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GetBucks goes for the Bucks

Publishing Date : 09 January, 2017


GetBucks Botswana Limited has announced the opening of offer for the first tranche of its Domestic Medium Note Programme. The micro financing company is in the process of establishing and listing a P500 million Domestic Medium Term Note Programme and it intends raising between P100 and P200 million as a first tranche of the Note.

The Botswana Stock Exchange (BSE) has approved the Programme Memorandum for the Note and it is anticipated that the Note will be listed on the BSE on Monday, 30 January 2017. Proceeds from the first tranche of the Note of up to BWP 200 million will be used by the Issuer to reduce the cost of funding.

GetBucks Botswana is 100% owned by GetBucks Limited, a Mauritius entity with MyBucks, the Guarantor, being the ultimate beneficial owner. The GetBucks Botswana Group provides micro-financing and insurance products. The Issuer has 14 service points, 49 employees, 88 agents and has disbursed over 100,000 loans amounting to P345 million since its inception.

The GetBucks Botswana Group consists of three operating entities; GetBucks Botswana, TU Loans (Proprietary) Limited and CashCorp (Proprietary) Limited. The Issuer and TU Loans (Proprietary) Limited provides term loans for a period of six to sixty months and CashCorp (Proprietary) Limited provides short term credit of one month loans. Their customer base is primarily employees of the Government of Botswana, employees of forty-three Local City Councils’ in Botswana and those employed in the private sector.

The issuer also provides insurance products through their insurance corporate agent entity, Regent Insurance, to the same customer base including Botswana Teachers Union members. GetBucks Botswana Group provides their products using their IT system proprietary Fincloud software which is complemented by a physical footprint.

Other than use the proceeds from Domestic Medium Term Note programme for reducing the cost of funding, the company says Pula denominated facilities backed by the US dollar intercompany 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. Furthermore, GetBucks Botswana seeks to access local funding to limit currency exposure risk.

“The Issuer will be able to expand its ongoing normal operations which will be primarily used to expand the loan book of the Issuer which will see the issuer introducing new products such as Educational and SME loans as well as offer longer terms on the current product offering (with a maximum term of up to 60 months),” the company said in the programme memorandum.

The company which was incorporated in Botswana on 12 March 2012 and obtained its certificate to commence business on the same day now has an asset base of around P99 million, bolstered by the net loan book that stands P61.4 million. For the year ended June 2015, the company’s revenue surged by 70% to P61.2 million on the back of interest income and fee income which recorded significant growth.

The strong performance was offset by a jump in impairment of loan book which stood at P5.9 million, up by 310%. But the biggest drag was operating expenses as they increased by 125.5% to P31.2 million. This resulted in operating profit of P23.9 million, up from the previous year by 16.5%. However, the profit before taxation was down by 14% from the previous period after a 118% increase in finance costs. The finance costs went up as a result of money paid to shareholders, financial borrowings, and loss on foreign exchange which greatly increased to P4.6 million, an increase of 773%. In the end the company delivered profit for the period of P10.7 million, down slightly by 6%.

 GetBucks Botswana operates in a highly competitive industry that currently has 300 players registered. There is also direct competition between Micro Finance institutions (MFIs) and commercial banks due to high credit risk within the corporate sector and commercial banks have been competing with MFIs to lend to individuals who are regarded as lower risk.

“Increased competition from commercial banks that have large balance sheets and have set up dedicated units for SME banking as a way of capturing market share may negatively affect GetBucks Botswana’s financial performance..As a way of mitigating this risk, GetBucks Botswana embraces technology as a means of differentiating itself to provide financial products and services to its customers with a quick turnaround time,” the company said.



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