Financial Advisor Looking for Working Capital for Regional Expansion

Opportunity Snapshot

Investment Opportunity

In order to offer clients a wider range of products I have secured TOBs with a range of providers and now seek working capital to expand in East & Central Africa.

The project is to establish a network of advisors throughout Eastern and Central Africa.

The rational behind establishing such a large territory is that recently I have signed a Master Broker agreement with Investors Trust Assurance SPC giving me rights to sell in 18 sub-Saharan countries (with an option on 20 more countries). What is vital to understand about this company is that unlike their competition, they offer savings policies that are far more attractive to African savers and the potential for sales in this region is vast.

The target market for these savings products is basically every person in the region who is working and earning more than $900 per month, so the market is huge. In addition to these savings plans I also have TOB's with a wide selection of Fund Houses and Alternative Investment Companies. In effect, I have a product range to satisfy the requirements of the majority of savers and investors.

Commissions on financial products are high when the effort involed in making sales is taken into account, there is little cost involved in distribution other than communications and the logistical costs of attending investment meetings with clients.

I have a database of potential clients (4000+) covering Kenya, Uganda, Tanzania, Zambia, DR Congo, Congo, Gabon, Equatorial Guinea, Angola, Burundi, Rwanda, South Sudan, Chad, Mozambique, Zambia, Malawi and Somalia, this database is growing daily and all contacts are pre qualified.

I have the product range in place, I have potential clients in place, the next step is to start sales and develop a network of sub brokers in certain countries. Sales will start in Kenya, Uganda and Tanzania followed by Gabon, Angola, Equatorial Guinea and Chad.

When a suitable network of sub brokers is established I will be introducing a small range of APS Consulting - Africa managed Funds, with holdings predominantly from African Securities Exchanges and these funds will be distributed worldwide by brokerage companies and IFA's.

The initial requirement is for working capital investment which is minimal, sales will start within 1 month of receiving funding and within 6 months the project will be entirely self funding. For any potential investor this gives the posibility of 2 stages of funding. 1. initial working capital (debt) and 2 second round funding at the stage when the APS Funds are launched (equity).

The initial working capital funding is modest with a minimum of $50,000 required, this will cover communications, travel costs and admin / distribution costs.

I must stress that I am seeking funding simply because the opportunity that I have been given is huge and there is not sufficient time available to generate the capital required to seize this opportunity from normal sales.

I am looking for an investor who can add value to this project, possibly an investor who has knowledge of the Financial Advisory sector and who understands the full potential of having the rights to distribute as a Master Broker for a leading Life Assurance Company throughout almost half of a continent!

At this stage I am open to suggestions from interested investors regarding payback periods, ROI, Debt vs Equity and only ask for minimal initial investment in the early stages with more substantial investment further down the road when the profitability and potential is clearly displayed.

Competitive Advantage

In the savings plan market the main competitors are Generali International, Friends Provident International, Hansard International, Skandia and RL360. The advantage that I have is that Investors Trust offer offshore savings plans that start from only $100 monthly minimum premium, the lowest minimum monthly premium from the competition is between $300 and $500. In addition Investors Trust have by far the lowest administration fees. Many clients who want to save for the future are very critical of higher admin fees, as an example ITA charge a maximum of 0.26% where Hansard charge 3.05%.

Salary levels in Africa are generally lower that in developed countries, but people still want to save for their future. To afford a basic savings plan from Generali a client needs to be earning around $4000 per month, to afford a basic savings plan from Investors Trust the client only needs to be earning $900 to $1000 per month. This difference opens up a market with savers who simply cannot afford the competitions rates.

This advantage is sustainable as the competitors increase minimum premium requirements for African clients. To take Generali as an example, the minimum monthly premium for a European client is $150, for an African client the minimum is $500. Non of the competitors I have mentioned are interested in reducing the minimum premium level below what is already established.

Investors Trust have no issue with minimum premium levels and over 50,000 of their low premium policies have been issued worldwide.
It has also been indicated by Investors Trust that as the market in Africa develops they will investigate additional products to suit the market requirements and that they will consider "White Label" products.

Rationale for the deal

There is a rapidly growing Middle Class developing in Africa, foreign investment is driving this growth. Read any of the financial press and there is excitement for the potential in Africa. Foreign companies are driving salaries higher, as an example, an accountant working for a Kenyan company would previously expect a monthly salary of 30,000 shillings... but companies like BAT, Unilever, Nestle etc are paying accountants 100,000 + so the national companies are now having to fall in line with increased salary rates to attract employees. Earning 100k shillings is still a long way from affording a savings plan from the competition, but it makes a plan from Investors Trust both viable and affordable. Most savers are prepared to save 10% to 15% of their salary.

In addition, government pension schemes in most African countries are of so little value that they will be worth nothing come retirement age and many clients are now doing the calculations and realising they are not prepared for the time they retire.

Investors Trusts offer high commission rates but only pay on a non-indemnity basis, so commission is paid monthly rather than total commission as an Indemnity based lump sum (with a claw back risk is the client defaults). This equates to potentially a very high monthly income as more plans are sold, but does not give the quick cash injection that this project requires.

My own experience is with Generali, Friends Provident and Hansard and I understand how frustrating it is to meet with a client who truly understands the importance of saving for the future but simply cannot afford to purchase the product offered.

Use of financing

The funding is required initially as working capital to cover the cost of client meeting trips (usually 10 to 14 days in a major city and meeting 3 to 4 new clients daily), administration costs, communications, printing etc.

The reason for requesting finance is that the opportunity offered by Investors Trust is once in a lifetime and I am simple not in a position financially to ensure that sufficient clients can be met, sufficient targets achieved, and sufficient sub brokers appointed without financial assistance. When I started working as an independent broker I planned to start small and develop a portfolio of clients and that the company would grow according to the increasing monthly income. This agreement with Investors Trust has created the requirement for a network of sub brokers covering half a continent!

I envisage 2 rounds of funding, the first being minimal working capital in order to get extra clients and develop a network of sub brokers.
The second round will only be required once the network is established and the full potential and scope of the project is fully realised. At this point I will be discussing "White Label" products with Investors Trust and also starting the setup of a small number of APS managed funds for worldwide distribution.

Opportunity for the investor

I am looking for a specific investor, ie., an investor who is familiar with the Financial Advisory sector and investment opportunities in Kenya, basically an investor who fully understands the full potential of this project and can offer hands on assistance while over looking minimal levels of physical security in the first few months of the project. Each plan sold adds to security on a monthly basis and there are hundreds of thousands of potential clients who can afford a basic savings plan, they just don't understand yet that an affordable offshore savings option is available.. yet!

Debt / Equity finance are both an option and I am open to discussions but I cannot discuss projected sales, ROI, interest rates at this stage as all are directly linked to the level of initial investment. As a basic example of turnover etc. 1 sub broker selling only 5 minimum monthly premium plans per week will be generating +/- $120,000 per annum by year 2, I expect to have a minimum of 5 to10 sub brokers per country.

The desired investment schedule is Round 1 - Working Capital - as soon as possible. Round 2. within 12 to 18 months.

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