Cordiant completes loan to South African specialist transport asset finance provider
Cordiant, a leading emerging market private debt fund manager, has closed a US$15.0 million loan to SA Taxi Development Finance, an asset-based finance provider for South African mini-bus SMEs.
SA Taxi is a leading mini-bus taxi finance provider in South Africa, with over 20,000 vehicles financed. This represents 10% of the total taxis in operation and over 30% of the taxis currently financed. The company has a very strong track record of extending successful vehicle loans having funded the purchase of 36,500 taxis in the last decade.
SA Taxi is part of the Transaction Capital group, a South African finance group listed on the Johannesburg Stock Exchange.
Cordiant explains that South African Government regulations dictate that mini-bus taxis cannot be more than seven years old, creating a significant opportunity for asset-based finance providers who can offer minibus operators funding to update their vehicles.
There are currently around 200,000 such mini-bus taxis in operation in South Africa, many operated by owner-driver SMEs. Minibus taxis are used by 19 million South Africans per day as a bus service on established routes. This represents 79% of the country’s public transport, as many areas have very little other bus or rail provision.
Cordiant adds that SA Taxi has a stringent credit checking process which includes sophisticated proprietary route profitability analysis. As the company offers a large number of relatively small loans, SA Taxi has a highly granular portfolio of clients. This removes concentration risk through debtor and geographic diversity.
The loan was written by the Cordiant Emerging Loan Fund IV (CELF IV), which focuses on floating rate, private loans in emerging markets. Cordiant says that this loan follows a €24 million loan to the company in 2010 from the Cordiant managed ICF Debt Pool fund.
The CELF IV fund allows investors to take advantage of the gap between the rising demand for bank-style funding in emerging markets, and the reduced lending from Western banks in these markets. Cordiant recently completed a US$350m fundraising for the CELF IV fund.
Bertrand Millot, President and CEO of Cordiant comments: “SA Taxi is a well-managed and well-capitalised company, and a borrower we know well. This is a sector that is often underserved by traditional credit providers, meaning the loan has been priced on an attractive basis for our fund.”
“The industry as a whole is performing strongly and we expect SA Taxi to benefit from regulatory tailwinds in favour of taxi leasing. The seven year age limit on mini-bus taxis ensures a regular turnover of new leases for SA Taxi.”
“The services offered by mini-bus taxis provide vital transport arteries for millions of South African commuters daily. Additionally, through lending to SMEs, SA Taxi plays an important role in facilitating entrepreneurialism amongst less affluent communities in South Africa and improves the safety and overall standards of transport in this sector.”
The loan of USD 15 million provided by Cordiant is part of a six-year USD 36 million multi-currency loan facility with SA Taxi. The loan facility was arranged by the Dutch development bank FMO in syndication with three other parties, including Symbiotics (USD 6 million) and Oikocredit (USD 5 million).
About Cordiant Capital
Founded in 1999, Cordiant pioneered the creation of emerging market corporate loan funds that invest in partnership with International Financial Institutions.
To date, Cordiant has raised US $2.4 billion in capital subscriptions from some of the world’s largest institutional investors across four emerging market loan funds; the ICF Debt Pool; and one private equity fund, the Canada Investment Fund for Africa.
The firm has made investments in nearly 200 companies in more than 50 countries. It has exposure to all major sectors, including a large number of infrastructure investments. Cordiant is a signatory to the UN Principles for Responsible Investment.
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