Musoni Microfinance Ltd is targeting pension funds through Sh2 billion notes as it shifts from foreign-based funding to local financing.
The Nairobi-based credit-only lender founded in 2010, which targets small-scale farmers and the informal sector, said on Thursday the notes facility — a private placement — would also tap trust management funds, asset managers and high-net-worth individuals.
“We agreed that a note issuance facility is the most ideal way of raising funds for our business. We settled on this format so that we can move from foreign-based borrowing to borrowing in the local market,” said Musoni chief executive Stanley Munyao.
“It is a two to three years’ facility tenor. They are renewable — an investor can decide to roll over instead of cashing in,” he said.
Mr Munyao said the Capital Markets Authority is aware of the issue with four phases of Sh500 million each.
Musoni uses Safaricom’s M-Pesa platform and real-time gross settlement transfers to conduct its digital lending.
Shareholders are Musoni Investments BV (16 per cent), Access Africa Fund LLC (MV) at 21.1 per cent, Grameen Foundation USA (GF) 10.6 per cent, KfW (21 per cent), Oiko (15.7 per cent), and FEFISOL (15.7 per cent).
It has an asset base of Sh2 billion, a loan book of Sh1.8 billion as at December 31, 2017 and a customer base of 50,000 and 25 branches countrywide.
Loans range from Sh500 to a maximum of Sh3 million, with repayment of between three months and three years at a flat interest rate of 1.83 per cent a month for group loans and 1.67 per cent for individuals.