The International Finance Corporation (IFC), a member of the World Bank Group, would invest up to R300 million in dual-listed Trustco Group to support the latter’s student lending activities in Namibia and expand micro insurance to new countries in sub-Saharan Africa, the two financiers said yesterday.
The IFC provides investment and advice to help the private sector find solutions to development challenges.
IFC senior manager for southern Africa Saleem Karimjee said the corporation helped eradicate poverty, assisted in job creation, and had invested more than $400m (R4 billion) in South Africa.
Trustco said the investment would enhance access to higher education and affordable insurance in Namibia and enable the company to expand in Africa.
Trustco is a Namibia-based company with a focus on micro-financial services to previously excluded communities, especially micro insurance and microloans for education. It has a dual listing on the Namibian Stock Exchange and the JSE.
The IFC will buy the first R200m of Trustco’s new R1bn JSE notes programme. It will subscribe for up to R30m of equity in Trustco by buying up to 35 million new shares at 85c each for a 4.5 percent stake.
The IFC will have an opportunity to acquire another R70m worth of shares in the future.
This R300m investment follows an R80m IFC loan in 2010 to Trustco’s student lending subsidiary, Trustco Finance.
Karimjee said: “The IFC is committed to supporting companies that provide access to financial products and services at the base of the economic pyramid. Trustco is an innovative company with opportunities to expand into new markets. By supporting Trustco’s corporate programme, the IFC is further encouraging deeper capital markets, which is critical to the development of Africa’s corporate sector.”
Trustco group managing director Quinton van Rooyen said the investment signalled the strength of the group’s business model and prospects for expansion in Africa.
“It will strengthen our balance sheet and help support our efforts to raise additional financing. It is the first time that a publicly traded Namibian company accesses the debt capital markets directly through the listing of a R1bn note programme on the JSE,” he said. “We are very pleased with the IFC partnership.”
Trustco shares rose 5 percent to close at 84c yesterday.