Walk­ing away from prop­erty fi­nance

Finweek English Edition - - Companies & Markets - SIKONATHI MANTSHANTSHA

AF­TER ????? A LESS THAN GOOD START as a pub­lic com­pany at list­ing in 2007, fi­nan­cial ser­vices com­pany Fin­bond Prop­erty Fi­nance has done well enough to at­tract the at­ten­tion of re­spected in­sti­tu­tional in­vestors. It now boasts an in­sti­tu­tional share­holder base own­ing close on 30% of its shares, those be­ing Metropoli­tan Life, Corona­tion As­set Man­agers and San­lam.

Grindrod Bank and In­vestec Bank to­gether hold an­other 8,8%. Grindrod Bank (2,5%) acted as Fin­bond’s des­ig­nated ad­viser and agent at list­ing, while Fin­bond’s 2008 an­nual re­port says In­vestec Bank bought its 14,5m shares (6,3%) in the pri­vate place­ment that brought Fin­bond to the mar­ket. That would have cost In­vestec R33m at the is­sue price of 225c/share, against the cur­rent R10,7m.

How­ever, since list­ing Fin­bond has done rel­a­tively well for it­self. The com­pany di­ver­si­fied from mort­gage orig­i­na­tion to mi­crolend­ing in a big way. Wil­lie van Aardt says in his six-page CE re­view that Fin­bond in­creased its branch in­fra­struc­ture from 10 to 101 in the year to Fe­bru­ary 2008, mainly through the ac­qui­si­tion of Free State­and West­ern Cape-based Blue Chip Fi­nance.

That deal largely helped shield Fin­bond from the slump in the hous­ing mar­ket, low­er­ing mort­gage orig­i­na­tion’s con­tri­bu­tion to earn­ings from 70% to the cur­rent 45%. That’s set to fall to 20% over the next two years as Fin­bond in­tends ex­pand­ing its mi­cro fi­nance busi­ness. (It started by buy­ing two branches “in Africa” – mean­ing out­side SA – post year end and in­tends tak­ing ad­van­tage of the con­sol­i­dat­ing mi­crolend­ing in­dus­try by buy­ing up smaller com­peti­tors.

Van Aardt writes: “Mar­ket con­di­tions in gen­eral, and in par­tic­u­lar ris­ing in­ter­est rates, could have a ma­te­rial ad­verse im­pact on our abil­ity to re­peat the per­for­mance of the past year dur­ing the first and sec­ond half of the new fi­nan­cial year.”

In an over­all good an­nual re­port, what stands out are the lack of in­for­ma­tion about the group’s in­di­vid­ual busi­nesses and much re­peat­ing of the group’s suc­cesses.

Newspapers in English

Newspapers from South Africa

© PressReader. All rights reserved.