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Could crowdfunding save SA Express?

‘It’s time that small players come out when maybe the big players will not be able to survive’: Uprise Africa CEO Tabassum Qadir.

NOMPU SIZIBA: South African Express employees have engaged Uprise Africa to help them raise funds through a crowdfunding initiative to save the airline. South African Express could be liquidated soon if there’s no buyer for it in good time, and this initiative is certainly running against the clock.

To tell us more, I’m joined on the line by Tabassum Qadir, the CEO of Uprise Africa. Thank you so much, Tabassum, for joining us. This sounds like a great and noble project, so just tell us how you plan to raise funds for the SA Express employees through your crowdfunding initiative. What quantum are you targeting, and within what timeframe?

TABASSUM QADIR: Thank you very much. Uprise Africa is an equity-crowdfunding platform in South Africa. The concept is very new in South Africa, but globally it has been around for the last six, seven years. A very small amount from investors is invested in return for equity shares. It is a highly regulated space. It was not easy to come up with this concept in South Africa because it had to go through a lot of challenges, explaining to the regulators how important it is in this landscape.

SA Express is concerned, yes. We were looking for a good rescue story, and that’s where we initiated a proposal at a point where we were introduced to South African Express employees, to the Department of Public Enterprises, and they were very excited when they heard that there is an alternative option available to save the airline.

NOMPU SIZIBA: So tell me, whom do you reach out to, to be able to invest in this idea? Of course, whatever money they put forward is in exchange for equity in the airliner.

TABASSUM QADIR: We have to approach investors everywhere. Globally we have seen the trend that, when there is a community project or a large based employee project, it is very successful to launch such kind of campaigns where the ownership is distributed towards the employees themselves. It is also one of the financial-inclusion initiatives where everybody is able to participate.

The minimum investment and the maximum investment is determined from the project owners – in this case, these are employees. They would have to come up with a strong business plan and have to convince first the platform that, whatever they are proposing, a new business plan or a new business model will, like any investment opportunity, have to go through the compliance and legal team and due diligence. After only that we determine that, yes, it is a worthy project. We would put it on our platform, where the everyday investor would be able to invest.

NOMPU SIZIBA: So where are we right now? Does this still have to go through that process that you’ve just outlined, or is it a done deal?

TABASSUM QADIR: No. We believed that there’s lots of potential in this deal after the initial review was done. Obviously, when this sector is in liquidation it has to go through a process and protocols of liquidation.

Because it is not final liquidation, and it is still in provisional liquidation, what we did was we made a bid of expression of interest that this is our expression of interest, a joint venture of ethics with employees and Uprise’s platform. When it’s approved, we want to crowdfund this initiative. At this point we have been approached by the liquidator and there are certain milestones which need to be achieved.

NOMPU SIZIBA: Yes. The reason why I’m asking this is because I know that everything is very time-sensitive. I think decisions are set to be made around the liquidation in September, which is around the corner.

TABASSUM QADIR: No. September is a cold date. It does not mean that the airline will be liquidated in September.

This September the court has to be satisfied enough that there is a potential. And I think there are not only this offer but other offers as well, and it’s now up to the liquidator and the shareholders to decide which is the best one. They have to satisfy the court.

NOMPU SIZIBA: Understood. But, in terms of timing and the appetite to invest in this crowdfunding – because presumably you would need to be able to show that, hey, we’ve got so much in the bank, we’re up for actually investing in SA Express – you’d have to do that within a certain time. That’s why I’m worried about the time factor even if there’s no liquidation, say, until December or January or whatever it may be.

TABASSUM QADIR: You can close a successful campaign between 40 to 90 days – a good successful campaign where the champions really take the ownership of promoting the campaign. And, remember, it can be promoted not only locally, but also globally.

We have seen when we have done two campaigns, just as a favourite as a prototype, we have seen 30, 40% investment coming from abroad. Here we are talking about small investments, not big investments. The amount will be small, but it can really build a class of owners who are interested in the brand’s success, because people do care about things that they own.

NOMPU SIZIBA: But, just in terms of what’s happening to the aviation sector globally, do you think people would have an appetite to invest in this right now?

TABASSUM QADIR: If you see that it way, you’ll see it is the best, because you avoid this shuffling. The world is not the world, even though the aviation world and the tourism world will not remain the same. Because I do come from an aviation background, I understand that it’s time that small players come out when maybe the big players will not be able to survive. That doesn’t mean that travel will stop. In three months or six months down the line, people will need to travel – and air connectivity is important, especially with the smaller towns.

It doesn’t look like the big players will be able to survive with these kinds of liabilities they have and the new kind of market we see the next three years. But, for a small operator, I think there is a very good chance that they come up with the right size of fleet. They do not have to do like too many fleets do. A small fleet, with a small structure, and a very lean structure, I think has a very good chance. I think it’s a blessing in disguise – otherwise an airline cannot be restructured while it is flying. So you have three to six months where there will be hardly any traffic. It is the best time for a restructuring.

NOMPU SIZIBA: Indeed. Tabassum, thank you so much. It’s very interesting, and I wish you all the very best in that endeavour.

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Is it too late to shift the R1bn dished out to Mango over to SA Express?
It’s SAExpress that’s facing liquidation, not Mango!
Does the crowd funder want equity in an airline run by the DPE?

No thanks, already crowd funding the commie anc with my capitalist free market taxes.

No thanks. Good money after bad.

End of comments.

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