QUASI EQUITY
Quasi Equity instrument will provide innovative finance to fast growing local companies which promise high development effects. The product will be offered as a standardised profit-sharing arrangement as this set up came highly favoured over other options like junior debt, convertibility or extended maturity for higher premium during the market survey.
Quasi Equity Instrument
| Description | Standardized profit-sharing product, financed through a Fund; and applications approved by an Independent Investment Committee. |
| Loan amount | At or above M15m Fund Capitalization, 15% single borrower limit i.e. M2.25m maximum per entity. |
| Maturity | 3 to 7 years |
| Pricing | Fixed period interest payments (prime minus 2%) and fixed % of firm’s future profit (20% royalty on annual profits post 2-year grace period) – more expensive than bank loan due to higher risk and zero collateral. 2.5% application fee on requested funding. |
| Repayment modalities | Based on applicant’s net profit projections and LNDC risk; Balloon Payments or Cash Flow Sweeps for principal payments, with 2-year grace period on same. Quarterly interest payments (monthly for high risk cases OR matched to specified cashflow period e.g. harvest); no loss participation. |
| Total Exposure | 80% maximum exposure to 3 priority sectors (50% agriculture; 30% manufacturing; 20% construction/transport); 20% other (NSDP) sectors |
| Collateral value and type | Standard practices in the banking business shall apply. |
| Application approval | By an Independent Investment Committee of 5 members, 2 from LNDC and 3 independents; at least one with investment experience. |
| Eligibility | Basotho/ permanent residents owned; fast growing; medium to large firms with 3 years of profit and 10% growth in annual turnover in last 3 years, with financial statements; active in LNDC priority sectors; Contribute 20% project costs; 2 personal guarantors. |
| Performance management | At least 2 transactions a year. |
About LNDC
The Lesotho National Development Corporation (LNDC) is the main parastatal of the Government of Lesotho charged with the implementation of the country’s industrial development policies.
“The mandate of the Corporation is to initiate, promote and facilitate the development of manufacturing and processing industries, mining and commerce in a manner calculated to raise the level of income and employment in Lesotho.” more...
Contact us
Lesotho National Development Corporation
Block A, Development House, Kingsway Street
Maseru, Lesotho, 100
- [email protected] or [email protected]
- +266 22312012
- Fax: +266 22310038
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