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Local financial firm secures billions from IFC
2007-07-23 08:34:05
By Perege Gumbo
The International Finance Corporation (IFC) will invest USD 20 million (approx.21bn/-) into Blue Financial Services to boost its lending and insurance businesses.
The support coming from this private sector investment arm of the World Bank Group would be split equally between equity and a senior debt facility.
The equity transaction sees the USD 10 million in Blue share and the second USD10 million is made available to `Blue` as a conventional senior debt loan.
The Blue Finance Services Country Director Johan Senekal said last week that release of the fund follows bargains between his institution and the IFC prior to Blue`s Johannesburg Stock Exchange (JSE) listing on 12 October 2006.
The discussions for the funding support inched to an advanced level that required the issue of a cautionary notice in terms of JSE listing requirements on 22 December 2006.
`To advance progress of the transaction, Blue senior representatives visited IFC and World Bank management in Washington DC in April 2007 after the completion of a comprehensive due diligence by the IFC` he said.
The US 20 million deal enhances Blue`s balance sheet and this funding available for lending to Blue`s clients, mostly in the form of micro-financing to customers in need of financial services such as salary advances, bonded housing finance, term loans and insurance products.
The IFC investment in the Blue Financial Services is being viewed as a major vote of confidence as the former is a cautious acquirer of equity in companies particularly as Blue has been listed in less than a year.
He said the IFC would be closely monitoring the Blue Financial Services performance over the next few months and as key agency of the World Bank, the IFC is expected to have significant further funding to invest in Blue’s future operations.
Following the investment, the IFC would from now on take up a non-executive seat on Blue’s board, bringing the number of non-executive directors to five.
In Tanzania, the Blue Financial Services plans to expand in Dar es Salaam as well as in upcountry regions by opening branches in Mwanza, Arusha, Dodoma, Morogoro, Zanzibar and Mbeya, Kigoma, Tanga and Tabora.
The expansion efforts would go hand in hand with the introduction of new products such as home improvement loans, and credit life insurance scheduled to officially commence next month.
Plans are also afoot to open branches in Kenya and Cameroon.
Blue had to allow an institution like the IFC a discount on its share price as the organisation would add significant stakeholders` value through its extensive influence within Africa and its long-term funding commitment.
The `Blue` is currently one of the big three listed micro-lenders in South Africa, operating in five other countries, 112 branches and a total of more than 630 employees.
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