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Low uptake of GetBucks P200m bond

ISAAC PINIELO
Getbucks is seeking funds to expand operations
GetBucks Botswana’s effort to raise up to P200 million through a medium-term note (MTN) programme seems to have not aroused confidence from investors in the market. This week, the up-and-coming micro-finance company said its offers for the medium-term note programme that closed on Friday last week, amounted to P71.8 million.

The medium-term note, which opened on December 23, 2016, was intended to raise between P100 million and P200 million as a first tranche of the note.

In a statement issued this week, the company, which embraces technology as a means to provide financial products and services to customers, stated that the listing of the note is subject to GetBucks submitting all final documentation to the Botswana Stock Exchange (BSE). “Listing of the notes and commencement of trading will be on 17 February 2017,” the company said. A medium term note, according to Investopedia, is a note that usually matures in five to 10 years.

A corporate medium term note can be continuously offered by a company to investors through a dealer with investors being able to choose from differing maturities, ranging from nine months to 30 years, though most medium term note range in maturity from one to 10 years.

With the issuance of the notes, GetBucks had stated that it would be able to expand its ongoing normal operations, which will be primarily used to expand its loan book, which will see it introducing new products such as educational, small and medium-sized enterprise (SME) loans as well as offer longer terms on the current

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product offering with a maximum term of up to 60 months.

The company also indicated that it intended to issue the notes in order to re-finance the existing financing facilities, thereby reducing the cost of funding as well as re-finance the existing financing facilities.

“The issuer will use proceeds from the first tranche of the note to reduce the cost of funding, to decrease the exposure to foreign exchange fluctuations and expand its current service and product offering,” it stated.

In addition, the company had sought to access local funding to limit currency exposure risk, noting that pula-denominated facilities backed by dollar inter-company loans, held as offshore deposits with Botswana banks, have had a significant negative impact on the profitability of GetBucks Botswana due to the depreciation of the pula.

GetBucks Botswana, a subsidiary of MyBucks SA Luxemburg, consists of three operating entities; GetBucks, TU Loans and CashCorp. It is a fintech company that embraces technology as a means to provide financial products and services to customers.

Both GetBucks and TU Loans provide term loans for a period of six to 60 months and CashCorp Limited provides short-term credit of one-month loans. GetBucks also provides funeral and legal cover through its insurance agency in Botswana.



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