IFC to invest US$40m in two Kenyan microfinance firms to provide liquidity

KENYA – Microfinance finance firms Platinum Credit Kenya and Premier Credit Kenya are set to get a loan of US$40 million (KSh4.6 billion) from the International Finance Corporation (IFC) and its partners to fund their lending business.

The loan is part of a total of US$45 million (Sh5.2 billion) financing that includes their affiliates Platinum Credit Uganda and Premier Credit Uganda.

The microfinance firms are owned by Mauritius-based Platcorp Holdings, which will guarantee the loans.

“The proposed project consists of an up to US$45 million senior loan to subsidiaries of Platcorp Holdings Limited, namely Platinum Credit Kenya, Premier Credit Kenya, Platinum Credit Uganda and Premier Credit Uganda,” IFC said in its investment disclosures.

IFC’s own account will be up to US$20 million in Kenya and up to US$5 million in Uganda, with the remaining US$20 million mobilised for the Kenya entities through B1/Parallel loans on a best-effort basis.”

The global financier added that the transactions seek to provide liquidity to the microfinance firms to support the growth of their lending to micro, small and medium-sized enterprises (SMEs).

Platinum Credit Kenya has multiple services including loans to civil servants, vehicle owners, SMEs and import financing. Premier Credit Kenya offers general business and consumer loans.

The microfinance firms offer mostly short-term loans but also disburse medium-term credit facilities. The interest rate on the loans — on an annualised basis — is significantly higher than the current average of 12.1 percent for banks.

The small lenders are popular with individuals and SMEs because of their more personalised service and ease of accessing credit, especially for those that have developed longstanding relationships with the institutions.

IFC said the loans it is mobilizing will help the institutions to extend their current average borrowing tenor of less than two years to meet their long-term funding needs.

“The proposed loan of up to US$45 million is a 3-year senior loan, with a 1-year grace period,” IFC said.

Platcorp Holdings owns nine operating microfinance companies in Kenya, Uganda, Tanzania, Lesotho, Zambia and South Africa. It manages over US$224 million (Sh26 billion) in assets, has 574 branches and about 10,000 employees servicing over 700,000 active customers.

“The model relies on a brick-and-mortar approach, operating optimally through small branches, enabling a high touch relationship with their customers,” IFC said.

Liked this article? Subscribe to DealStreet Africa News, our regular email newsletter with the latest news, deals, and insights from Africa’s business, economy, and more. SUBSCRIBE HERE

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.