s operational capability, track record and ability to source opportunities; the mining legacy of the sponsors; a high calibre investment committee; as well as the chosen investment and risk mitigation strategy have all combined to present a unique and compelling investment opportunity for potential investors into CCP 12J.
What are your fees?
No capital raising fees. 2% management fee (based on AUM) and a 20% performance fee (above a hurdle based on STeFI). Corporates are more fairly treated as CCP 12J does not assume that they receive a 45% tax deduction.
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