Financial services provider, GetBucks MicroFinance Limited (GetBucks) said yesterday its pace setting $30 million debt security has been under subscribed forcing the company to adopt another route to mobilise the funding.
GetBucks had, through the issue of a medium term note, become the first listed firm to attempt to raise funding on the bourse through the listing of a debt security.
This came only a year after the Securities and Exchange Commission of Zimbabwe approved listing of debt securities as one of the means through which companies could mobilize funding on the bourse.
“Uptake has been slow and is yet to meet the regulatory threshold to bring the securities to listing,” GetBucks said in an update.
“The notes will now be placed privately by way of a tap issue.”
A tap issue is a procedure that allows GetBucks to sell the debt instrument from the past at the original face value, maturity, coupon rate but at the existing market price.
GetBucks’ note has a three-year tenure at an interest rate of 10.25 percent per annum that will be paid on a quarterly basis.
Experts say tap issues allow the issuer to bypass many of the formalities surrounding issuance of the securities, avoiding certain transaction costs and expedite the fund raising.
“Current subscribers to this issue as at 21 July 2017 will be issued with pricing supplements,” GetBucks said, adding, “This second series of the program will be listed by the introduction of the ZSE after the threshold has been achieved.”
At the issuance of the note, Getbucks had said it planned to use the funds raised to re-invest in its operations which would allow it to offer cheaper long term loans.
It would also be able to reduce the cost of funding from 12.5 percent to 10 percent in the next three years.
Meanwhile, GetBucks shareholders last week approved the name change for the firm from GetBucks Financial Services Limited to GetBucks MicroFinance Bank Limited.
A subsidiary of South African head-quartered, My Bucks, GetBucks was in 2015 granted a license to operate as a deposit taking micro-finance bank and listed on the Zimbabwe Stock Exchange (ZSE) early last year.
It has 14 branches across the country and employs 66 people. — New Ziana.