Ecsponent secures R700m loan from Afreximbank

JSE-LISTED financial services group Ecsponent yesterday announced that it had secured a R700 million loan with the African Export-Import Bank (Afreximbank).

The group said the dual-tranche medium-term loan facility would target its growing small and medium enterprises (SME) portfolio to reduce funding costs.

Chief executive Terence Gregory said the transaction was in line with the group’s ongoing efforts to diversify and grow its funding sources.

He said that it would strengthen Ecsponent’s ability to service its growing credit operations on SMEs in South Africa and neighbouring countries.

“We have raised more than R1.6 billion through the issue of preference shares in South Africa since 2014,” Gregory said.

“Agreeing terms in respect of the credit facility with Afreximbank is an important step in our strategy of partnering with development financial institutions and access cheaper funding to support our growth objectives.”

Afreximbank is headquartered in Cairo, Egypt, and it has approved more than $67bn (R940.8bn) in credit facilities for African businesses since 1994, including $7.2bn in 2018.

The lender was formed in 1993 and it is the foremost pan-African multilateral financial institution devoted to financing and promoting intra and extra-African trade.

The bank was established by African governments, African private and institutional investors and non-African investors.

In July last year Ecsponent secured an international funding facility for $5m from Norsad Finance.

Ecsponent said the loan would provide the group with short and medium term profitability.

The groups aid the loan operations would be funded through a combination of preference shares, domestic medium-term notes programme, and institutional funding.

“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.

Ecsponent has a growing footprint across South Africa, Botswana, Swaziland, Zambia and Zimbabwe.

It creates wealth by investing in credit and equity opportunities in companies active in attractive and high growth sectors in select African markets.

Ecsponent shares rose3.70 percent on the JSE yesterday to close at R0.28.