Mvela Buys Into Finance Company
KEY management at Merchant Commercial Finance (Merchant Factors) and Mvelaphanda Holdings have acquired a 65% stake in the independent factoring and trade finance company for R120m, it was announced yesterday.
The stake in Merchant Factors was acquired from RMB Corvest, a private equity company in the FirstRand Group. The remaining 35% stake in Merchant Factors is held by management.
“We are very excited about our partnership with Mvelaphanda Holdings. We will develop a joint strategy to offer empowerment and working capital funding to the SME (small and medium enterprises) market,” said Merchant Factors MD Johnny Philippou.
Merchant Factors provides factoring and debtor administration services to SMEs. Factoring involves financing the working capital of a company that sells its accounts receivable to a factoring house. It supports growth, offers flexibility and access to funds other than bank overdraft facilities.
Mvela Holdings CEO Mark Willcox said that the investment in Merchant Factors was an opportunity to support the small business market.
Mvela, Merchant form new partnership
Mvela Holdings Acquires 65% Of Merchant Factors.
Merchant Commercial Finance (Pty) Ltd ("Merchant Factors" or "the company"), the largest independent factoring and trade finance company in South Africa, is pleased to announce that Mvelaphanda Holdings (Pty) Ltd ("Mvela Holdings"), the private holding company, and key management of Merchant Factors, have acquired a 65% stake, for R120m, in the company. This stake was acquired from RMB Corvest, a private equity company in the FirstRand (JSE:FSR) Group. The remaining 35% stake in the business is held by management.
Founded in April 1988 by Johnny Philippou, Merchant Factors provides factoring and debtor administration services to small and medium enterprises (SMEs). Factoring is working capital finance, linked to turnover, to support business activities and growth. Such funding offers greater flexibility and access to funds than traditional bank overdraft facilities.
The company's factoring and working capital book is in excess of R500m. First National Bank has funded Merchant Factors since the company's foundation and that will continue after this transaction.
Johnny Philippou, Managing Director of Merchant Factors said:
"We are very excited about our new partnership with Mvelaphanda Holdings. Together we will develop a joint strategy to offer empowerment and working capital funding to the SME market that is central to the success of this segment of the business community."
The transaction was concluded on commercial terms with Mvela Holdings utilizing their own cash resources to finance the R120m acquisition. It provides Merchant Factors with a black economic empowerment partner to support the growth in the working capital finance of SMEs. This is regarded as key to unlocking real economic growth in South Africa.
The partnership between Mvela Holdings and Merchant Factors occurs at a time when Government is placing greater emphasis on the development of SMEs as a priority.
Mark Willcox, CEO of Mvela Holdings commented:
"We see our investment in Merchant Factors as an opportunity for us to support the SME market which is a priority for the country's socio-economic development agenda. Merchant Factors has been in operation for over 20 years and is the absolute leader in its field. We will work closely with them to grow the company's presence in this market."
Mvela Holdings remains committed to making further strategic investments and to maintaining its status as a leading, black-controlled, owned and managed group.
Mvela Holdings will be represented by two directors on the board of the company.
Johnny Philippou, MD Merchant Factors concluded:
"Over the last 20 years the company has come a long way. This transaction will allow us to take the next step by working with Mvelaphanda Holdings and their wide network of contacts to grow our presence in the SME market and thus in turn help support the development of this vital segment of our economy."