AltCap Section 12J Intro

Deton Private Wealth would like to welcome you to the first AltCap Venture Capital (PTY) LTD, a divisision of Deton Private Wealth, Newsletter. The purpose of this newsletter is to firstly introduce you to the world of Section 12J investing, if you haven’t already started investing, and secondly, to introduce you to AltCap and its team.

So to avoid rambling on over Section 12J for too long, I will include the link to the AltCap website where we have an abundance of Section 12J information, and rather spend the time discussing the benefits of Section 12J.

If you don’t know what a Section 12J is, then let me fill you in a little. This is an act of the SARS income tax act, which allows South African tax payers, companies or trusts to invest, and claim back up to 45% in income tax. Simply put, SARS wants you to invest in Venture Capital. So why the drive to get investment flows into the “risky” world of Venture Capital? Our main thinking behind this is to drive the SME market, and subsequently the South African economy. As an Entrepreneur myself, I see big value in this for not only our clients, but also for the country as a whole.

Having invested in different asset classes within the South African market over the last few years, we know that bubbles happen, and that markets crash. As we stand today, we are seeing cryptocurrencies giving unheard of returns in as little as 2 or 3 years. We have shares on the JSE doubling shareholders returns in a 12-month period. All of this could be seen as highly profitable, but also highly risky. Venture Capital has been seen as a risky class, and yes, for the most part it is. One of the main benefits to Venture Capital investing, if you avoid the herd mentality investing that happens with listed assets. It also protects against Political, and economic risk. Let’s take Cryptocurrencies(Bitcoin) as an example. The fact that they have risen so much in recent months makes them attractive to not only high-level investors, but also to the man in the street. This investment has grown exponentially due to high demand, but it could also fall out of favour just as quick. Naspers is a share listed on the JSE, which has risen over 90% just this year. This is great if you are holding that share, or an index with a high weighting in the share, but not great if markets revert.

So why am I telling you about these great investments, and not about AltCap and our offering. Well simple put, we invest in unlisted assets, which removes the risk of herd mentality! We as the investment committee find assets that could give Naspers returns, or could even be the next Naspers, but due to the fact that these unlisted assets can only be bought on private placements, means their share price will not over run, or become overvalued. The value on the share is only worth what the company is worth, and as such, similar returns can be achieved with a much lower risk.

With our main focus on high dividend and high capital growth, over fund aims to achieve an IRR of over 30% per year for a 5-year holding period. This in the current market will enhance any annuity requirements, or provide high growth for future planning.

So, if your marginal tax rate is on the upper end, this investment could not only diversify your current portfolio, but also reduce your taxable income by as much as 45%. Please feel free browse our website to obtain some of the information on Section 12J investing or on AltCap on our website at www.altcap.co.za, or contact us directly on info@altcap.co.za, or contact your financial advisor at Deton.

We look forward to hearing from you soon, feel free to ask any questions around this. If you would like to look at more documentation or presentations on the finer details, let us know.