Johannesburg - Real People Investments Holdings Pty Ltd is in funding talks with development finance institutions after the collapse of African Bank Investments Ltd. wiped out demand for corporate bonds.
“It takes more time and it means more work and there’s probably less bang for your buck,” Chief Executive Officer Neil Grobbelaar said by phone from Johannesburg yesterday. “We can probably go a year without selling a bond. It’s been a tumultuous time and the South African capital markets are going to be a tough place for businesses like ourselves.”
African Bank, the country’s largest provider of unsecured loans, had to be rescued by the central bank on Aug. 10 after mounting losses caused investors to withdraw funding. Johannesburg-based Real People lends to small businesses and individuals who want to renovate homes or privately educate their children. It has sold 30 rand bonds and Swedish and Norwegian securities since 2011, according to data compiled by Bloomberg.
“We’re fortunate because we have access to other forms of funding,” Grobbelaar said. “We can prove we have a different quality of customer from Abil and show what the loans are used for. Our assets are shorter dated than our liabilities.”
The closely held company still plans to complete the sale of asset-backed securities this year and sell a 2-billion shilling ($22.6 million) Kenyan bond.
Toyota South Africa and BMW SA canceled bond sales this month, citing a lack of investor appetite in the wake of African Bank’s collapse.
Abil’s shares and bonds were suspended on Aug. 11 with senior bondholders told to expect a 10 percent haircut while subordinated debt holders may get nothing.