JANNIE Mouton, who has built and financed some of South Africa’s most successful businesses, says it is neither a lack of funding nor a lack of opportunities that is holding back South African entrepreneurs.

He dismisses a constant refrain heard recently at a conference of the Black Management Forum, that the shortage of black entrepreneurs and industrialists is primarily a result of the fact that banks have refused to give them loans.

“This kind of attitude worries me,” says Mouton, who started PSG Group, which has financed some of the country’s most successful entrepreneurial ventures including Capitec Bank, private school company Curro Holdings and agri-business conglomerate Zeder Investments.

Mouton believes there have never been more opportunities available for business people to create companies.

“Through black economic empowerment a lot of wealth has been given to the previously disadvantaged. They must utilise that to build businesses. There are examples of people who have done this and they’ve done well, but they’re exceptions, they’re in the minority.”

Sandile Zungu, a successful entrepreneur and politically influential vice president of the Black Business Council, has argued that black entrepreneurs cannot get money to buy equity, and without equity they can’t build meaningful businesses. “You can’t use that as an excuse,” says Mouton, “because I know exactly where GT Ferreira [one of the founders of FirstRand Bank] comes from.”

The two were at the University of Stellenbosch. Ferreira’s father was a policeman and the family was poor. “GT built his business step by step. In the beginning there was no money whatsoever available, no funding whatsoever. So that can never be an excuse,” he says.

“An entrepreneur can start small, learn about money, learn that you can borrow something and then pay it back. And as the business grows, you can borrow some more. And later on you can do a listing if you like, because then you can draw money from shareholders. Nothing can stop you, it is open to all.”

He says the popular belief that white entrepreneurs who built businesses under apartheid had easier access to funding because of government and business contacts than their black counterparts today is a myth.

“There is no doubt there are stories like that. But most of them were guys who worked their way up from nothing. “There are numerous blacks who have benefited from government deals, tenderpreneurs. There may have been people like that in the old South Africa, and apparently there were. Deals for friends. Just as there are deals for friends now.”

Mouton says that there was no “formal help” for white entrepreneurs back then. “There were banks and you had to borrow from the banks and repay them. And if you didn’t have the necessary track record you wouldn ’t get a loan.”

He also doesn’t buy the Black Management Forum’s argument that commercial banks are not lending to black would-be entrepreneurs.

“Never use funding as an excuse, because it will be available, because banks and financial institutions are sitting there with funds they want to invest. But they don’t want to give it away to somebody who hasn’t proved himself.”

Famously blunt and down to earth, Mouton is clearly irritated by the argument that development financing institutions and commercial banks are not lending money to entrepreneurs to buy equity, and because of that they can’t build substantial businesses.

“Never buy equity. Develop something yourself and then you can later on sell a bit of equity for funding. This is exactly how PSG started. Not with banking facilities. We developed the company and slowly built it up. People were not standing in line to lend us money.

“We raised zero money. We had to first prove ourselves. So never use that excuse. Never.”

He says financing institutions apply the same conditions to black entrepreneurs as to white entrepreneurs.

“They don’t ask the colour of your skin when you apply for a loan. It’s about your track record and how much work you’ve put into the business.”

Even a good business plan is not enough, says Mouton.

“It is difficult to lend money on a business plan. The business must be in operation. So it must start small and build. If somebody comes to us for money, the first thing I ask for is a set of financials. I want to see the starting point. We won’t invest in a dream or self-publicity.

There must be something there,” he said.

In practice, this means that sometimes you have to start a small business first and show that it is growing before approaching anyone.

Mouton argues that there is no shortage of financing in South Africa for good opportunities. Equity funds are crying out for opportunities to invest in. “But [what is] very important for us is, you must have started. There are unbelievable problems but South Africa is also a land of opportunities. You’ve got to bring us more than a dream and a presentation.”

Mouton, 68, rose from humble roots in Carnarvon in the Northern Cape to become a chartered accountant. He then started his own stockbroking company with a couple of friends. He started PSG in 1995 after being fired from his own company, and is now the non-executive chairman. He is irritated by pessimism and gets “bored” listening to people harping on about the problems facing the country.

“There are unbelievable problems, but it is also a land of opportunities,” he says.

What is hindering entrepreneurs, he believes, is not a lack of funding but a hostile business environment created, among other things, by too much red tape, unaffordable wage demands and labour volatility.

He does not believe the new ministry of small business will make any difference. It will merely add another layer of bureaucracy, he says.

“They ’ve never been in business. They’ll have conferences and drink bottled water and fly here and there and buy cars and have more conferences.

“They don’t have the experience of starting small businesses.”

Famously blunt and down to earth, Mouton is clearly irritated by the argument that development financing institutions and commercial banks are not lending money to entrepreneurs to buy equity, and because of that they can’t build substantial businesses.

Stake in education paying off for Mouton

Jannie Mouton’s notion of building companies slowly, brick-by-brick, is paying rich dividends.

This week, PSG announced a 30% jump in earnings, as well as a 28% increase in its dividend for the half year — cash flow generated by its big success stories, Capitec (in which it owns 28.2%), private education arm Curro (57.5%) and wealth manager PSG Konsult (62.6%).

The value of its investment portfolio has climbed 25%, worth a giddying R22.1-billion, with three-quarters of that attributable to its three big hitters.

That puts its value at around R118.49 per share — nearly 20% above its share price of R99.40 on Friday.

This prompted some analysts to rate it a “buy”, despite the fact that a large part of that depends on Capitec, which is at the whim of a fragile unsecured lending market.

But Curro, in particular, stands out as a success story of how to build a company before approaching funders like Mouton. Curro, which now owns 31 schools, listed on the JSE in 2011. Its share price soared to R24.20 this week.

Mouton’s PSG invested in Curro only after its founder, Chris van der Merwe, had built three schools. Even then, Van der Merwe didn’t approach PSG for funding — PSG approached him.

“I had that feeling [that] education is something we had to do,” says Mouton. He researched the sector and asked Sanlam to sell him its 24% stake in private education group Advtech.

Then he heard about Curro, started by “this wonderful person Chris van der Merwe who doesn’t know anything about finance but cared about education. He really cared.”

He invited Van der Merwe to make a pitch. Halfway through his pitch Mouton left, telling his colleagues he was going to invest and if they didn’t agree he would use his own money.

According to its results released this week, PSG’s investment in Curro is now worth R4.8-billion.

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