FAQ

FAQ

How much does SEAF invest?

SEAF’s investment ranges from BDT 8mm (~USD 100,000) and to BDT 38mm (~USD 0.5mm) in a single round of investment. The money can be disbursed in one or multiple tranches. There is scope for a follow-on investment in the same investment range provided the Company proves growth potential, implements accounting and governance system, and achieves significant profit earning capability. The stage of investment or need drives the investment amount. Note that SEAF provides growth capital primarily to fund capital expenditures, long term working capital, business development etc.

 

What are the criteria SEAF looks for in a prospective investee?

The profile of SEAF’s target companies will be similar to the following table:

Investment Criteria

Target Investee Profile

Legal Status

Private Limited Company

Financing Requirement

BDT 20 mm and BDT 77 mm

Total Project Size

BDT 50 mm to BDT 400 mm

Revenue (Actual / Pro Forma)

BDT 100 mm to BDT 600 mm

Cash Flow

Fulfill 1.5x mandatory investment service requirements within 2-3 years

Years of Operation

1-5 years

Stage

Start up (ready for roll-out), Early, Growth / Expansion

Use of Funds

Capital expenditures, market / business development, working capital

Sector

Information Technology, Agro, Clean/ Renewable Energy, Services, Manufacturing, Exports etc.

Environmental & Social

Compliant or willing to be compliant (with SEAF support) with IFC ESG Guidelines

Alternate Sources of Finance

Unable to access banks for 100% of funding requirement for various reasons

Accounting/Reporting

Maintains (or willing to maintain, with SEAF support) proper books of accounts

Management Capacity

Strong domain knowledge, relevant experience, growth potential, transparent

Sponsor

Coachable, transparent, reputable, requisite capital and time commitment

Corporate Governance

Maintains (or is willing to maintain, with SEAF support) effective and transparent corporate governance system

 

How is SEAF different from Banks/NBFIs?

SEAF’s investment is different from that of Banks/NBFIs in many ways. Some key points are provided below:

Point of Difference

Banks/FIs

SEAF BV

Collateral (other than business property)

  • Must
  • Not Required

Risk taking for early stage high growth initiatives

  • Do not take any risk
  • Risk taker for promising businesses

Investment Repayment Structure

  • Not flexible and designed according to Bank’s fixed rule.
  • Flexible and designed to match firm’s cash flow.

Investment tenor

  • Usually shorter term
  • Longer term

Business Concentration

  • Traditional businesses
  • Skeptical to innovative ideas
  • Open and welcome early stage, new ideas and new businesses

Involvement in business decision and policy making, and corporate governance

  • No involvement
  • Closely involved

Business Support Services

  • Usually no Business Support Services provided.

 

  • Various Business Support Services provided to improve productivity and efficiency

What is Private Equity and/or Venture Capital Investment?

Private Equity (PE) and Venture capital (VC) is financial capital provided to private companies that have high-potential and growth prospect. The fund earns money by owning equity in the companies it invests in, which usually have a novel technology or business model in high technology industries, or something unique that differentiates the business and makes it unique. The VC fund is provided at earlier stage of any companies whereas PE is for later stage companies.

 

What is Equity Investment?

Equity Investment is provided to Companies in exchange for ownership stake in the company and, as shareholders, the investors’ returns are dependent on the growth and profitability of the business. SEAF’s equity investments could be in preferred or common shares. Target tenor of SEAF’s investment is usually 3-5 years.

 

What is SEAF’s interest rate?

There is no interest rate on SEAF’s investment as SEAF does not provide loans. SEAF invests as equity partners and hence SEAF takes dividends throughout the period of its investment. The rate or amount of dividend varies across investments based on risk profile the business, its management, and its growth potentials.

 

How much time does SEAF take to give Investment decision?

It can take around 3 months to complete the disbursement from the day of initial meeting. The timeframe can fluctuate based on investee’s willingness and promptness to provide company related information needed to complete SEAF’s due diligence process.

 

What sectors/ industries SEAF invests in?

SEAF is sector agnostic and has no barrier on investing in any sector/ industry. But SEAF prefers to invest in growth sectors such as IT and, manufacturing related sectors.

 

How does SEAF monitor the Investments?

SEAF works side by side with entrepreneurs as a partner. SEAF tries to identify a company’s training and development needs, assists in developing company’s accounting system, and provides corporate advisory development and maintenance advices. SEAF regularly monitors company’s financial performance, conduct visit to company premises to see progress, and also work closely with the entrepreneur by arranging meetings and strategic sessions so that SEAF can play a role in the improvement and development of the company. The above processes and procedures are all part of SEAF’s monitoring efforts.

 

How SEAF exit any Investment?

Exit will depend on the investment structure. It could be a self-liquidating structure, IPO, third party sale of shares, or share buyback by the entrepreneur.

 

What geographic areas does SEAF invest?

So far SEAF has invested in areas adjacent to Dhaka, Tangail, Rajshahi and Khulna. SEAF is actively considering more regions under its coverage.

 

Can SEAF help me find key people?

SEAF has relationships that will allow you to find the right people when you need them. SEAF can use its local and global network (across 26 countries) to assist you grow your business. SEAF tries to provide market linkage support to its investees so that they grow to their fullest.

 

What if an Investee company needs more money?

SEAF has scope for follow on investment. It wants to see new, profitable growth stories. SEAF will provide follow on investment if it helps to keep things on track and moving smoothly.

 

Will SEAF sign an NDA (Non-disclosure Agreement) before prospective investee explains his/ her business idea?

As an institutional investor, SEAF is committed to protect the intellectual properties of the entrepreneurs it works with. SEAF is here to support companies financially so that they can grow further. Typically SEAF does not sign any NDA unless the Company requests so. However, SEAF welcomes the request of signing NDAs.

 

What is Corporate Governance and why is it necessary for growth?

Corporate governance refers to the structures and processes by which companies are directed and controlled. Corporate governance concerns the relationships among the management, Board of Directors, controlling shareholders, minority shareholders and other stakeholders. Good corporate governance contributes to sustainable economic development by enhancing the performance of companies and increasing their access to outside capital. It also helps companies operate more efficiently, mitigate risk and safeguard against mismanagement. It makes companies more accountable and transparent to investors and gives them the tools to respond to stakeholder concerns. Corporate governance also contributes to development. Increased access to capital encourages new investments, boosts economic growth, and provides employment opportunities.

 

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