Westbrooke Alternative Asset Management, South Africa’s largest Section 12J asset manager, has confirmed that it has successfully closed its February 2019 fundraise, with over R750 million raised across four local Section 12J investment strategies. These strategies include investment into businesses in student accommodation, moveable asset rentals, hospitality and asset-backed operating businesses. Investors were also able to diversify their investments across these strategies, by investing through three S12J investment portfolios.
Dino Zuccollo, S12J fund manager at Westbrooke Alternative Asset Management who is a founding member of the S12J Association of South Africa says, “We see increased growth each year from our now more than 700 passive investors. We raised R420m in 2016, R470m in 2017, R565m in 2018, of which over R900m has been invested into small/medium sized business across South Africa. We are very pleased with our 2019 raise of more than R750m. Our 2019 fundraise was in line with our targets and we were able to solidify our position as South Africa’s largest S12J asset manager. This highlights investors’ growing interest in this asset class and confirms that National Treasury’s intention to encourage investment in the SA economy and to stimulate job creation is on track.”
It is estimated that the S12J market now has upward of R5 billion under management, positioning Westbrooke as the market leader in the S12J industry with approximately R2.3 billion in S12J assets under management.
Jonti Osher, a S12J fund manager at Westbrooke Alternative Asset Management adds, “Westbrooke spearheaded the formation of an industry body to prove the viability of extending the incentive past June 2021 (there is a 12-year sunset clause). The body, The Section 12J Association of South Africa,aims to compile, what the association believes is the relevant information that National Treasury can use to assist in understanding the success of the incentive and motivating to extend the legislation post the sunset clause.”
The S12J Association will look to investigate the number of Section 12J investments made, how many jobs have been created and sustained, how much S12J capital has been deployed, what sectors of the economy and geographic areas are benefiting, and economic activity around S12J, amongst others. The body will track successes as well as areas which can be improved for the benefit of the industry and investors.
S12J is an investment tax incentive which was introduced by the South African Revenue Services under Section 12J of the Income Tax Act in 2009. It wasn’t until 2014, however, when SARS made a number of favourable amendments to the Section 12J legislation, that the industry began to gain traction amongst investment circles.
The intention of S12J is to boost the South African economy and promote job creation by encouraging investment into a range of private companies which meet defined criteria. The incentive gives individuals, companies and trusts the ability to write off 100% of their investment against their taxable income in the year they invest. Therefore, investors can benefit from up to 45% immediate tax relief, thereby reducing the cost of the investment, and enhancing overall returns rewarding investors for participating in the economic stimulation of the SMME sectors.