Letshego Africa Holdings is seeking P800 million from shareholders as the Botswana-based financial services group moves to reduce costly borrowing and build a more diversified funding base.
The company plans to issue about 1.096 billion new shares at 73 thebe each, equivalent to one new share for every 1.984722 shares held. The offer price is 13.1 percent below Letshego’s 30-day volume-weighted average price.
The fundraising comes as Letshego shifts away from reliance on commercial banks and development finance institutions, increasing its use of deposits and listed debt. The transition, however, has come against a backdrop of high borrowing costs.
Some commercial paper issued earlier this year carried interest rates above 19 percent, although more recent instruments have been priced between 10 percent and 12.5 percent, suggesting that funding conditions have begun to ease.
Most of the proceeds will be used to reduce holding-company borrowings of about P3.19 billion and settle debt owed to certain shareholders. On a pro forma basis, the transaction would lower borrowings by about P770 million and reduce annual interest costs by approximately P93 million.
The offer has significant shareholder backing. Botswana Public Officers Pension Fund, Letshego’s largest shareholder with a 37.2 percent stake, has agreed to underwrite the entire issue, providing a backstop for shares not taken up by other investors. Botswana Insurance Holdings Limited owns a further 27.5 percent.
The capital raising is also part of a broader funding strategy. Letshego has applied for a Botswana banking licence, a move that could allow it to mobilise local deposits and reduce its dependence on wholesale funding.
For a group that began almost three decades ago as a Botswana payroll lender, the shift represents a move towards a broader and potentially cheaper funding model.
