We have appointed Jaltech Financial Consultants to administer the LionPride Agility Fund. Jaltech is  boutique corporate finance firm with extensive experience in transaction advisory. They are industry leaders in structuring and administrating Section 12J Venture Capital Companies in multiple industries.

Jaltech will issue investor share certificates that comply with SARS requirements. This provides SARS with the proof it needs to allow you, the investor, the relevant tax deduction.

In addition, Jaltech will provide the investor with all the support and compliance information.

With effect from 1 July 2009, investors (any South African taxpayer both trust, corporate and individual) can claim an income tax deductions in respect of the expenditure incurred on Venture Capital Company (“VCC”) shares. The VCC legislation is subject to a sunset clause which ends on 30 June 2021. The sunset clause will allow for review of the legislation and a decision will then be made as to whether it should be continued, however all investments made prior to the sunset clause will remain complaint even if the incentive is not continued.

Government has implemented this tax incentive to help provide equity financing to small and medium size enterprises (“SMEs”) with the intention to create jobs and to grow the economy. As these investments are potentially higher risk, the added tax investment provides VCC investors a substantial reduction in capital due to the up front tax deduction (speak to your preferred financial/tax adviser).

The LionPride Agility VCC (“LionPride VCC”) is intended to bringing together investors as well as concentrating investment expertise in favour of the small business sector which will lead to SMEs receiving equity financing, create jobs and help grow the South Africa economy.

• Lionpride VCC is an approved VCC and is a licensed Financial Services Provider (“FSP”) in terms of Financial Advisory and Intermediary Services Act, 2002 (Act No. 37 of 2002) under licence number 49378.
• LionPride VCC is also registered with SARS as a Venture Capital Company in terms of Section 12J of the Income Tax Act No. 58 of 1962 under reference number VCC-0129.
• Lionpride Agility Fund has obtained legal opinion that it does not fall within the ambit of the Collective Investment Schemes Control Act no. 45 of 2002.

Potential tax advantage for investors in LPI Agility VCC

*assumed the individual is in the highest tax bracket. Please consult your preferred advisor for the tax advantage in your situation.

The full amount invested in LionPride VCC is 100% deductible from your taxable income in the tax year in which the investment is made. This applies to individuals, companies and trusts.

If the investment in LionPride VCC is held for a minimum period of time of 5 years the tax benefit received at the date of investment will become permanent, i.e. no recoupment of the tax benefit in the hands of the investor will occur. LionPride VCC invests in SME which positions Lion Pride VCC with investments in growth companies, thus significantly expanding the investment universe and targeting real alpha returns for its shareholders.

Section 12J is subject to the provisions of the Income Tax Act No. 58 of 1962 (the Act). Section 12J was introduced to cater for the deductions in respect of expenditure incurred in exchange for the issue of venture capital company shares.

• FSCA Regulatory environment for 12J (Type in 49378 and search for the FSP)
• Email info@lionpride.co.za for the Prospectus

1. Investment into VCC by investors.
2. VCC issues investor with VCC share certificate and tax certificate.
3. VCC capitalises investee companies.
4. Investee companies pay dividend to VCC.
5. VCC pays dividend to investors.
6. Investor allowed to claim tax deduction when submitting return to SARS.
7. Investor submits tax certificate to SARS (if requested).
8. VCC pays fund manager fee.

1. The full amount invested in LionPride VCC is 100% deductible from the investors taxable income in the tax year in which the investment is made. This applies to individuals, companies and trusts.
2. An investor in LionPride VCC will therefore obtain a tax break at the time of the investment.
3. The investment must be held for a minimum period of time of 5 years at which time the tax benefit conferred at the date of investment will become permanent.
4. LionPride VCC is able to invest in companies with total assets of a maximum of R50 million at the date of investment which significantly expands the investment universe for the pool.
5. LionPride VCC will have proper governance through:
   • An experienced board and Audit Committee;
   • An experienced investment committee with sector specific co-offered members o a needs basis; and
   • Appointment of Jaltech Financial Consultant to manage all compliance and regulatory matters with FSCA and SARS.

Any South African taxpayer qualifies to invest in an approved VCC. Qualifying investors can claim an income tax deductions in respect of the expenditure actually incurred to acquire shares in an approved VCCs.

Where any loan or credit is used to finance the expenditure in acquiring a VCC share and remains owing at the end of the year of assessment, the deduction is limited to the amount for which the taxpayer is deemed to be at risk on the last day of the year of assessment.

No deduction will be allowed where the taxpayer is a connected person to the VCC at or immediately after the acquisition of any venture capital share in that VCC. An investor can become a connect person to the VCC if he/she/it owns more than 20% of the VCC and/or owns more than 20% of the funds with family members and/or other persons with connected interests with the investor.

On request from SARS, the investor must verify a claim for a deduction by providing a VCC share certificate that has been issued by an approved VCC, stating the amount of the investment and the date that the investment was made.

Except in the case of VCC shares held by a South African taxpayer for longer than five years, the tax deduction is recouped (recovered) if the taxpayer disposes of the VCC Shares (under the general recoupment rules of section 8(4) of the Act)).

Standard income tax and CGT rules apply in respect of the underlying investments made by VCC.

• The Investee must be a company;
• The company must be a resident of South Africa;
• The company must not be a controlled group company in relation to a group of companies;
• The company’s tax affairs must be in order (a tax clearance certificate must be requested from SARS to support this requirement);
• The company must be an unlisted company (section 41 of the Act) or a junior mining company; A junior mining company may be listed on the Alternative Exchange Division (AltX) of the JSE Limited;
• During any year of assessment, the sum of the “Investment Income” derived by the company must not exceed 20% of its gross income for that year of assessment; and
• The company must not carry on any of the following impermissible trades:
  • Any trade carried on in respect of immoveable property, except trade as a hotel keeper (includes bed and breakfast establishments);
  • Financial service activities such as banking, insurance, money-lending and hire purchase financing;
  • Provision of financial or advisory services, including legal, tax advisory, stock broking, management consulting, auditing, or accounting;
  • Operating casino’s or other gambling related activities including any other games of chance;
  • Manufacturing, buying or selling liquor, tobacco products or arms or ammunition; or
  • Any trade carried on mainly outside the Republic.

Agility VCC has a single structure with 2 different classes of shares. This enables investors to invest capital into one of two capital pools co-managed by LionPride and Newtown Partners and gain a balanced exposure to South African technology or concentrated exposure into the selected theme which provides the desired risk/return profile.

1.  Impact Investing (Share class B)

• Focus on SMEs and startups using mature technology to positively impact economic upliftment objectives in South Africa.
• Unlock value at the bottom of the pyramid (13.5 million South African households).
• Lower risk, targeting SMEs with largely stable, predictable free cash flows and a defensible moat / large margin of safety.
• Target sectors include Fintech, Education, Healthcare, Food and 4th Industrial Revolution.

2.  Emerging Technologies (Share class C)

• Focus on South African startups utilizing emerging technologies within highly scalable and disruptive business models. Rapid adoption and higher productivity allows startups built on emerging technologies to reach global scale quickly with lower capital outlay.
• With high mobile penetration, a low cost base, friendly regulation and being the technology hub of Africa, South Africa is the ideal testbed for startups targeting global expansion and scale.
• Higher risk, classic Silicon Valley VC model with an asymmetric return profile versus capital deployed.
• Target sectors include Fintech, Agritech, On-Demand Services, Business Process Outsourcing, Renewables and EdTech.

Active Management through strategic investments

Our investment strategy is designed to deliver a well-balanced and diversified portfolio that will maximize sustained long-term returns by managing the risk/reward relationship.

We believe that an active and adaptive approach to managing the portfolio is essential to preserving and growing assets in ever-changing capital markets. This requires applying a high degree of skill and experience to managing the portfolio across investment programs.

We will employ seasoned entrepreneurs to join the management team of investee companies. Our decision to manage all aspects of the portfolio actively is not made lightly. Many investors seek above-market risk-adjusted returns but few consistently achieve them. While active management does require specialized skills and additional resources, our operational excellence expertise give us a greater capacity to manage risk and add value well above the associated costs over the long term

• The contents of this presentation/document are intended solely for the addressee(s) and may contain confidential and/or privileged information and may be legally protected from disclosure. The addressee(s) accepts responsibility for taking adequate steps to ensure this presentation/document’s confidentiality. The information and content contained in this presentation/document may not be distributed, communicated or disclosed to any party other than the addressee(s) without written consent from LionPride VCC.
• The information herein is indicative and for illustration purposes only. This presentation/document does not constitute the provision of financial services, financial advice or investment advice of any kind, which includes but is not limited to tax, accounting, investment, legal and regulatory advice.
• LionPride VCC assumes no responsibility or liability for any errors or omissions in the content of this presentation/document. No guarantees of completeness, accuracy, usefulness or timeliness is provided.
• LionPride VCC accepts no liability for any losses incurred by any party in implementing any of the strategies and/or structures contained in this document, and brings to the addressee(s) attention that the outcomes of the strategies and/or structures are dependent on a multitude of factors which cannot be predicted/conveyed at the time of writing.
• LionPride VCC is an authorised financial service provider (FSP# 49378).