BDC ramps up subsidiary funding to P190m
Lewanika Timothy | Monday June 2, 2025 10:21
The corporation posted a loss before tax of P40.7 million for the year to June 2024 and narrowed this to P24.2 million in the half-year to December 2024.
In its latest annual report, the investment agency which boasts an asset value of P5.7 billion, revealed to stakeholders that ramped its spending to support subsidiaries from P42.6 million in 2023 to P189 million in the year to June 2024, an increase of P146 million on a year on year basis.
While BDC did not explicitly state the instruments used to extend the facilities, it is expected that these involved mezzanine finance structure which includes a blend of debt and equity deals.
“In addition, the company has issued letters of support to its subsidiaries Fairgrounds Holdings (Pty) Ltd, Milk Africa (Pty) Ltd, Lobatse Clayworks (Pty) Ltd and Malutu Enterprises (Pty) Ltd,” executives stated in the latest annual report.
Letters of support to the stated subsidiaries are commonly used in finance transactions, such as securing loans for the subsidiary. They can also be used in commercial transactions to support the subsidiary's obligations to customers or suppliers.
As of 30 June 2024, the carrying value of the company's investments in subsidiaries amounted to P1.15 billion, constituting 31% of the company's total non-current assets. In 2023, this figure was P1.091 billion.
Also in its annual report, BDC directors noted major gaps in meeting its investment targets for the full year 2024 in what the company blamed on due diligence bottlenecks. The shortfall percentage was pegged at 71% a major shortfall that investment analysts at the firm were optimistic could be slashed through closing two major deals which were valued at P300 million.
“For the year ended June 30, 2024, the corporation had disbursements amount to P254 million, primarily directed toward a significant retail development in the northern part of the country where BDC does not have any representation,” the companies executives revealed in the report. “This significantly trailing the budgeted amount of P869 million by 71%, largely due to delays in due diligence processes for key transactions.”