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Tuesday Jan 22, 2013

Blue prepares to offer home loans

Blue Financial Services is preparing to launch its housing finance products within the next two months.

The microfinancier, which is repositioning itself in the local market, said yesterday that it was expecting a capital injection from its majority shareholder, Mayibuye Group.

Mayibuye, which owns 51 percent in Blue, is due to inject assets and debt capital, which have not yet been quantified, into the company.

The negotiations between the two companies were still at a relatively early stage but Blue expected a deal to be concluded in the first quarter., it said

Blue chief executive Johan Meiring said the proposed transaction with Mayibuye was only one of many initiatives in the firm's strategy to fund the expansion of its African operations.

"We announced during our interim results last year that we want to increase our capital structure to strengthen our balance sheet. The capital that we raise won't fund geographical expansion but we want to expand our channels for selling our existing products to more customers," Meiring said.

AltX-listed Blue operates in various jurisdictions as a registered bank, insurance company or microfinance provider. Its main product lines include micro business finance, savings products, insurance policies and cellular contracts.

Within its existing platforms, Blue will add housing and education loans. It has set a target to grow its client base to 5 million in the next three to five years from 200 000. Blue has 213 branches and operates in 12 African countries.

Meiring said the company wanted to increase its market share in east and west Africa while focusing on housing finance in South Africa.

Blue's housing pool solutions would include mortgage, incremental building and home improvement loans. The company is looking to offer incremental building and home improvement loans on an unsecured basis and mortgage finance as secured loans.

Meiring said a there was a gap in the market for such loans, particularly in the segment Blue served, which is mostly low-income and financially underserved customers.

Mayibuye also owns specialised home loan provider Integer, which in turn owns Hlano Housing Solutions, a provider of housing finance to previously unbanked customers.

Meiring said Blue would be working in collaboration with Hlano as it had been serving the market for 12 years.

Blue has historically offered secured loans in South Africa.

The stock rose 5.6 percent to 19c on AltX yesterday.

Business Report

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