Real People raises R400 million through equity capital

Real People Investment Holdings Ltd is pleased to announce the successful conclusion of an equity capital raise, aimed at restoring the capital base of the Group to levels where it can access further funding lines for the growth of its continuing businesses, being the provision of Responsible Finance through its Housing and SME lending businesses in South Africa and East Africa, and the purchase and collection of non-performing debt portfolios, through its DMC brand in South Africa. The conclusion of the capital raise marks the end of a period of significant change for the Group over the last 18 months during which the Group implemented: · a comprehensive shift in strategy which entailed closing its general purpose unsecured lending and cellular retail businesses in South Africa, and adopting a lending strategy focussed on exclusively providing economically productive “responsible finance” in the form of Housing and SME finance; · a significant cost reduction and rationalisation programme which resulted in the Group headcount reducing by almost 25%; and · significant changes in its accounting estimates relating to financial assets as a consequence of both deteriorated collections and changes in market practice. The recently completed capital raise resulted in an improvement of approximately R385 million in the Group’s capital base. Subsequent to the capital raise, which was largely supported by existing shareholders together with the Soros Economic Development Fund, the Group’s capital adequacy levels are above the  minimum  levels required by its various funding covenants and with the ongoing operations delivering profits on a monthly basis together with collections and portfolio quality largely stable and improving, the Group is now in a position to access funding lines that have been made available to it by various developmental finance institutions, with the objective of resuming an acceptable rate of balance sheet growth. Commenting on the success of the capital raise, Group CEO Neil Grobbelaar expressed his sincere gratitude to its participants for the faith placed in the strategic direction of the Group and in the Board and management team.