Opportunity to Invest in South Africa's Financial Services Market

Opportunity Snapshot

Investment Opportunity

Experienced finance professionals aiming to establish a financial services business that would focus on purpose specific lending to the mass market.

Our team is starting a business venture where we want to provide sustainable finance to the lower and middle income market in South Africa.

Our core purpose is to provide customers access to meaningful, affordable and purposeful credit solutions by partnering with businesses in the buildware and educational sector. We would enable the business to offer credit solutions to their customers in a efficient, transparent, sophisticated and simplistic manner backed up by a passionate and professional team.

All 3 of us have more than 10 years experience in this industry and we are now keen to pave our own way.

Herewith some as the business concepts that are part of our business model:

Phase 1: Providing financial solutions to buildware and educational businesses customers base, this includes financial solutions around home improvement, educational finance and retail finance. All finance solutions are purpose specific driven and we not going to focus on general consumer lending as we believe that market has been saturated. Our focus is to align ourselves to merchants all over SA and leveraged of their infrastructure to provide customers with financial solutions. We already have a base of merchants that is ready to align themselves with us.

Phase 2 would be to introduce Micro Enterprise Finance solutions to established entrepreneurial business but does not have access to working capital and expertise. We still see this a huge opportunity in SA as most financial institutions purposefully ignores to service this part of the market due to lack of expertise and appetite for risk. Entrepreneurship is the future of SA and we would like to be part of enabling those businesses to succeed, not just be a financial service provider in terms of working capital but also assist them to grow their businesses and create more jobs for others

Phase 3 we would be looking at introducing Debt Rehabilitation Solution to the over indebted clients in SA, currently this over indebtedness ratio is increasing rapidly and more and more lower to middle income customers are under severe financial stress.

We have already built a business case with the help of JTB Consultants which outlines the business case and the financial model.

Our aim is to build an asset of value and not just make a quick income from this, we want to poor our souls into this venture.

I promise this would be worth your while and I look forward hearing from you.

Competitive Advantage

Competitive Unique Selling Proposition:

CUSP 1: PSGI will target Merchants/Businesses that are under serviced or not serviced at all by the bigger competitors.

CUSP 2: Tailored Product Offering per Customer Segment; cater for the entire need of the customer and not just a portion of the solution.

CUSP 3: Merchant/Businesses Participation; make the merchant part of the relationship and provides benefits for the merchant in terms of repayment performances on the portfolio. Give the merchant insight in terms of portfolio performances and potential tools to assist with improving receipting. Also include the merchant in terms of input around product design and features. Merchant will also benefits in terms of commissions based on portfolio performances and not on actual sales generated. That is the approach of the other financial institutions.

CUSP 4: Superior Customer Relationships and Services; link the customer to the financial hub to ensure there is full transparency and agreement has been properly explained and customer are happy with the service. That would create a strong relationship between the financial service provider, the merchant and the customer.

CUSP 5: People Factor; professional and highly skilled that already has extensive experience in this industry.

CUSP 6: Successes achieved to date; the concept was previously tested and has delivered the desired results to ensure that there is a demand for this. An existing base of merchant dealers has already been established and it would be relatively easy and quickly to enable them to service their customers. So we have a good launching pad to work from.

CUSP 7: Lean Cost Structure; the business model does not require an extensive distribution network that consists of bricks and mortar to service customers. We will leverage the established infrastructure of the merchants. The only overheads would be that of the financial hubs that we would like to establish in key areas. We want to ensure we have a very lean infrastructure cost set up.

CUSP 8: Quick and nimble, PSGI would remain of such a nature that it can quickly response and adapt to competitive influences or customer changes. Most of the bigger players are bogged down by corporate structure complexities

CUSP 9: PSGI would also pursue establishing a partnership with selective employers for a preferential deduction platform for their employees and provide them with a platform to interlink with the selective merchants that we have established a partnership with. The objective is to provide a compelling value proposition for the employer.

Rationale for the deal

Currently the SA unsecured landscape is characterised by general consumer lending and there are not many financial institutions that focus on purpose specific lending by partnering with already established merchants. Our main objective is to enrich the lives of our target market and not just focusing on generating an income. Revenue streams would be generated of interest income on the loans issues to customers as well as fees such as initiation fees, service and credit life which are governed by the national credit regulator in SA. We also plan to infuse Micro Enterprise Finance solutions to black entrepreneurial companies to assist them with their working capital problems. SA has now a huge drive to promote entrepreneurs to fill the void of the ever rising unemployment rate in the economy.

Use of financing

1. Start Up Cost

2. Operating Capital (Lending Operations)

Opportunity for the investor

Investing in a very viable and sustainable business which will address a key gap in the market and whereby the investor can earn a very good and competitive return on their capital and obtain a good equity share within the business. Risk will be minimised at all cost to ensure the investors capital is protected and the required returns are secured. But foremost, its about social upliftment and ultimately creating value for the end customers as well. PSGI is not about selling credit but selling dreams.

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