Blue Financial Services, a South African microfinance institution, has entered into an agreement with Mayibuye Group (Pty) Ltd, a South African investment company, to provide ZAR 450 million (USD 58.6 million) in equity and debt financing. As a result of this recapitalization Mayibuye will own 65 percent of Blue.
Mayibuye plans to replace the current chief executive officer, Dave Van Niekerk, and enhance the Blue board of directors with independent directors. Mayibuye’s turnaround strategy also aims to reduce costs and credit risks and improve corporate governance and risk management. The strategy is expected to commence in September and take 18 months to achieve.
As reported by MicroCapital on June 16, 2010, Blue Financial Services reported an expected loss for the fiscal period ending February 28, 2010 and also the loss of its operating license in Rwanda. Blue subsequently reported a loss of ZAR 1 billion (USD 134 million) for the period ended February 28, 2010.
By Jennifer Shevock, Research Associate
About Blue Financial Services:
Blue Financial Services is a South African microfinance institution operating in 14 African countries. It serves people who are formally employed yet underbanked. Blue is listed on the Johannesburg Stock Exchange Limited AltX in South Africa and the Botswana Stock Exchange. Blue reported assets of ZAR 1.5 billion (USD 200 million) at February 28, 2010.
About Mayibuye Group (Pty) Ltd:
Mayibuye is a South African investment company focusing primarily on equity acquisitions relating to the credit environment. Mayibuye attracts funds from investors for the purpose of investing in companies which have suitable fundamentals but have a need for capital to enhance their operations or to modify their shareholding structure.
Sources and Additional Resources:
“Mayibuye set to build on Blue in Africa” June 22, 2010. http://www.busrep.co.za/index.php?fSectionId=563&fArticleId=4044930
MICROCAPITAL BRIEF: “South African Microfinance Institution Blue Financial Services Reports Significant Year-End Loss and Recapitalization, Loses Operating License in Rwanda” June 16, 2010. https://www.microcapital.org/microcapital-brief-south-african-microfinance-institution-blue-financial-services-reports-significant-year-end-loss-loses-operating-license/#more-5178
Press Release: http://www.blue.co.za/pdf/Blue%20Announces%20Recapitilisation.pdf
“Blue ‘Financial Services’ Loses Operating License” June 8, 2010. http://www.tradingmarkets.com/news/stock-alert/bfnlf_blue-financial-services-loses-operating-license-970536.html
MicroCapital Universe: Blue Financial Services: https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Blue+Financial+Services
MicroCapital Universe: Mayibuye Group(Pty) Ltd: https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Mayibuye+(Pty)+Ltd
Browse the MicroCapital Universe and add your entry to the wiki at: https://www.microcapital.org/microfinanceuniverse/
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