Namibia: Mineworkers Union to Invest in Venture Capital Fund

11 December 2019

The Mineworkers Union of Namibia (MUN) will capitalise on 25% share ownership in their investment vehicle Nammic to invest in a venture capital that will earn its members additional income and shield them further from job losses.

Union president Eben Zarondo announced last Friday that they have initiated a just transition plan (JTI) aimed at addressing adversities faced by their members, accompanied by job losses during economic downturns.

The estimated value of the MUN shares in the Namibian Mineworkers Investment Holding Company (Nammic) is in the region of N$130 million.

Zarondo said the JTI is their long-term strategic plan, which involves transferring its 25% stake in Nammic to a special purpose vehicle (SPV), which is held directly by the mineworkers, who are members and ex-members.

MUN intends to invest into a venture capital fund (VCF), whose sole focus will be investing in high-growth companies which are climate change-aware and keeping up with fourth Industrial Revolution solutions.

Venture capital funds/investments seek private equity stakes in start-up and small to medium-sized enterprises with strong growth potential.

These investments are generally classified as high-risk/high-return opportunities.

MUN will be the anchor partner in the fund, and will be welcoming other limited partners to invest, while the fund will be managed by the Growth Catalyst Fund, a South African company.

MUN, through a strategic partnership with Monasa Advisory & Associates and the Growth Catalyst Fund, together with Uhuru Energy, also intend to invest in the first smart agriculture farming module (SAFM) in Africa.

SAFMs are innovative farming practices which use a combination of modern technologies to produce multiple outputs with different revenue streams.

Other areas of interest for the VCF include companies operating along the mining value chain, with the potential to generate employment for the mineworkers in fields such as energy, chemicals, logistics, and beneficiation.

According to the spokesperson of the fund and Monasa Advisory & Associates representative Jason Kasuto, 2020 will be used to finalise the limited partners' investments into the venture capital fund, alongside the MUN's investment from the proceeds of the sale of shares in Nammic to members.

He added that in the same year, they will empower potential entrepreneurs to make them investor-ready through a series of reality-based education and training programmes run by the Growth Catalyst Fund.

Kasuto noted that they will use a bottom-up approach to venture capital in creating their investment pipeline.

In their bottom-up approach, a reality-based governance system will be utilised to cover governance tools needed for the businesses supported by the VCF.

The deployment of the VCF capital will only start in 2021, after all the preparations have been done.

The returns from the VCF investments will accrue to both MUN and the SPV (a trust which will hold the interests of the members).

Kasuto explained that the registered trust, which is a SPV, is for the benefit of the members, who will subscribe to units when the information memorandum is issued next year.

The SPV will hold 25% of the shares in Nammic, and will own the rewards company which will allow members and their beneficiaries to directly get discounts on different purchases made with authorised vendors.

Such purchases include airtime and fuel purchases. The rewards company will also get some value from the purchases that members make.

The subscribing members will be entitled to dividends declared from their Nammic shares and dividends declared from the profit made by the rewards company owned by the SPV.

Moreover, it will include the returns arising from the VCF investment at the end of the funding period (which is the carried interest split between MUN and SPV).

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