THE SUN CONTINUES TO SHINE AT STIMULUS

By By Francis Mukuzunga
August 2010
Business
DESPITE showing a slight dip in its profit margins for the year ending June 2010, Stimulus Investment Limited (SIL) continues to show a growing income base and a healthy balance sheet. The private equity investment group and its management subsidiary, Stimulus Private Equity (SPE) remains strong in gross revenues from its investments.

Announcing the company’s annual results in to its investors in Windhoek this August, Stimulus founding co-shareholder and Managing Director, Monica Kalondo expressed satisfaction at the company’s results and indicated that the strength of the portfolio was tested by the recession and it passed that test well.

For the year-ending June 2010, the SIL Group raked in N$32.1 million as opposed to N$29.3 million the previous year while the company, SPE recorded total revenues of N$6.5 million compared to N$5.9 million in 2009. Gross profit for the Group grew fromN$18.2 million to N$20.3 million.

However, the net profit stood at N$10.9 million compared to N$13 million the year prior while SPE’s net profit this year went down by N$2.5 million from N$12.9 in 2009 because of the fair value adjustments of some of the investments and high operating costs. Given all that, the company made a surplus of approximately N$11 million that Kalondo said the Board of Directors would soon make a decision on whether to reinvest it or go for potential new portfolio in a “drawdown, or investing on behalf of other clients.”

Although the company is not listed on the Namibian Stock Exchange, it is compelled to update its shareholders on its performance as it has a preference share listed.

Stimulus has bought into Joe’s Beerhouse, Cymot Group, One Africa TV, Westair Maintenance, Plastic Packaging, Polyoak Namibia, Walvis Bay Stevedoring and Nashua Namibia at varying shareholding levels amounting to N$80 million and is looking at adding another investment to its N$115.2 million capital base. In 2009 the company’s assets stood at N$105.2 million.

Commenting on the portfolio, Kalondo said, “While we are confident that we have a resilient and balanced portfolio, we are seeing the delayed effects of recession in our retail, manufacturing and tourism related investments. We also see equity opportunities arising due to succession planning and the increased need for expansion capital. We therefore would like to see Stimulus acting as a catalyst in unlocking value,”

Kalondo said the company enjoys a competitive advantage over other private equity investment companies in Namibia as it is the first private equity company in the local financial sector with a solid and healthy six-year track record. In addition, Stimulus has full-time management team and is backed by professional input from its shareholders and places high emphasis on corporate governance.

According to her, the current private equity market in Namibia is vibrant as there is about N$3 billion floating around which means there is improved access to capital for potential investors. However, the long lead time to transactions and finding qualified people remains a challenge. In addition, there is a regulatory and policy vacuum relating to the recognition of the private equity asset class. “This is why we are so excited that there are new private equity players on the market. It provides us an opportunity to form an industry and speak with one voice on issues that affect all of us.”

Kalondo indicated at the Annual Investor Update session that Stimulus has learnt some valuable lessons and is more than happy to share some of these with its investors and other players in the local financial industry.

“Despite all this, Stimulus has a different story to tell. With the N$3 billion uncollateralized funds coming into the market soon, banks will need to relook at the way they borrow out funds as more BEE players will go for this option and, hopefully show that they can show transparency in their management of funds.”PF