Ecsponent gets R700m loan
Small-cap financial services group Ecsponent says its R700m loan facility from the African Export-Import Bank will reduce funding costs and boost profits.
Small-cap financial services group Ecsponent says its R700m loan facility from the African Export-Import Bank (Afreximbank) will reduce funding costs and boost profit.
The company said on Monday that it had secured the fouryear loan facility, which would diversify its funding and support its lending business aimed at small and medium-sized enterprises in Southern Africa.
To date, that business has been funded by Ecsponent’s preference share and domestic medium-term note programmes, as well as institutional funding.
Ecsponent has raised about R1.6bn by issuing preference shares in SA since 2014.
“The Afreximbank facility is expected to bolster the group’s results as the reduction in funding costs will translate directly into improved profitability, while also improving tax efficiency,” Ecsponent said in a statement.
CEO Terence Gregory said that the credit facility with Afreximbank was “an important step in our strategy of partnering with development financial institutions and access cheaper funding to support our growth objectives”.
Ecsponent’s share price was 3.7% higher at 28c at close of trade on Monday, valuing the company at R291m. At the end of December 2018, the stock was trading at 21c.
The company said in December that it had concluded an initial public offering as part of a new R10bn debt programme, which was also aimed at reducing funding costs.
The capital raised would be used to “accelerate” the group’s equity investments and operational expenditure.
“Our equity holdings portfolio is a critical component to balance short- and long-term investment horizons,” Gregory said at the time.
“This programme will assist in accelerating our growth, allowing us to significantly grow our equity holdings portfolio and add to the diversification of our investments across sectors and geographies and currencies.”
EQUITY HOLDINGS PORTFOLIO IS CRITICAL TO BALANCE SHORTAND LONG-TERM INVESTMENT HORIZONS