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

Letshego Holdings Limited, a micro-lending company based in Botswana, announced on October 10 that it intends to raise USD 137.7 million (BWP 1 billion) in debt instruments in order to fund the expansion of its micro-lending operations across Africa. Target countries in the short to medium term include: Ghana, Mozambique and Namibia. Over 80 percent of shareholders—excluding the World Bank and the International Finance Corporation (IFC)—voted to approve the move at a special general meeting in Gaborone, Botswana.

The details of the financial proposal to raise the capital have yet to be finalized. Letshego’s Chief Financial Officer, Calm Petterson, said that he will announce the complete proposal in due course after interested parties have worked through the multiple options that are still on the table. If the Botswana Stock Exchange approves the debt instruments, then they will be divided into tranches. However, another proposal is to come up with a rights issue, an issue of new shares for cash to existing shareholders in proportion to their existing holdings, in order to expand the company’s equity trading and to broaden its base of shareholders.

Jan Claasen, Letshego’s Group Managing Director, expects U.S. demand for a Letshego debt offering to be strong despite the current financial crisis’ crippling effect around the globe. Botswana continues to remain resilient amidst the turmoil and has excess liquidity, resulting in an unusually high demand for bonds listed on the Botswana Stock Exchange (BSE). The offering, Mr. Claasen implies, could help alleviate this pressure.

Formerly known as Micro Provident, 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. 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 USD 85.2 million (BWP 522.5 billion) in total assets (p. 17) and USD 29.7 million (BWP 182.4 billion) in total liabilities to borrowers (p. 17). 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:

International Finance Corporation (IFC)

International Finance Corporation: “Micro Provident Limited t/a Letshego: Summary of Proposed Investment

International Finance Corporation: “IFC Invests in Micro Provident Botswana to Expand Access to Financial Services in the Region

Investec

Kingdom Zephyr

Letshego Holdings Limited

Letshego Holdings Limited: January 2008 Annual Report

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

Mmegi Online: “Letshego Confident It Will Raise P1 Billion

Netherlands Development Finance Company (FMO)

Sanlam

Sunday Standard: “Letshego seeks to P1 billion to strengthen itself across Africa

The World Bank

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