Zimbabwe-focused Cambria Africa has unveiled an “innovative” financing, aimed at growing its payments subsidiary, Payserv.
The deal reinforces and makes more transparent the value in Cambria’s portfolio – a value not fully reflected in its market cap, says Cambria.
The company’s investment portfolio already spans hotels, value-added chemicals distribution and payment outsourcing and it has struck an agreement with Johannesburg based Nisela Capital, which will place US$2 million of convertible debt into Payserv.
Half the proceeds will remain with the subsidiary while the other 50% will go to Cambria.
The debt has a coupon of 15%, will mature in three years, and all or part can be converted into up Payserv shares, up to a limit 21.3% of Payserv’s equity.
Chief executive, Edzo Wisman, described the transaction as “exciting” for various reasons.
“Firstly, it evidences Cambria’s ability to add, and subsequently realise, value from its investments. Secondly, in Nisela we have found a well-resourced and well-connected partner, sharing our values, and with in-depth knowledge of the Southern Africa payments industry. Lastly, we are pleased to have secured an innovative financing structure that also brings additional expertise to the table.”
Payserv generates most of its revenues in Zimbabwe but has made significant strides building a presence in Zambia.
In recent interims, payroll and processing firm Payserv posted revenues and gross profit of US$ 2.1 million and US$ 1.9 million, respectively, showing it had grown revenues by over 1.5 times and almost doubled gross profit.
The Payserv business and the property have a book value of US$2.2 million compared to Cambria’s current market cap of US$9 million.
“This transaction provides strong third party evidence of the concrete value within Cambria’s portfolio, not fully reflected by the company’s current market capitalisation,” said Cambria.
Regulatory approvals are still outstanding and Cambria noted it is not certain the transaction will complete.
Broker WH Ireland said in a note to clients: “We welcome this diversification of the funding base, achieved without risking dilution of the share capital in the parent company.
“This is in line with Cambria’s review of strategic alternatives to accelerate the release of shareholder value.” – Proactive Investors