The real deal?
OUTSIDE OF African Bank and Capitec Bank, the domain of micro-finance or emerging banking services in South Africa is often perceived as a not too inspiring picture. The other two listed contenders – ignoring Blue Financial Services (which is largely a pan-African business) – are African Dawn and Finbond, which don’t appear to be held in much esteem by the market.
The annual report shows it generated a not insubstantial profit before tax of R153,5m in the year to endMarch 2011 and paid out R15m in dividends
Before them, Saambou and Unifer left some large scars on the market.
So it was with some interest and trepidation that Finweek followed a Stock Exchange News Service (Sens) advisory that noted the annual report for East London-based Real People Investments Holdings was available on the company’s website. Real People’s communiqué popped up on Sens because the company has issued “senior unsecured floating rate notes” under its domestic medium-term note programme on the JSE (with a nominal value close to R600m).
Real People offers a range of credit-linked financial products to individuals throughout SA (and also in East Africa), with the main lines of business being “the provision of unsecured credit to formally employed individuals in SA and the acquisition of partially and non-performing personal loan portfolios”.
It seems Real People has, unlike some of its listed counterparts, been doing rather well from its specialised “banking” services.
The annual report shows it generated a not insubstantial profit before tax of R153,5m in the year to end-March 2011 and paid out R15m in dividends.
To put this performance in context, the after-tax profits of Real People are roughly double the size of the combined market capitalisations of Finbond and Afdawn.
It’s probably not as easy as Real People’s sterling profits suggest, and Finweek does note non-performing loans of R365m stand at around 25% of gross advances of R1,4bn. However, its annual report does show non-performing loan coverage is 60%.
Still, we wonder whether any consideration has been given to listing the business on the JSE or – perhaps more intriguingly – has any listed financial services counter looked at making a play for Real People?
Finweek also notes Real People looks intent on selling off or unbundling its affordable housing business – which, interestingly, doesn’t look a half bad proposition, with profits before tax of around R30m. Presumably “unbundling” could entail a listing for this division, but some interest would surely be shown by the handful of listed low-cost property developers (although not all currently could probably afford such a transaction).