Ecsponent Limited recently published its year-end financial results and despite a difficult economic climate the group showed significant growth.
Ecsponent has a presence in four African countries, including South Africa, and has recently announced a new asset management licence in Botswana. All this puts the company in a favourable position.
The asset management licence will enable Ecsponent to not only offer expert and affordable financial advice to clients, but will also enable Ecsponent to manage institutional funds and through this negotiate better cost structures for clients. All this will assist in putting the client in a better financial position, as opposed to forcing high fees onto clients.
How do listed shares compare to preference shares?
A listed share is an investment platform and is very precarious and will be influenced the market, as was the case when Minister Nhlanhla Nene was fired. Preference shares are more stable – one would normally invest directly in a company and receive more benefits, for example – depending on how the preference share is structured, you get paid first in terms of dividends, preference shares are also more stable, and one would not be affected too much by market fluctuations.
What are the product characteristics of Ecsponent’s listed preference shares?
While still being strictly regulated by the JSE as well as the Financial Services Board in terms of financial advice, what makes Ecsponent’s listed preference shares unique, is that it can be seen as an asset class within a client’s portfolio- it gives the investor a fixed-term investment, as well as an after-tax income or capital growth option within the preference share programme, as opposed to normal share performance characteristics.
How do Ecsponent’s listed preference shares perform and what are the terms attached to it?
The performance is very good and at this stage Ecsponent can offer clients a 9% net rate on the Class A and B preference shares. The Class B preference shares are a non- interest bearing, capital growth investment, so, therefore, it does not attract an income tax liability. This tax advantage puts the investor in a better position when looking at costs, as Ecsponent also gives 100% fund allocation from day one. On an investment of R1million, this will make a difference of R60 000 over a five-year period.