… Getbucks loan book increases to over E110m
– The shareholding of ESWIG on Getbucks Eswatini continues to keep the fires burning in the quest to have the hundreds of emaSwati who lost their investments to Ecsponent recover their monies.
MBABANE – Despite coming up with a promising turnaround strategy, the ESW Investment Group (ESWIG) has not made much progress in helping over 1 000 emaSwati recover the E340 million they lost after investing in Ecsponent Eswatini.
If anything, some of the projects the entity had earmarked on to implement have been almost a non-starter.
This is reflected in an end-of-year communication report, which has been prepared by the Investor Relations Committee (IRC) and provided to all the investors.
In giving feedback on some of the projects it had planned, ESWIG decried that the Financial Services Regulatory Authority (FSRA) made things difficult.
ESWIG highlighted how last month, it issued a letter of demand against the FSRA and a few individuals for the claim of E340 million and that the latter responded by stating that there was no wrongdoing in the execution of duties.
“A decision on the way forward is being considered by the ESW shareholders, Board of Directors and management. The letter of demand is one of the numerous efforts being made by the IRC and management to recover the lost funds and was embarked on following thorough internal investigations and much considered legal advice, reads part of the report.
Another blame shifted to the FRSA is that in August 2023, the regulator allegedly rejected an application by the investors to have about 51 per
MDeciSiOn
BABANE
The end-of-year report stated that ESWIG shareholding in Getbucks is currently 49 per cent and the latter is said to have, since 2021, supported the working capital requirements of ESWInvestment Group (ESWIG).
This, it was stated, had critically ensured that ESWIG remained open for business, thus protecting the various investor liabilities.
It was highlighted that Getbucks made notable progress in 2023, increasing its Loan Book to over E110 million by the beginning of December 2023.
IMPROVe
According to the report, the company is poised to improve its 2022 profit after tax despite using some of its capital to keep ESWIG afloat in order to protect the various investor liabilities.
“Critically, the Getbucks balance sheet continues to strengthen with the support of patriotic institutional investors. The new products that the ESW Investment cent shareholding in Getbucks (Pty) Limited shifted to Lihhoko Limited, a matter which was then taken to court and is pending.
The less progress in the turnaround strategy has been seen in that ESWIG was not able to settle an investor liability, which stands at E403 800 000 as per a promise it made to investors in March this year.
The report highlights that at the beginning of 2023, ESWIG essentially had three types of investors with a total liability of E423 399 380.
Feedback on the three investor categories reflected that one of them was the Linked Loan Unit Holders, which constituted the majority of the
ESW investor community totalling about 1 138 investors, 69 of whom are now deceased.
ReSOLVeD
It is stated that when the investors resolved, at the recommendation of the ESW management, during an annual general meeting (AGM) held in June 2022, to stop the payment of dividends, the investor liability of this category was E400 million.
Of this amount, about E406 million was the investors’ liability made up of the principal invested plus interest as of
December
31,
Team has developed for Getbucks will fully come to the market in 2024,” it was mentioned.
Also, it was stated that with an increased focus on cost rationalisation, Getbucks was, therefore, well poised for growth in the coming financial year, while also delivering on its critical mandate of supporting ESWIG and contributing to the reduction of the investor liability,” it was highlighted.
In terms of background, it was last year that an 11-member committee to represent the over 1 500 emaSwati, whose E340 million investments were allegedly misappropriated by Ecsponent Eswatini Limited’s management, 2021.
About E4 million was in respect of owed dividends for the period between September and December 2021.
The report stated that as was communicated by the management at the AGM held in March 2023, the E4 million outstanding dividends were fully paid by December 2022 through Getbucks Eswatini’s support and only E229 385.94 remained unpaid.
The unpaid dividends, the report mentioned, belonged to at least 18 deceased investors as well as others, who despite constant appeals, have been unable to
claim their dividends.
NegOtiatiOnS
“Investors are advised that the Linked Loan Unit Holders Investor Liability of E406 million has now been further reduced. This follows successful negotiations with two investors who had loans of about E2.2 million granted to them in 2021. These loans have now been offset against their December 2021 investment balances. As of was elected.
Known as the Investor Relations Committee (IRC), the team was elected from 21 members, who were nominated during the investors’ first-ever AGM held at Esibayeni Lodge in Matsapha mid-June 2022. The 21-member group then converged at the ESWIG offices in Mbabane to elect among themselves the IRC, whose main task was to work handin-hand with ESWIG’s newly-appointed management in raising funds to repay the distressed investors.
The election process ensured that all the country’s four regions were represented to make communication easy and effective. Another fundamental criterion was fair gender balance, hence the election of five females and today, the Linked Loan Unit Holders’ Investor liability stands at E403 800 000,” reads part of the report.
Investors were advised in the report to note that it had not been possible to start reducing the principal from 2023, as was promised during the AGM in March.
Instead, priority had been given to the reduction of the two other liability categories, one of them being the Collective Investment Scheme (CIS) Growth & Income Funds.
This, according to the report, is the second largest category by the investor numbers.
It was mentioned that unlike the Linked Loan Unit Holders, the CSI investment was housed in a separate licence granted by Ecsponent in July 2019 and is administered at ESWIG’s insistence by DnD The Cycle (Pty) Ltd, an independent company based in South Africa (SA) with Nedbank Eswatini as custodian.
SUPPORt
At the start of January 2023, the report said, there were 17 investors in the CSI with a total liability of E3 849 380.58 and that through the support of Getbucks, five investors have been paid off during the course of this year, totalling E3 018 433.14.
With the year coming to an end, the report stated that only 12 investors remained under the CSI Growth and Income Funds with a liability of E830 947.44.
It was highlighted that because both the CSI Growth and Income Funds were now fully funded, ESWIG would formally apply to the FSRA to close them down, subject to full compliance with the law in early 2024 and to pay off the 12 investors immediately thereafter.
“This is key as this fund costs about E45 000 per month to administer. The monthly administration fee will be saved going forward and will contribute towards addressing the Ecsponent challenge.
‘‘This is why paying off this category of investors and closing down the CSI Growth and Income Funds has been prioritised this year, as it will result in annual savings of at least E540 000 per
six males.
An additional condition that was considered was each member’s skills that would add value as they undertake the mammoth task of creating revenue-generating initiatives that would guarantee compensation of the investors within the shortest time possible.
It was made clear from the onset that the committee would in the initial stages meet, at least, twice a month.
PROceSS
This became doable as ESWIG Chief Executive Officer Max Mkhonza gave feedback early July that the IRC and management had their first meeting on July 1, 2022, to define their working relationship and agree on priority actions for the short-term including the acceleration of a process of implementing the turnaround strategy.
The meeting, as per Mkhonza’s feedback, thoroughly ventilated the need to establish a new special purpose vehicle (SPV) and the shareholding of this company as key to the operationalisation of the turnaround strategy.
It was said that the vehicle had been established for the sole purpose of developing new income streams from, which the investors would begin to re-coup their losses as committed by the company.