File picture: Philimon Bulawayo. (IOL).
JOHANNESBURG - FirstRand has announced that it was planning to start a new debt-instrument investment fund to raise R1 billion to take advantage of lending gaps  and opportunities in the south of the continent. 

The continent’s biggest bank by value said it would start the Mezzanine Debt Fund through its wholly-owned subsidiary Ashburton Investments within 12 months. Ashley Benatar, a head of Mezzanine Finance at Ashburton Investments, said the fund had already managed to raise more than R500 million on the first close. 

“This is a Mezzanine Debt Fund, not a new debt instrument investment fund as it is reported,” Benatar said. 

“Mezzanine investments consist of a loan instrument with an equity kicker and it is a combination of private equity and debt.” 

Benatar said the fund would focus on investments in South Africa but on an opportunistic basis they can invest up to 20 percent of the fund in Namibia, Botswana and Zambia.  

“Thus we do not have to invest in these countries but only if opportunities arise there. We chose these because of the close link in the currencies of the pula and Namibian dollar to the rand and Zambia because of the team’s experience in that market,” he said. 

In the results for the six months to end December released in March, FirstRand reported that headline earnings increased by 7 percent to R12.4bn and pre-tax profits were up 8 percent to R17.3bn.

Mixed blessings

FirstRand’s business consists of FNB, WesBank, Rand Merchant Bank and Ashburton Investments. The group said the two largest operating businesses, FNB and RMB, produced strong operational performances while WesBank had a tough six months. FNB grew its pre-tax profits 11 percent to R10.4bn on the strong performance of its South African business, which grew pre-tax profits 12 percent, and a moderate turnaround in the rest of Africa portfolio, which delivered a 5 percent decline in pre-tax profit compared with a 29 percent decline in December 2016. 

In other developments within the FirstRand group, FNB Wealth and Investments announced that Wayne McCurrie, who was previously with Ashburton Investments and Momentum Investments, would be would be taking up a new role in its business from today. The group said he would use his 30 years of experience to inform and advise FNB Wealth and Investments clients. McCurrie said he was encouraged by FNB’s effort to disrupt the investment space by leveraging its strong digital capabilities to extend the reach of investment products. 

“I am equally energised by the prospect of nurturing client relationships while continuing to engage in investment commentary across various media and other public platforms,” McCurrie added. 

Sizwe Nxedlana, chief executive of FNB Wealth and Investments, said they were delighted to retain McCurrie’s expertise as part of their efforts to bolster FNB’s investment offering to their clients. 

“Our efforts to leverage digital and internal capabilities are well advanced. These are underpinned by our advice-led investment philosophy and ongoing commitment to being a trusted money manager.”

- BUSINESS REPORT