*This content is brought to you by METTA Capital
METTA Capital is a next generation Section 12J ‘portfolio of funds’, which will provide a high-quality, moderate risk investment opportunity for investors who are looking for alternative investment opportunities, combined with tax saving in 2018.
Brought to market by the founders of Grovest and Venture Capital Management Services (VCMS) – Jeff Miller and Malcolm Segal – METTA Capital will comprise a portfolio of eight established Section 12J funds across the logistics, mining, hospitality, retail, energy and telecommunications sectors.
The portfolio selection process was conducted by a professional and independent Investment Committee chaired by Dr. Adrian Saville, a financial educator, author, economist in the South African asset management industry and Chief Executive of Cannon Asset Managers.
Each fund within the portfolio is managed by a different fund manager and targets a blended nett internal rate of return (IRR) to investors of 16%, with a dividend yield of 5% – 8% per annum from 2019, providing investors an efficient alternative to investing in multiple venture capital companies (VCCs).
What is a Section 12J fund?
In 2009, the South African Revenue Service (SARS) introduced the Section 12J tax incentive, part of the South African Income Tax Act, to stimulate the growth of small to medium-sized business through venture capital investment. This incentive was created to stimulate growth in priority sectors through venture capital investments.
Three years ago, a Section 12J fund was an unknown asset class, but it is now an imperative consideration when constructing an investment portfolio. Today, Section 12J companies are a recommended component of between 5% to 10% of a well-balanced investment portfolio. An investor is not only earning a meaningful return, but also receiving a tax benefit. There is already R1.8bn invested in existing registered Section 12J funds, and is anticipated to grow to R3.8bn in 2018.
The full amount invested in METTA Capital is 100% deductible from an investor’s taxable income in the year in which the investment is made. This applies to all investor classes, including individuals, companies and trusts.
Individuals and trust investors in the METTA Capital portfolio will therefore receive a 45% tax break in the year of investment, which is expected to mature in seven years. Corporate investors will receive a 28% tax rebate.
What is a portfolio of funds?
A portfolio of funds is a single fund that invests in other funds. The funds invested in by the single fund usually contain a variety of asset verticals, enabling its investors to access a diversified investment portfolio.
The METTA Capital Section 12J portfolio of funds is a weighted collection of selected Section 12J companies across the logistics, mining, hospitality, retail, energy and telecommunications sectors housed together in a ring-fenced portfolio, which investors can gain exposure to through a single entry-point, and is carefully curated and managed by a professional management team.
These include:
- CCP Mining 12J Fund Limited,
- Franchise Junction Section 12 VCC Limited,
- Grovest Energy Limited,
- Mdluli Safari Lodge Limited,
- Rencell Limited,
- Sunstone Capital Limited,
- Westbrooke Aria Limited and
- Westbrooke Stac Limited.
Investors wanting to find out more about METTA Capital, or to invest in the portfolio require a minimum upfront investment of R500,000.00 payable by EFT on or before 20 February 2018 into a nominated account available on the website.
With a targeted capital raise of R200 million, the offer opened on 25 January 2018 and ends on 20 February 2018.
