Technology group Reunert is forming a finance company. Nashua Finance, also known as RC&C Finance Company, will partner with PSG Group to form a new entity from 1 December, Reunert announced yesterday.
The new entity will be 49.9% owned by Reunert; financial services group PSG will hold 39.9%; Michiel le Roux, the new entity`s chairman, will own 6.7%; and other individuals 3.5%, Reunert said in a statement.
PSG and the other shareholders are investing R376.5 million in the venture. Bridge financing company ZS Rational, in which PSG and Le Roux have a majority stake, will also be acquired and will form part of the new entity. The new company will start with R500 million of capital.
RC&C provides asset-backed finance to customers of companies within the Reunert group by way of instalment sales transactions. In addition to expanding the existing RC&C and ZS Rational businesses, the company will focus on other niche markets such as financing provided against clients` existing share portfolios.
Reunert owns Nashua, Nashua Mobile, RC&C Holdings and CBI. It holds a 75% share in ATC, which includes African Cables, and has a 40% stake in Siemens Telecommunications.
Reunert CEO Gerrit Pretorius says the deal provides an ideal opportunity for growth in the group. "We will continue to serve our Nashua customers, but can now also, with the right partners, provide finance to people outside the group.
"In the short-term, the deal will dilute Reunert`s earnings by about R12 million, but we expect this to change in due course, and a return on equity of more than 20% in the longer term is on the cards."
Former Innofin CEO Johan du Preez will assist Le Roux, co-founder and former Capitec Bank CEO, at the new company.
"We believe there is ample scope for a financing company that is able to accurately assess the underlying risks in these underserviced niche markets," says Du Preez.
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