Micro-finance firm unveils $5m mobile debt instrument

15 Dec, 2017 - 10:12 0 Views
Micro-finance firm unveils $5m mobile debt instrument Untu said the $5 million mobile debt instrument due is expected to change the face of Zimbabwe’s capital markets by casting the net wider to the low income earners

eBusiness Weekly

Taurai Mangudhla
Micro-finance Enterprise Untu Capital (Untu) on Wednesday said the $5 million mobile debt instrument due is expected to change the face of Zimbabwe’s capital markets by casting the net wider to the low income earners.

Investors across the world are able to lend money to Untu and get an instrument which is tradable on the Financial Securities Exchange (FinSec).

Interest is at 9 percent per annum for a period of 12 months, 9,5 percent per annum for a period of 24 months and 10 percent per annum for a period of 36 months. This compares favourably to prevailing market interest rates.

Untu said the medium term notes which are issued when one subscribes to the bond may qualify as prescribed assets.

The notes will be issued in uncertified form on FinSec to allow for electronic trading. Untu said proceeds will be used to expand its loan book through onward lending to MSMEs and underwrite new business, expand tenure of lands and retire expensive debt for clients.

Chief executive Clive Msipha said the $5 million will  be raised by end of 2018 in tranches, with the first lot expected to be fully subscribed in 2017. The balance will be raised by end of the first half of 2018.

“We are raising $5 million but what we are doing immediately is we are issuing $1 million of it. We are offering $1 million through various channels. As a business we lend mainly to SMEs and that is our target channel,” Msipha told Business Weekly in an interview, adding “there is huge potential in SMEs”.

“We have partnered with the mobile networks which is (Econet Wireless’) Ecocash and (Telecel’s) Telecash to make sure everyone with a mobile phone can take part,” he added.

NMB Bank is the financial advisor, receiving bank and sinking fund manager while Intellego Investments Consultants is the arranger and MMC Stockbrokers the debt sponsor.

Scanlen & Holderness are the legal advisors, Deloitte Chartered Accountants Zimbabwe reporting accounts and ZB Bank the trustee and fiduciary agent. Corpserve plays the role of fiscal agent, transfer secretary, and payment agent.

In terms of the conditions of issue, the facility has a maximum tenure of three years, subject to early redemption in accordance with terms and conditions.

Untu said mobile subscribers will be allowed to transact a minimum amount of $50 while individuals and MSMES were given a minimum amount of $1 000 and corporates $50 000. The trading currency is in US dollars.

The proceeds of the notes will be used to advance loans to MSMESs and retire expensive short term finance. The notes constitute direct general secured and unconditional obligations of the issuer and will be preferred obligations with all other present and future, unsecured obligations of the issuer.

Untu said draw-down will be in one full amount upon application and allotment while the issue price will be issued on a fully paid basis at par. The micro-finance firm said both local investors whether institutional or individuals are eligible.

Interest rates are fixed and paid half yearly in arrears. In terms of security, there is a guarantee from the African Guarantee Fund covering 50 percent of the principal amount invested excluding interest and any other charges and 50 percent cession of receivables backed by immovable securities.

Untu in 2016 reported an after tax of $440 000, revenue of $2,9 million. Its total assets stood at $5,5 million.

Finsec is a registered Securities Exchange (Alternative Trading Platform) that was born out of recognition of the restrictive listing requirements in Zimbabwe, the isolation of a wide array of tradeable financial instruments as well as the lack of seamless end-to-end technology interlinking all participants in the trading and settlement cycle.

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