Finbond Group Limited will acquire 49% ownership in Trustco Finance (Pty) Ltd in a deal in which the purchase consideration payable by Finbond will be N$60 million.
This is as a result of Trustco having undertaken a strategic decision to divest a portion of its investment in its banking and finance portfolio.
Trustco Finance provides educational loans to students enrolled inter alia at the Institute for Open Learning (Pty) Ltd (IOL), the largest private distance learning tertiary education institution in Namibia.
“50% of the purchase consideration set out above will be payable in cash on the signature of the definitive agreement on or before 31 July 2023. The remaining 50% of the purchase consideration will be payable when the Balance Sheet of Trustco Finance as at 31 August 2023 has been restructured to reflect the intention of the Parties, and has been audited without any qualification or modification. The anticipated effective date of the Transaction will be 1 August 2023,” a SENS notice issued on Friday reads in part adding that Finbond intends to fund the purchase price from cash reserves.
“We are delighted to welcome Finbond as a new coinvestor in Trustco’s banking and finance portfolio,” said QZ van Rooyen, Deputy CEO of Trustco. “With Finbond’s expertise and presence in the market, we anticipate that synergies between Trustco Finance and Finbond will only strengthen. As the markets recognize the importance of diversification of investment assets, we believe that the diversification of investors in an asset can also contribute to positive growth. We are confident that our partnership with Finbond will unlock significant value in our investment as our relationship deepens over the next few years.”
“Namibia’s resurgence as the preferred investment destination in Africa for international investors is truly remarkable. Trustco is proud to be at the forefront, actively contributing to the nation’s economic growth and welcoming investors from around the world to participate in our journey of success,” he continued
Trustco Finance has evolved into a preferred student loan lender in Namibia since Trustco’s initial investment in 2005 for N$5 million when it was serving only approximately 4000 students. Over the past 18 years, Trustco Finance’s loan portfolio has grown significantly, currently exceeding N$650 million gross loan book value with a peak loan book of over N$771 million. To date, Trustco Finance has disbursed loans amounting to approximately N$1.3 billion, benefiting more than 62,000 students, and collected over N$2.5 billion in loan repayments. The proposed divestment represents 2.47% of Trustco’s total investment portfolio as of August 31, 2022.
Finbond is a leading financial services institution operating in South Africa and North America, renowned for its expertise in designing and delivering innovative credit products that prioritize borrower requirements over institutional policies and practices. With a strong presence in both brick-and-mortar and online channels, Finbond operates through an extensive network of 589 stores, consisting of 397 in South Africa and 192 in North America, while also offering online services in South Africa and six states within the United States of America.
Finbond specializes in providing unique value- and solution-based savings, insurance, and transactional banking products, reflecting their commitment to meeting the specific needs of depositors and borrowers. Finbond’s unwavering dedication to being a global leader in short-term consumer lending fuels their pursuit of excellence in the financial sector. The Finbond Transaction with Trustco exemplifies their vision and passion for delivering exceptional short-term lending services.
The successful completion of the Finbond Transaction is contingent upon fulfilling several conditions precedent. These include obtaining approvals from Finbond’s Board and Investment Committee, as well as Trustco’s Board and Investment Committee, as well as all necessary regulatory approvals.
“With the completion of the Finbond Transaction, Trustco is strategically positioned to enhance the valuation and unlock substantial growth opportunities within its banking and finance portfolio. By strategically expanding the portfolio’s lending operations, capitalizing on new opportunities, strengthening its market presence, and diversifying its revenue streams, Trustco remains confident in its ability to significantly increase the value of our banking and finance portfolio going forward.”