Letshego Holdings, the titanic micro-lending outfit, issued warning bells to the market this week about its ambition of raising cash aimed at helping it to increase its foot-print across the African continent.
In a statement issued this week, it said it would be holding an Extra Ordinary Meeting on January 23 “to seek shareholder’s approval to proceed with the proposed capital raising exercise by way of offer for subscription of 30 million ordinary shares at a consideration of P12 per share or P350 million in total.
The move is in line with what the company’s financial director, Colm Patterson, told the Sunday Standard last month saying the cash raised from the exercise would be used to strengthen the operation of the company as it intends to be a big player in the African market.
“The share preference scheme will ensure that the existing shareholders increase their shareholding in Letshego and the exercise is open to all our shareholders,” he said in a statement released by Letshego Holdings this week, adding, “The funds raised from the offer will be used to bolster the capital of the company to be used for local and regional expansion and working capital requirements.”
Letshego Holdings is the oldest and the largest micro-lending company in the country with a book value of over P1 billion. It has other operations in Tanzania, Uganda, Swaziland and Zambia while plans are afoot to open other operations in Mozambique and Ghana in the near future.
“We believe that this would be a good time for shareholders to participate in the share preference scheme exercise,” the directors of the company said, adding that “this would provide a solid base to work on” in relation to regional expansion.
As part of sweetening the deal, shareholders will buy preference shares at a discounted price of P 12.00 per share against the company’s trading price of P 11.75 at Friday close of business.
“We would like it to be attractive to shareholders and would issue it at P 12 and we think that it is in the best interest of shareholders,” Patterson said.
According to the plan, after the January Extra Ordinary Meeting, the offer will be open for about three weeks.
In the four new countries where the company is operating within, it is already showing some impressive results.
Further, the company is expected to issue a debt instrument to the tune of P 1 billion, which has already been approved by shareholders. The details of the structured plan are expected to unfold in the coming year as it tries to bolster its position in the African continent.
Africa has shown a great support for micro-lending companies which ordinarily have flexible rule as compared to the traditional banks.