Mvela acquires 65% stake in Merchant Factors
MVELAPHANDA Holdings has acquired a 65percent stake in Cape Town-based Merchant Factors, a company that provides funding to small businesses.
The deal cost Mvela R120million, which was funded by Rand Merchant Bank Corvest, a private equity company in the FirstRand Group.
The remaining 35 percent stake is held by management.
Johnny Philippou, managing director and founder of Merchant Factors, said: "We are very excited about our new partnership with Mvelaphanda Holdings. Together we will develop a joint strategy to offer empowerment and working capital funding to the SMME market that is central to the success of this segment of the business community."
Mark Willcox, chief executive of Mvelaphanda Holdings, said: "We see our investment in Merchant Factors as an opportunity for us to support the SMME market, which is a priority for the country's socio-economic development agenda.
"Merchant Factors has been in operation for over 20 years and is the absolute leader in its field. We will work closely with them to grow the company's presence in this market."
Charles Maisel, founder of Black Umbrellas, a recently launched incubator for small black businesses, said start-ups that had not made use of bank loan facilities still needed to show that they could be viable.
"The SMME must be an honest borrower," Maisel said. "What this means is that the SMME must have a track record of borrowing money from either friends and family or from a financial institution and have the integrity to pay back their debts no matter what."
Dumisane Mpafa, director of SMME Solutions, said: "Judging from the jobless economic growth we have seen in the past few years, the current approach of developing SMMEs is definitely not working.
"There should also be tax incentives for businesses that create employment. The incentives should take into account the quality of jobs created, measured by the salary paid; the number of jobs created and the sustainability of those jobs measured by the period of employment."