Advisory support to the IDC on a major investment

One of the companies in which the Industrial Development Corporation of South Africa (IDC) has a major shareholding, has faced significant challenges over recent years due to the volatile market in which it operates and the nature of its core business lines. The IDC and the company have called on a range of consultancies to assess and assist in improving the company’s operations. However, significant problems have persisted.

Genesis was retained by the IDC to provide advisory support for this company by conducting an assessment of its operations and viability going forward. For this assessment, the Genesis team conducted a critical review of work undertaken by previously retained consultants, long-term forecasts of prices, financial modelling of various operational restructuring scenarios and quantification of the socio-economic effects of each possible restructuring scenario.

Genesis’ assessment was key in the IDC, gaining a clear grasp of the significant challenges faced by the company, without losing sight of the complexities and importance of socio-economic factors such as employment. Our financial models revealed that previously favoured restructuring scenarios were not in fact as favourable as they were put forth to be.

Ultimately, Genesis gave the IDC appropriate tools to be used in assessing this company, and played an important role in informing the IDC’s strategy for the company going forward. Genesis’ recommendation was for the IDC to consider an unbundled sale of this company through a strategic investor. As of October 2020, the IDC is seeking an investor to acquire a partial equity stake in this company.