INVESTOR BRIEF SHORT TERM FINANCING COMPANY
Sector Financial Services
Geography South Africa and the Southern African Development Community (SADC)
Desired Funding The Company is seeking to raise up to US$10 million debt or mezzanine financing with minimum commitments of US$5 million from each funder.
Guarantee The African Guarantee Fund (AGF) will provide a 50% guarantee. For more information on AGF, see: www. africanguaranteefund.com.
Use of Funds Expansion of the Company’s debt book.
Security 50% guarantee from AGF; First priority security interest over underlying book from which funds are lent. The shareholders capital and existing book provides a “first loss ratio”. Additional security can be discussed.
Market Overview

The Company targets newly formed businesses with their first contract to established businesses that are unable to access finance. These businesses are often excluded by traditional banks due to lack of business history, financials or collateral. The global financial crisis forced businesses and prospective entrepreneurs to look at smaller credit loan facilities that are short-term based and smaller loan values. While the Company utilizes stringent lending policies, the services are much more accessible in comparison to the traditional financial institutions. The majority of traditional financial institutions do not cater for small credit loan values, making the Company the partner of choice among potential clients.

The Company estimates that just within South Africa less than 30% of the addressable market is adequately serviced, with a significantly higher percentage in the rest of SADC.

Company Background

The Company operates is a provider of SME-finance to entrepreneurs and consumers within South Africa and the SADC region. The Company provides short-term financing focusing on invoice discounting and purchase order financing, with an average transaction cycle between 30 and 60 days. Funding is only considered where the payment risk is limited, i.e. the ultimate debtor is a large corporate, parastatal, State Owned Enterprises, certain Municipalities, etc. The performance or delivery risk of the SME must be minimal (i.e., not intangible services or complex performance like construction) or mitigated by the client’s performance history.

The business currently operates in several African countries, including South Africa. The Company plans to identify other profitable locations in Anglophone African to expand to in due course.

Prospects Despite average monthly revenue growth of over 60%, the Company has a large transaction pipeline of approximately R100m which it is not be able to fund in the short-term. The Company’s distribution strategy allows it to push these channels once it secures additional capital. The Company anticipates that with sufficient capital, it can add over R50m in new business per month. Additionally, the Company has the opportunity to expand it financing offerings, e.g., Asset financing; Agricultural and Mining finance; Trade finance; etc., as well as to expand further into SADC and other Anglophone African countries.
First Half 2015 Financial Highlights:
  • Six-Month Revenue: R13.25 Million
  • Six-Month Gross Profit Margin: 92.3%
  • Six-Month Net Profit Margin: 65%
  • 60% Average Monthly Revenue Growth
  • Less than 2% Write-Offs
Competitive Advantages:
  • “Lock box” collection system without ceding payments to a third party
  • Quick credit decision process
  • Quick turn-around times – Application to payout in 7 days
  • A strong national distribution methodology without incurring the expense of a national brick and mortar infrastructure
  • New end–to-end IT solution
  • Easy application process
  • Experienced Management Team
More Information Information Memorandum made available upon request.
Contact For more information, please contact: Mansur Nuruddin at mansur@mncapital-africa.com