Johann Rupert: Business Partners explain ‘contentious’ R1bn donation

The firm in charge of managing Johann Rupert’s R1 billion contribution to the fight against coronavirus have clarified the terms and conditions of the donation. Things aren’t as black and white as they seem.

A loan or a donation? Johann Rupert’s coronavirus cash explained

Business Partners detail exactly how the dollar-billionaire will be giving the state a much-needed cash injection to help smaller businesses come through the COVID-19 storm. At first, the R1 billion fee was understood to be a strings-free donation. But that description has been questioned recently.

The EFF called Johann Rupert a loan shark, after learning that an element of the deal involves some form of repayments. In a communication sent to us on Tuesday evening, Business Partners refute these allegations:

“The company would like to stress, that the money made available for small and medium enterprise (SME) support by the Rupert Family and Remgro is in fact a donation. It would also like to reiterate that the administration of these funds are subject to certain criteria.”

“These criteria have been specifically designed in order to sustain the fund in the long-term. The objective is to administer the donation in a way that will retain capital in the trust after the COVID-19 crisis.” 

Business Partners

Yes, there will be repayments – but only in some cases

However, the group have not denied that there will be some form of loan payments for business to make in the long run. They explain that whatever grant businesses are given in the next 12 months will not be subjected to the terms of a loan. But there will be a requirement to repay money if its still being borrowed a year after that grant is given.

According to the financial specialists, they want to keep a flow of funds between the two parties “to ensure capital is available in the future” for any similar, nationally devastating challenges:

“Business Partners will make available two distinct and separate assistance programmes for both Formal Sole Proprietors and SMEs to ensure widespread support. We can confirm that the assistance includes both a grant and a grant that will only convert into a loan in 12 months, once the business is on its feet.”

“It means beneficiaries get 12 months interest-free with no repayment obligations during this period. The loan will become repayable after 12 months, and incur interest at the prime rate. Administering funds in this way ensures that capital will be available to assist SMEs when new challenges are confronted in the future.”

The Johann Rupert donation unpacked

Although calling Johann Rupert a loan shark might be a little wide of the mark, it has been made clear that, in some circumstances, companies will have to repay any money they borrow 12 months after applying for the grant. Business Partners also explained what they – are their ultra wealthy client – expect from the agreement:

• There is no expectation on the part of Johann Rupert to receive anything in return for this donation.
• Business Partners will not be profiting from the funding it will be administering. Furthermore, the company has undertaken to perform all duties, directly and indirectly, for zero fees.
• The firm has previously managed funds for the South African Government as well international development finance institutions such as the International Finance Corporation (“IFC”).
• The repayment of the loan portion is an appeal to the beneficiaries of the initiative to ‘pay it forward’ and allow the continuing support of SMEs into the future.