1 November 2017 – JSE-listed Ecsponent Limited (“Ecsponent”) announced today that it has secured an international funding facility for USD 10 million (R142-million) from a UK-based corporate financier.
To date, Ecsponent’s Investment Services business unit has raised over R1-billion capital through its listed preference share programme, which has subsequently been deployed through the group’s various business units.
The group’s expertise in raising and profitably deploying capital has been a key driver behind its exponential growth since 2010. During the 2017 reporting period, it increased operating profit by 416%. This substantial growth momentum allows the group to continue broadening its funding base and thereby reducing the cost of capital, with the net result of ongoing and improved profitability.
The US dollar-based funding will be deployed to expand Ecsponent’s growing African operations and will be deployed through the secured Business Credit operations. and, explains Terence Gregory, CEO of Ecsponent Limited, will allow the group to expand operations in the African territories in which they operate:
“The demand for funding in these territories is significant and the offset is therefore secured. In addition, the deployment of dollar-based funds will result in an increase of hard currency assets on the group’s balance sheet.”
Ecsponent’s Business Credit unit, Gregory continues, “Addresses the demand for funding and other challenges that SMEs face in South Africa and selected African markets. The banking sectors of many sub-Saharan African countries have significant growth potential but require funding to unlock it. Traditionally, credit provision in these countries lags significantly behind development requirements – a situation aggravated by many banks still applying traditional credit processes.”
“While providing an efficient and transparent service to clients, the Business Credit unit’s strength lies in its model that secures transactions to minimise risk. By applying this model, Ecsponent never takes an unsecured position in respect of credit agreements. Additionally, we develop a deep understanding of the nature of our clients’ businesses and their operations, which further minimises risk for the group – another key element that ensures profitable growth.
The nature of these transactions is typically medium-term, but with a short-term call-up to ensure liquidity for the group.
“The group will remain prudent when allocating capital and new funding agreements will continue to be based on demand and secured offset capabilities. While this additional funding facility provides the opportunity for accelerated growth and profitability, the group’s proven business strategy will be perpetuated without change,” Gregory concluded.