Midrand Compute Distribution Business Plan — Funding Requirement and Structure
The funding requirement and the import-finance facility, drawn to R19.1m at peak and repaid to R8.7m by Year 5.
Section 20 of 25
Funding Requirement and Structure
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- 1. Executive Summary
- 2. Investment Thesis
- 3. Company and Business Overview
- 4. The Problem, Customer Need and Value Proposition
- 5. Industry Analysis
- 6. Market Analysis
- 7. Customer Analysis and Segmentation
- 8. Competitive Landscape
- 9. Business Model
- 10. Products and Services
- 11. Go-to-Market Strategy
- 12. Operating Model
- 13. Management and Organisation
- 14. Strategic Plan
- 15. SWOT Analysis
- 16. Risk Analysis
- 17. ESG and Sustainability
- 18. Implementation Roadmap
- 19. Financial Plan
- 20. Funding Requirement and Structure
- 21. Investment Case, Valuation and Returns
- 22. Sensitivity and Scenario Analysis
- 23. KPIs and Management Dashboard
- 24. Conclusion
- 25. Appendix: Detailed Financial Statements
R25m of equity does the heavy lifting on risk; a committed R55m trade-finance line does the heavy lifting on volume.
Use of funds
|
Use |
Amount (R’m) |
Note |
|---|---|---|
|
Capex — DC fit-out, MHE, fleet, IT/ERP, lab |
15.5 |
One-off platform build, largely Year 1 |
|
Peak working capital |
~34.0 |
Inventory + receivables, net of payables |
|
Pre-operating & launch |
4.0 |
Recruitment, systems, first marketing |
|
Contingency / minimum cash |
4.5 |
Operating buffer and standby |
Table 30. Indicative use of funds (peak requirement).
Funding structure
|
Instrument |
Amount |
Role & terms |
|---|---|---|
|
Equity — Tranche 1 |
R15.0m |
At close; funds capex and initial launch |
|
Equity — Tranche 2 |
R10.0m |
Start of Year 2, milestone-contingent; growth capital |
|
DFI / commercial term loan |
R12.0m |
5-year, 12.5%, Year-1 interest-only (principal moratorium) |
|
Asset finance |
R3.0m |
MHE and fleet; 5-year amortising at 13.5% |
|
Import / trade-finance revolver |
R55.0m |
Committed; secured on stock & receivables; priced ~14.0% |
|
Standby equity (contingency) |
~R20m |
Uncommitted; triggered only in a stress scenario (Section 21) |
Table 31. Recommended funding structure — blended equity, DFI/commercial and asset debt, and a trade-finance revolver.
Rationale. Equity absorbs the start-up risk and the illiquid platform build; term and asset debt match long-lived assets to long-term funding; and the revolver, the largest facility, funds the self-liquidating working-capital book, drawn only to need and repaid as stock and receivables convert. In the base case the revolver peaks near R19m (well inside the R55m limit) and net debt/EBITDA falls below 1.5x by Year 3. The R20m standby equity is a deliberate, disclosed contingency against the stress case, not a base-case requirement.
Debt serviceability
The proposed debt is sized to what the cash flows can service, with headroom. Interest cover and DSCR are thin but adequate in Year 1, the interest-only period on the term loan is deliberate, and strengthen rapidly as EBITDA scales and the facilities amortise.
|
Serviceability metric |
Y1 |
Y2 |
Y3 |
Y4 |
Y5 |
|---|---|---|---|---|---|
|
EBITDA (R’m) |
2.7 |
8.8 |
16.4 |
27.5 |
41.4 |
|
Interest cover (EBITDA / interest) |
0.9x |
2.2x |
4.3x |
7.6x |
17.2x |
|
DSCR |
1.1x |
1.8x |
3.1x |
4.5x |
6.6x |
|
Net debt / EBITDA |
10.0x |
2.6x |
1.5x |
0.7x |
0.1x |
|
Total debt (R’m) |
30.1 |
25.6 |
27.2 |
22.2 |
8.7 |
Table 32. Debt serviceability (base case). Cover ratios move from adequate to comfortable by Year 3.
Debt capacity. By Year 3 the business carries materially less leverage than its cash flows could support, giving it unused debt capacity to fund the regional scale-up without a further equity round, an important source of financing flexibility and a mitigant to funding risk.