Cape Town - Following a spate of value-enhancing acquisitions in 2015, Ecsponent Limited is subtly flexing its muscle as a force to be reckoned with in terms of its focused expansion and acquisition strategy.
As part of this expansion, shareholders will soon be approached to ratify the Group’s acquisition of the business of Ecsponent Investment Holdings (refer to www.ecsponent.com for the latest SENS announcements).
From high-yield SME funding to vendor finance transactions, the company differentiates itself through its investment in both listed and non-listed companies with high-growth potential across a number of sub-Saharan countries.
With its sights set firmly on niche enterprise development markets, Ecsponent provides funding and expertise for entrepreneurs, while rewarding entrepreneurship, stimulating enterprise development and creating economic exclusivity.
Basically, Ecsponent funds the unfunded by providing working capital to purchase stock or materials for a business with a valid purchase order – even if the business has no financial track record or means of collateral.
Strong focus on SME financing
For smaller, entrepreneurial businesses like the above mentioned, it is near impossible to follow a traditional financing route and often the only viable alternative is to trade shareholding in the business for immediate working capital. However, the chances of the business owner realistically being able to afford to buy back the sacrificed share capital down the line are minimal.
To this end, Ecsponent provides transactional finance, which means the business owner benefits from having both its equity and future profits intact.
Andrew Maren, CEO of Ecsponent Investment Holdings, the company that manages purchase order financing for the Group, explains that Ecsponent provides business owners with invaluable access to funding without having to dilute themselves out of their own business.
“While banks and other credit providers will look at the track record of the business and the applicant, Ecsponent predominately focusses on the transactional risk, where start-ups have a contract, guaranteed cash coming in, know what their profits are, but are simply unable to raise capital from mainstream banks and alternative credit providers.”
So is opting for alternative funding options therefore something that all new and growing small businesses should be considering?
“Why wouldn’t they, considering that as business owners continue to grow their businesses, an initial R500 000 investment in a company’s working capital could be worth R6m five or six years down the line,” Maren emphasises.
Solid growth in financial results
This positioning has clearly begun to bear fruit with Ecsponent Limited continuing to reflect solid growth in the underlying operations.
The latest forecast to shareholders for the year ended 31 December 2015 reflected that earnings per share (EPS) are expected to increase by a minimum of 100% relative to the previously reported comparative period.
Headline earnings per share (HEPS) is expected to increase by a minimum of 40% relative as compared with the published results for the previous year.