By THE AFRICA BAZAAR Staff Writer
In its continuous efforts and commitments to supporting domestic capital market development in Africa, IFC, a member of the World Bank Group, is taking a stake in Trustco Group Holdings by investing $29 million (ZAR 300 million) to support student lending activities in Namibia and expand micro insurance into new countries in Sub-Saharan Africa.
This investment follows an existing $7.8 million (ZAR 80 million) loan from IFC to Trustco’s student lending subsidiary, Trustco Finance Limited, which was concluded in 2010. The new funds will help enhance access to higher education and affordable insurance, and help strengthen the company’s balance sheet to support its efforts to raise additional financing.
According to the agreement, IFC will purchase the first $19.3 million (ZAR 200 million) of the company’s recently listed ZAR 1.0 billion notes program. IFC will further subscribe for up to $2.9 million (ZAR 30 million) of equity in Trustco `through a purchase of new, listed shares of Trustco Group Holdings. IFC will have an opportunity to acquire a further $6.8 million (ZAR 70 million) shares in the future.
It is the first time that a publicly traded Namibian company accesses the debt capital markets directly through the listing of a ZAR 1.0 billion note program on the JSE.
“We are very pleased with the IFC partnership. IFC is a world-leading, AAA rated financial institution. This investment by IFC sends an important signal about the strength of Trustco’s business model and prospects for expansion in Africa,” said Quinton van Rooyen, group managing director of Trustco Group Holdings.
Trustco is a Namibia-based company with a focus on micro financial services to previously excluded communities, especially micro insurance and microfinance for education. The company has a dual listing on the Namibian Stock Exchange and the main board of the Johannesburg Stock Exchange.
Saleem Karimjee, IFC Senior Manager for Southern Africa, said in a statement, “Trustco is an innovative company with opportunities to expand into new markets. By supporting Trustco’s corporate bond program IFC is further encouraging deeper capital markets, which is critical to the development of Africa’s corporate sector.”
IFC also said it has obtained consent from the Securities and Exchange Commission—Ghana and the Ghana Stock Exchange to regularly issue cedi-denominated bonds. The consent will allow IFC to issue cedi bonds when market opportunities align with funding needs, supporting local capital markets while increasing access to local-currency finance for the private sector in the country.
The bonds will be issued under the IFC Pan-African Domestic Medium-Term Note Program, launched in May 2012 to facilitate regular bond issuances by IFC in the region. The program currently includes Botswana, Ghana, Kenya, Namibia, Rwanda, South Africa, Uganda, and Zambia.
“Supporting domestic capital market development is a priority for IFC because such markets efficiently intermediate funds in an economy,” said Jingdong Hua, IFC Vice president and treasurer . “The consent from the Ghanaian authorities enables us to support the deepening of the local capital markets and offer local-currency funding for priority sectors such as infrastructure.”
IC Securities has been appointed as the licensed dealer member for bonds issued under the IFC program in Ghana.