3 April 2017 – JSE-listed, African financial services company, Ecsponent Limited, has received shareholder approval to conclude a series of transactions announced in December 2016.

 

“Over the past six years the Group has grown from an asset base of under R9m to over R1bn through a combination of acquisitive and organic growth. The result of this growth has been an extended infrastructure and overhead accrual with the associated increase in management span of control.” says Terence Gregory, CEO of Ecsponent.

 

Gregory says that the Group is in the fortunate position of being able to effectively refine its operations to ensure the continued alignment with the strategies which have delivered the results to date. “The business model is proven and has delivered sound results in the past. We are confident that concluded transactions will contribute to further improving the Groups results in line with the objectives we have set ourselves,” he adds.

 

Following the approval of the transactions, Ecsponent will continue to operate across three pillars – capital raising, business credit, and listed and private equity.

 

Ecsponent recently announced a strong set of second interim results for the year ending December 2016 and has made two new board appointments to strengthen the leadership and enable further growth in line with its strategic objectives.

 

Transaction summary

The Group exited the retail credit sector in SA in 2015 and the transactions approved by shareholders paved the way for the exit in Zambia and Botswana. Finalising the strategic exit, the group is disposing of its 50 percent interest in Sure Choice, incorporated and operating in Botswana. It also agreed to dilute its interest in Ecsponent Financial Services Zambia (EFS Zambia) from 100% to 25%, through an issue of shares by EFS Zambia to GetBucks MU. This results in a minority interest which will be managed through the Groups private equity division.

 

Through these transactions, the group is aligned to focus on providing business credit to SME’s and in the enterprise development sector’s.

 

The transactions which were approved also resulted in the disposal of other assets deemed non-core to the Groups strategy including a 51 percent stake in Clade Investment Management and the 70 percent stake in Ecsponent Holdings incorporated in Botswana.

 

The Group’s enterprise development vehicle Ecsponent Development Fund had developed a diverse client base resulting in substantial infrastructure requirements. Management’s assessment of the opportunities resulted in a more refined focus on the corporate target market. This market is the largest growth market and provides a reduced credit profile. As a result, the client portfolios which are outside of this target market have been disposed of as a going concern to Ecsponent Investment Holdings .

 

“The group has shown success in the transition to providing secured business credit and is set to make inroads in the enterprise and supplier development sectors. Here, the demand for credit remains buoyant as most emerging businesses battle to access funding. This market is further stimulated by the changes to the BEE codes in South Africa. In addition to credit, our model provides skills transfer and upliftment of vendors while supporting corporate businesses to channel their preferred procurement spending in areas where growth and development are most needed,” adds Gregory.

 

Furthermore, in a transaction valued at just under R263-million, the group has acquired a stake in the fintech group, MyBucks. MyBucks is listed on the Frankfurt Stock Exchange and provides state of the art, virtual banking solutions to customers around the world. MyBucks is a perfect fit in respect of the Group’s target profile as the internationally listed group offers a high technology, high profit margin business, whilst providing significant barriers to entry. The acquisition substantially bolsters the Groups equity investment arm and provides effective diversification without the need for additional infrastructure or overhead growth.

 

A more streamlined group structure after the approved transactions:

Transaction information

The Group exited the retail credit sector in SA in 2015 and the transactions approved by shareholders paved the way for the exit in Zambia and Botswana. Finalising the strategic exit, the group is disposing of its 50 percent interest in Sure Choice, incorporated and operating in Botswana. It also agreed to dilute its interest in Ecsponent Financial Services Zambia (EFS Zambia) from 100% to 25%, through an issue of shares by EFS Zambia to GetBucks MU. This results in a minority interest which will be managed through the Groups private equity division.

 

Through these transactions, the group is aligned to focus on providing business credit to SME’s and in the enterprise development sectors.

 

The transactions which were approved also resulted in the disposal of other assets deemed non-core to the Groups strategy including a 51 percent stake in Clade Investment Management and the 70 percent stake in Ecsponent Holdings incorporated in Botswana.

 

The Group’s enterprise development vehicle Ecsponent Development Fund had developed a diverse client base resulting in substantial infrastructure requirements. Management’s assessment of the opportunities resulted in a more refined focus on the corporate target market. This market is the largest growth market and provides a reduced credit profile. As a result the client portfolios which are outside of this target market have been disposed of as a going concern to Ecsponent Investment Holdings .

 

“The group has shown success in the transition to providing secured business credit and is set to make inroads in the enterprise and supplier development sectors. Here, the demand for credit remains buoyant as most emerging businesses battle to access funding. This market is further stimulated by the changes to the BEE codes in South Africa. In addition to credit, our model provides skills transfer and upliftment of vendors while supporting corporate businesses to channel their preferred procurement spending in areas where growth and development are most needed,” adds Gregory.

 

Furthermore, in a transaction valued at just under R263-million, the group has acquired a stake in the fintech group, MyBucks. MyBucks is listed on the Frankfurt Stock Exchange and provides state of the art, virtual banking solutions to customers around the world. MyBucks is a perfect fit in respect of the Group’s target profile as the internationally listed group evidences a high technology, high profit margin business, whilst providing significant barriers to entry. The acquisition substantially bolsters the Groups equity investment arm and provides effective diversification without the need for additional infrastructure or overhead growth.

 

In addition to these transactions and the results announcement, Ecsponent has made two new board appointments to strengthen the leadership and enable further growth in line with its strategic objectives.