Finbond expands in US

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Published Feb 5, 2016

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Cape Town - Finbond Group, South Africa's largest short-term micro lender, on Friday announced the acquisition of four payday lending businesses in the US and Canada.

The value of the four separate deals, subject to various financial targets, is around $17.2 million and Canadian $6.5 million.

The company said it would undertake a fully underwritten rights offer to raise approximately R525 million to fund the expansion.

Finbond's short-term micro credit division is the largest provider of 30-day loans in South Africa, operating through 342 branches nationwide.

The acquisitions would give Finbond a branch network of 85 branches in the US and six in Canada, with the North American short-term micro credit division advancing about $130 million per annum.

Within 12 months of the acquisitions, the company said, 40-50 percent of net earnings would be denominated in US dollars, which the company plans to increase to 70-80 percent of net earnings in 3 to 5 years.

Also read:  Finbond: Profit improvement expected

A statement from the company said there were various similarities between the South African 30-day micro credit industry and the payday lending industry in the US, where $38.5 billion in loans are granted per year.

A total of 19 million households use payday loans in the North American market, with a typical payday loan of $300 being borrowed over a 21-day period.

The company added the expansion into North America would diversify risk and give it an effective rand hedge.

AFRICAN NEWS AGENCY

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