{"id":137204,"date":"2019-05-14T08:29:55","date_gmt":"2019-05-14T06:29:55","guid":{"rendered":"https:\/\/www.myza.co.za\/how-section-12j-investments-complement-the-business-rescue-process\/"},"modified":"2019-05-14T08:29:55","modified_gmt":"2019-05-14T06:29:55","slug":"how-section-12j-investments-complement-the-business-rescue-process","status":"publish","type":"post","link":"https:\/\/www.myza.co.za\/press\/how-section-12j-investments-complement-the-business-rescue-process\/","title":{"rendered":"How section 12J investments complement the business rescue process"},"content":{"rendered":"

MyPR<\/a>: How section 12J investments complement the business rescue process<\/a>:<\/strong> <\/p>\n

\"CEO<\/a><\/p>\n

CEO of MasterCare \u2013 Wesley Rabie Photo: Image Supplied<\/p>\n

South Africa\u2019s leading home appliance repair and maintenance brand is poised for spectacular growth thanks to the success of two pro-business processes introduced by local lawmakers. The firm used both the Department of Trade and Industry\u2019s \u2018business rescue\u2019 legislation and the SARS Section 12J tax incentive scheme to shake off recent trading difficulties and emerge revitalised, ready to create jobs and contribute meaningfully to the broader economy.<\/p>\n

MasterCare, established in 1974, ran into trouble three years after its 2009 acquisition of EarlyBird Services from Ellerines Holdings. The firm faced a perfect storm of post-acquisition challenges including overstated revenue estimates, old and underutilised infrastructure and unprofitable stores. As cash flow dried up management was left with one of two choices \u2013 either close doors and go into liquidation or enter into a business rescue arrangement to see whether the business could be saved. Management opted for the latter and Neill Hobbs of Hobbs Sinclair was appointed as the business rescue practitioner in 2012.<\/p>\n

\u201cHobbs and his team looked at every aspect of the business and realised its vital role in the domestic home appliance repair industry,\u201d says Wesley Rabie, current CEO of MasterCare. \u201cThey optimised the business model and created a \u2018leaner and meaner\u2019 operating infrastructure to deliver sustainable growth\u201d. He credited Hobbs Sinclair with creating the space necessary for the management team to focus on the business plan rather than obsessing over day-to-day operational issues. The only missing ingredients at this point were a clear strategy and capital \u2013 enter Anuva Investments, a section 12J-compliant Venture Capital Company (VCC) which acquired a majority share in MasterCare in 2015.<\/p>\n

The combination of business \u2018smarts\u2019 and \u2018fresh\u2019 capital put MasterCare on a totally different business trajectory. \u201cCapital is one thing,\u201d says Rabie. \u201cBut we benefited from the business acumen of Neill Hobbs as well as inputs from the \u2018captains of industry\u2019 behind the Section 12J venture capital company\u201d. He adds that the five year minimum investment term for such investment creates a strong incentive for investors to get involved. \u201cAs the business rescue process unfolds you reach a point where a clear direction and an injection of fresh capital becomes an imperative for business success,\u201d says Larry Worthington-Fitnum, co-founder and director at Anuva Investments Ltd. \u201cWhat separates our fund from other VCCs in this sector is that our investors go out of their way to leverage their networks and experience to the benefit of the acquired business\u201d.<\/p>\n

The business rescue process and subsequent Section 12J investment saved 80 jobs at MasterCare and prevented countless job losses in the broader repair industry. \u201cWe currently support more than 140 small service agent businesses across the country as well as a handful of spares suppliers \u2013 often as the agent\u2019s largest client,\u201d says Rabie. If MasterCare had gone into liquidation instead of business rescue he estimates that a third of the smaller agencies would have struggled to stay in business, with many additional job losses.<\/p>\n

The new business has emerged \u2018lean and mean\u2019 and ready to achieve real jobs, turnover and profit growth. \u201cWe have streamlined our operating infrastructure and refocussed the business on sustainable growth opportunities with the result our headcount has increased by 8% in the past year,\u201d says Rabie. MasterCare is better-positioned than ever with great technical staff, an industry-leading CRM system and \u2018fit for purpose\u2019 products and services. He jokingly refers to the group as a \u201c45 year old start-up\u201d made up of motivated staff who carry out their roles with respect for one another, for their customers and for their brand partners.<\/p>\n

The influence of the tech-savvy directors at Anuva Investments is already showing. There are plans afoot to venture into repair and servicing of higher level technology products as well as to leverage technology to improve service delivery to customers. \u201cOur company culture is that of a start-up under a revitalised brand \u2013 and our focus is on disrupting our sector, exceptional customer service and delivering an innovative product offering that offers real value,\u201d says Rabie.<\/p>\n

The MasterCare experience shows that liquidation should only be considered as a last resort. \u201cBusiness rescue gave us the opportunity to take a company that had been around for almost half a century, recognise the value in the business model and turn the company around,\u201d concludes Rabie. \u201cThe marriage of business rescue and section 12J venture capital has kept us alive, returning this business to profitability while saving existing jobs and creating new work opportunities\u201d.<\/p>\n

About MasterCare
MasterCare is a leading name in home appliance repairs and maintenance, operating from a national network of wholly owned stores and contracted service agents. The firm is majority owned by Anuva Investments (a section 12J-compliant Venture Capital Company) and minority shareholders, including private equity investor, NEDI Investments. MasterCare was established in 1974 to coincide with the arrival of television in South Africa. It was bought by Teljoy Holdings in 1987 \u2013 underwent a management buy-out in 2001 \u2013 and acquired its largest competitor, EarlyBird, in 2009.<\/p>\n

About Anuva Investments
Anuva Investments Ltd is a section 12J compliant Venture Capital Company (VCC) that creates value by skilfully combining capital with selected business opportunities, under the guidance of an expert investment and management team. Anuva was incorporated in 2014 in accordance with section 12J of the South African Income Tax Act and has raised more than R265 million in capital since. It is licensed as required under the Financial Advisory and Intermediary Services Act.<\/p>\n

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MyPR: How section 12J investments complement the business rescue process: CEO of MasterCare \u2013 Wesley Rabie Photo: Image Supplied South Africa\u2019s leading home appliance repair and maintenance brand is poised for spectacular growth thanks to the success of two pro-business processes introduced by local lawmakers. The firm used both the Department of Trade and Industry\u2019s […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","ngg_post_thumbnail":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[3331],"tags":[25,1737,77,3333],"class_list":{"0":"post-137204","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-cape-town","7":"tag-cape-town-2","8":"tag-government","9":"tag-municipality","10":"tag-mycapetown-co-za","11":"entry"},"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/posts\/137204","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/comments?post=137204"}],"version-history":[{"count":0,"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/posts\/137204\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/media?parent=137204"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/categories?post=137204"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/tags?post=137204"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}