MICROCAPITAL STORY: Botswana’s Letshego Holdings to Raise US$ 43.26 million in Shareholder Preference Scheme

Letshego Holdings, the Botswana-based microfinance institution (MFI), is planning to raise P 350 million (USD 43.26 million) through a share preference scheme that is anticipated to be put before shareholders at a special annual general meeting (AGM) in January 2009. The share preference scheme is intended to ensure that the existing shareholders increase their shareholding in Letshego and is open to all existing shareholders. According to the plan, after the January Special AGM, existing shareholders will be able to buy shares at a discounted price, and the offer will be open for a period of up to three weeks provided that the meeting approves it. This plan is in addition to the P 1 billion (USD 123.6 million) it plans to raise to fund its expansion, which was covered in this MicroCapital story.

Under the preference scheme, shareholders will be able to buy preference shares at a discounted price of P 12.00 (USD 1.4) per share against the company’s trading price of P 15.70 (USD 1.94). According to Mmegi Online, the release of information on the upcoming fund raising initiative by Letshego may have resulted in a decrease of 4.5 percent in share prices. The released statement reportedly advised shareholders to exercise caution when dealing in their shares due to the equity-related fund raising initiative. Whether Letshego was aware that a share price decrease would be the result of this information release has not been stated, but it appears that shareholders may be selling some of their shares at the higher price now to take advantage of the upcoming preferential share price.

Letshego Holdings Limited is a pan-African micro-lending company (based in Gaborone, Bostwana) that provides short- to medium-term consumer loans to employees of governmental and private sector companies. It is based in Botswana and was formerly known as Micro Provident .Letshego was incorporated in March of 1998 and since 2002 has been traded on the Botswana Stock Exchange under the ticker symbol LETSHEGO. In addition to Botswana, the company currently operates in Swaziland, Uganda, Zambia and Tanzania. For the period ending January 31, 2008, the company listed in its annual report BWP 522.5 billion (USD 85.2 million) in total assets and BWP 182.4 billion (USD 29.7 million) in total liabilities to borrowers. As of December, 2007, Letshego’s major shareholders included the IFC, the Netherlands Development Finance Company (FMO), Sanlam, Investec and Kingdom Zephyr. The company did not report its return ratios and is not listed on The Mix Market, the microfinance information clearinghouse. For more information, please see the Microcapital story covering the USD 20 million loan, a subset of a USD 50 million debt and equity financing package, given to Letshego by the IFC earlier this year. The IFC also purchased a seven percent equity stake in the company in 2005.

Additional Resources:

Letshego: “Home” “Annual Report

Mmegi Online: “Investors in selling mood ahead of Christmas

MicroCapital Story: “Micro-Lender Letshego Holdings Limited (Micro Provident) Seeks $137.7m in Capital for Expansion of African Operations

MicroCapital Story: “International Finance Corporation (IFC) Invests $50m in Consumer Finance Company Micro Provident Botswana (Letshego)

Sunday Standard: “Letshego to raise P 350 million for regional expansion

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