Optimism high as Yetu launches IPO

YETU Microfinance primary share sales to the public is expected to be oversubscribed since the institution operates at the grassroots level, according to an industry analyst.

Mr George Fumbuka, the Chief Executive Officer of Core Securities told the ‘Daily News’ yesterday that oversubscription of Yetu Microfinance shares was most likely because it is a micro entrepreneurs lenders that has been helping a number of small businesses to grow.

“I won’t be surprised for Yetu (Microfinance) oversubscription,” Mr Fumbuka said during the official launching of Yetu’s IPO in Dar es Salaam.

Yetu IPO, with green shoe option, started last Thursday in a bid to raise 12.5bn/- for expansion and meeting Bank of Tanzania’s regulatory requirement for minimum core capital of 5bn/- for microfinance institutions.

It is expected to list at Dar es Salaam Stock Exchange alternative market — Enterprise Growth Market (EGM) in August. Core Securities is the sponsoring broker and Consultants for Resources Evaluation Limited is nominated advisory.

The chief guest of the occasion, The Executive Chairman of IPP Group of companies, Reginald Mengi, encouraged small scale businesspersons to think big and muster the courage to try.

He said with courage, confidence and trust they will eventually become successful. “But don’t regard yourself as small businesspersons… in business you are businessmen and women... that way you will go far,” Mr Mengi said amid cheers from hundreds of members and clients of Yetu Microfinance.

Giving his story to inspire the businessmen, the IPP chairman said he began from the bottom before raising to the group of elite businesspersons: “No business has started at the top.

At one point in the past it was at the bottom.” He promised to buy 40,000 shares worth 20m/-. Over 70 per cent of Yetu customers are women and youth, who started with the capital of 50,000/- but raised to some being able to borrow 20m/- and owning big business that also offers employments.

Johari Mkonde, a businessman said he started with a 50,000/- loan from the institution for charcoal business 15 years ago. He now has a 20m/- capital for his business which includes a poultry farm with over 2,000 chicken, boutiques shop and several bodabodas.

Gloria Mleli, owner of Tevienda Catering Services, said in comparison with other financial institutions, Yetu stands out of the rest as they are close to their clients thus enabling them to succeed in business.

“If you borrow 300,000/- you pay 354,000 in six months, the interest is relatively low,” Ms Mleli said, “this is about 6,000/- a month.”

Yetu Managing Director Mr Altemius Milinga said the institution started in 1997 with a capital of 30m/- as YOSEFO as a lender to micro entrepreneurs and later clinched an award prize of 35m/- which was also directed to loan portfolio.

“The purpose of this offer is to recapitalise the company further and, upon attaining the capital requirements for licensed financial institution, converting it into a microfinance bank,” Mr Milinga said.

The shares offered for sale are 25,193,213 that will be sold at the price of 500/-. And the shares expected after the IPO will be 36,972,249. The offer will be closed on July 30.

The minimum shares that an individual will be allowed to purchase are 200 worth 100,000/-. Yetu’s prospectus shows that it will distribute at least 60 per cent of available profits as dividends but it will depend primarily on profits made and the company’s capital requirements in compliance of banking laws.

The company has been generating profits in the last five years since 2009 where a net profit was 298.9m/- and climbed to 1.03bn/- of 2013. It has over 32,000 customers served at three branches, three agencies and over 130 financial centres in Dar es Salaam, Morogoro, Lindi, and Zanzibar.
Source: Daily News reported by Abduel Elinaza, from Dar es Salaam, Tanzania
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