Hortfin is the first blended finance scheme for the fruit and wine industries and is aimed at fast-tracking the uptake of new entrants and supporting the expansion of existing black-owned enterprises. It was launched in October 2018.
The initiative, a partnership between the South African deciduous fruit, table grape and wine industries, the Jobs Fund and Land Bank, aims to help South African agripreneurs overcome a common dilemma – finding suitable funding to become fullfledged commercial entities. Modern approach to funding Hortfin is a R600 million ring-fenced debt fund directed at the fruit and wine industry value chains and is positioned to provide innovative and comprehensive financing and support systems in a manner that promotes job and wealth creation, social upliftment, economic growth and development, and sustainability.
Aimed at people or entities who want to enter or expand their businesses in the fruit and wine industries, it specifically targets those with at least 51% black ownership. It offers a modern approach to funding, with partners using their expertise and resources in a complementary way, and participating industries include pome fruit, stone fruit, table grapes and wine grapes.
The Hortfin model intrinsically requires a close collaboration with industry partners; its success is dependent on a close working relationship with partners such as the Treasury and the Western Cape Department of Agriculture. The latter has been instrumental in previous initiatives and has acted as key partner and funder in several programmes. The Department also took part in the initiation of this venture, and its support and commitment is acknowledged and valued.
Criteria for applicants
Hortfin is primarily targeted at agripreneurs from previously excluded groups and previously disadvantaged individuals who meet the following criteria:
They must have the ability to repay the loan.
They must consent to appropriate mentoring, capacity building, implementation of financial and administration systems, and regular monitoring and evaluation audits.
They must be able to create sustainable jobs within the three-year implementation period at approximately R300 000 per job.
They must be at least 51 to 100% black-owned or provide an undertaking to achieve at least 51% black ownership within three years.
They must be a ‘juristic person’ in the form of a company, trust or cooperative.
They must have a majority turnover from the South African deciduous fruit value chain, including pome fruit, stone fruit, and table and wine grapes.
Hortfin anticipates that 60% of its funding will be targeted at primary agricultural players and 40% on value chain growth.
How is Hortfin different?
Given the applicants targeted, the fund has a willingness to absorb relatively greater risk with relatively less security.
It is flexible in structuring finance products with an optimum matching of cash flow to repayments and offers comprehensive post-investment support and assistance regarding financial, technical and management aspects.
Hortfin encourages collaboration with other funders, commodity organisations and agribusinesses to enable the fund to grow and do more. In doing so, it relies heavily on industry bodies and local knowledge to assist with deal origination, due diligence, investment decisions and postinvestment support.
The process
When an application is received, Hortfin’s project management unit ensures that it is complete and correct before an initial evaluation is conducted.
Applications that meet the required standards and criteria move on to the due diligence phase, where issues such as financing, viability, structure and management are addressed.
This process, from pre-screening and evaluation to due diligence, can take approximately eight to ten weeks. The third phase, which incorporates the Land Bank credit committee, may take an additional eight weeks.
Hortfin’s aim is to ensure that the financing process for agripreneurs in the deciduous fruit, table grape and wine industries – from initial application to final approval – is smooth and efficient. – Michael Brinkhuis, Hortfin CEO
