Socks are big in South Africa. Just ask any of the number of specialist sock retailers who’ve clearly identified a market with plenty of opportunity. But, for any business to take its operations to the next level, scale is important. Cape Mohair, which started producing small quantities of socks in 1990 had a vision to become the largest mohair sock producer in the world. Now, thanks to a 12J investment from Anuva Investments, the company is one step closer to making this a reality.
Cape Mohair manufactures a niche product called the Medi Sock using a specialised combination of mohair from Angora goats and bamboo. The unique qualities of this product make it ideally suited to people with diabetes, circulatory problems and Reynaud’s syndrome – a medical condition that causes some areas of the body such as fingers and toes, to feel numb and cold. Due to its capillary capability, mohair is antibacterial as a fibre and also resists odour by wicking moisture away from the foot.
Cape Mohair had a maximum production capacity of 70 000 units per month but could not keep up with local and international demand for their Medi Sock. At Cape Mohair, 60 machines were running lines for the Medi Sock as well as for the rest of the diversified product range. This was hindering the efficiency and production of the core product.
As with most SMMEs in the country, Cape Mohair falls into the financing gap known as the ‘missing middle’ and, with a shortage of working capital, Cape Mohair was unable to reach its full production capacity. A synergistic partnership between Cape Mohair and Anuva Investments, however, has seen the 12J Venture Capital Company (VCC) take a 46% equity stake in the local sock manufacturer, which will see production more than triple.
SARS has written Section 12J into the Tax Act, which offers taxpayers a 100% tax deduction in the year of investment if they invest in small and medium-sized enterprises (SMMEs) by way of subscription of shares in a Section 12J Venture Capital Company (VCC). With the investment into Cape Mohair by Anuva Investments, Cape Mohair’s sock machinery has been substantially increased, seeing capacity increase to 210 000 units per month.
“Our investment in Cape Mohair is the exemplar of Section 12J. The production of Mohair is a labour-intensive process providing many South African jobs, especially in rural areas where it’s needed most. An estimated 60 jobs were either saved or created with this investment,” says Neill Hobbs, co-founder and director of Anuva Investments.
“With access to equity funding, Cape Mohair is now able to use this expansion capital to grow and add value in realizing our vision to become the world’s premium mohair sock manufacturer,” says Cape Mohair CEO, Denys Hobson.
The addition of the Cape Mohair acquisition into Anuva’s portfolio diversifies their spread of investments and mitigates risk. “From shearing mohair from Angora goats in the Eastern Cape, to the manufacture of socks in the Western Cape and tax breaks for South African Section 12J investors, this is the intention of Section 12J,” concludes Hobbs. -Press release