We are pleased to share with you that yesterday shareholders unanimously approved the Pink Orchid transaction. Pink Orchid is an investment holding company incorporated in Botswana. This investment results in the Ecsponent Group (“Ecsponent” or “the Group”) acquiring 34.89% of the ordinary share capital of Zimbabwean Stock Exchange-listed GetBucks Zimbabwe and increasing its investment in MyBucks S.A. GetBucks Zimbabwe is one of the most profitable entities in the MyBucks international group.
This transaction, together with the balance of the announced corporate actions, supports the ongoing growth trajectory the Group has reflected since 2011, contributing to the portfolio growth and medium-term liquidity. More importantly, the transaction enables the Group to significantly grow its Equity Holdings portfolio and further diversify across sectors and geographies, introducing additional hard currency revenue streams to the business.
Along with the additional corporate actions announced earlier in 2018, the transaction will:
- position the Group for future value-enhancing investment opportunities;
- create an efficient and professional management structure for the Group’s equity investments;
- improve the balance sheet concentration exposure;
- provide a balance between the Group’s short-term cash generative assets and longer-term growth assets; and
- increase the Group’s equity holding in assets considered to have high growth potential.
2018 in review
2018 has been another productive year for Ecsponent in which several milestones were achieved. 2019 should be no different as a solid foundation has been created to facilitate continued growth.
At the end of 2017, we had announced that the Group’s assets had grown from R645 million to R1,597 million. By the end of the next financial period, June 2018, that number had grown to R2,235.8 million.
This asset growth is significant to investors as it demonstrates the Group’s ability and drive to create a robust and sustainable portfolio of investments that will balance short- and long-term priorities. Since the appointment of the management team at the end of 2010, the Group has invested strategically in its Credit operations to generate short-term cash flows and liquidity. By 2018, these investments have yielded returns that enabled the Group to grow its balance sheet.
In doing so, Ecsponent is targeting an asset split between its Credit operations and Investment Holdings portfolio, that matches the liability horizons of the its debt programmes. This is fundamental to the Group’s corporate actions.
During 2018, the Group’s Equity Holdings portfolio increased as a result of several significant transactions, including:
- Committed to a R400 million investment in venture capital company (“VCC”), Capitis Equity, which is a fully-empowered VCC in terms of Section 12J of the Income Tax Act.
- Increased the investment in Luxemburg-based FinTech innovator MyBucks S.A., listed on the Frankfurt Stock Exchange.
- Added African Media Group, Truth Digital to the Equity Holdings portfolio.
- Took a strategic stake in a growing, specialised healthcare group, Go Life International, that holds a primary listing on the Stock Exchange of Mauritius and a secondary listing on the JSE’s ALTX. primarily on the Stock Exchange of Mauritius and the JSE’s AltX.
- Expanded the Group’s African investment reach with proposed investments in:
- Pink Orchid, an investment holding company incorporated in Botswana.
- Renewable Energy Producer, Invest Solar Africa, which is currently installing a landmark solar plant in Zimbabwe, expected to add 22MW to that country’s power
Looking forward to 2019
In finalising the transactions announced in 2018, the Group will continue to enter into transactions that support sustainable returns in high growth, niche market sectors. This will include renewable energy and financial services amongst other sectors.
Ecsponent’s successful preference share programme has been providing investors with stable, predictable returns since its launch in 2014. The Group recently introduced a series of JSE-listed medium term notes to complement these investment opportunities and provide investors with a choice between regular dividend (preference shares) or interest (from notes) income. With the first tranche of preference shares being redeemed in September 2019, we look forward to celebrating continued growth and success in this year.
Career move by Brandon Topham
It is with sadness that we have announced that Brandon Topham has resigned as independent non-executive director and member of several board committees with effect from 31 January 2019. Brandon has a great career opportunity and his employment is our loss. He has served as an Ecsponent director since 2010, when the Group’s management changed, which initiated a change in strategy and direction for Ecsponent.
We are fortunate to have board members of calibre and the skills, experience and balance of the board of directors remain intact. The board and management extend its appreciation to Brandon for his services to the Company and wish him well in his new endeavours.