File picture: Philimon Bulawayo. (IOL).
File picture: Philimon Bulawayo. (IOL).

FirstRand eyes R1bn lift from new fund

By Sandile Mchunu Time of article published Jun 1, 2018

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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  a nd 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.”


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