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Abridged Prospectus – offer to subscribe for preference shares-ECSP1, ECSP2, ECSP3
Ecsponent Limited
(previously John Daniel Holdings Limited)
(Incorporated in the Republic of South Africa)
(Registration number 1998/013215/06)
JSE share code: ECSP1 (Class A) ECSP2 (Class B) ECSP3 (Class C)
ISIN: ZAE000196317 (ECSP1), ZAE000196309 (ECSP2),
ZAE000196291 (ECSP3)
(the “Company” or “Ecsponent”)
ABRIDGED PROSPECTUS –OFFER TO SUBSCRIBE FOR PREFERENCE SHARES OF
ECSPONENT
Abridged prospectus relating to:
• an offer for subscription for 10 000 Class A Preference Shares at R100 each;
• an offer for subscription for 10 000 Class B Preference Shares at R100 each; and
• an offer for subscription for 10 000 Class C Preference Shares at R100 each
(the “Offer”), and the subsequent listing of the above classes of preference shares (collectively the
“Offer Preference Shares”), under R5 billion Preference Share Programme established by Ecsponent
and approved by the JSE Limited (“JSE”) on 8 September 2014 (“the Programme”).
This abridged prospectus announcement is not a prospectus, but is issued in compliance with
the Companies Act, 2008 (“the Companies Act”), for the purpose of giving information to the
public in relation to Ecsponent, the Offer and the Offer Preference Shares, which are offered in
terms of a registered prospectus, which was filed with the Companies and Intellectual Property
Commission on 26 September 2014 (the “Prospectus”).
The Company intends offering multiple tranches of preference shares to the public in the
future, under the Programme. The Prospectus relates to the first tranche issued under the
Programme
This announcement contains the salient information in respect of Ecsponent, which is more fully
described in the Prospectus, which will be made available to interested investors from today. For a full
appreciation and understanding of Ecsponent, the Offer and the listing, the Prospectus should be
read in its entirety.
INTRODUCTION
The Company was incorporated in March 1995 on 9 July 1998 and was listed on the Venture Capital
Market of the JSE on 6th August 1998. The Company’s registered address and primary place of
business is Acacia House, Green Hill Village Office Park, Corner of Nentabos and Botterklapper
Streets, The Willows, Pretoria East.
Ecsponent functions as a pure holding company which develops interests in operational subsidiaries.
Ecsponent focuses on the following operational segments:
* Financial Services in South Africa;
* Financial Services in Africa; and
* Investments.
The Company’s primary focus is financial services. Ecsponent ensures the strategic alignment of its
investment targets by applying a highly focused approach to the acquisitions. Core to the approach is
the ability of the target business that provide high barriers to entry and high gross profits resulting in
above average levels of returns which are sustainable.
Ecsponent effects governance and oversight in respect of its subsidiaries and provides central
services such as administration, treasury, management accounting, IT, legal, HR & payroll, etc.
Ecsponent adds value to its subsidiaries by:
* providing capital raising expertise;
* JSE Listings Requirements compliance and the associated governance;
* management support and access to industry specialists; and
* access to National Credit Act (“NCR”) and Financial Services Board (“FSB”) licences.
The prospects for Ecsponent are linked to the prospects of the investee companies, details of which
are set out below. Over the past two years, the group has taken several strategic steps that the
Directors believe have improved the future prospects of the group.
Ecsponent Financial Services (Pty) Limited (“Ecsponent Financial Services”)
(Formerly Escalator Financial Services Proprietary Limited)
Ecsponent Financial Services was incorporated as a private company on 24 April 2006 under the
name Tiespro 69 (Pty) Ltd, registration number 2006/012668/07 and has been in operation for 8
years. The name was changed to Escalator Financial Services on 22 November 2011. The name
was thereafter changed to Ecsponent Financial Services on 28 January 2014.
Ecsponent Financial Services has 10 000 000 ordinary shares of R0.00001 each in issue, of which
Ecsponent holds 100%. Ecsponent Financial Services became a subsidiary of Ecsponent on 25 July
2014.
Ecsponent Financial Services is registered with the FSB as a Financial Services Provider (licence
number 32968) to provide intermediary services between product providers and the public in general.
Ecsponent Financial Services’ main business is the provision of financial services and it has been
appointed to act as intermediary between Ecsponent Capital (RF) Limited (“Ecsponent Capital”), and
the public as a placement agent.
Ecsponent Financial Services recruits and manages qualified advisors under its FSB licence to
market the products under the rules and regulations that are prescribed by the FSB. Advisors who are
already registered with the FSB are also to be evaluated to market these products.
The Ecsponent financial services strategy requires access to, and control of, key elements of the
channel to market. FSB regulatory licences are an important component of the roll out of the strategy
and the acquisition of Ecsponent Financial Services provides Ecsponent with the required licences,
skills and infrastructure.
Director’s view of prospects
The Ecsponent Financial Services network has in the past successfully marketed unlisted, prospectus
based products. Ecsponent intends providing listed products with enhanced tradability which the
directors believe will substantially improve the market acceptance of the product range. It is further
the company’s intention to expand the product range further bolstering the future prospects.
Sanceda Collections Services (Pty) Limited (“Sanceda Services”)
Ecsponent acquired the business of Sanceda Collections (Pty) Limited (“Sanceda”) (i.e. assets,
leased assets, marks and goodwill) on 25 July 2014, which business has been in operation for 3
years and which will be conducted by Sanceda Services going forward, a wholly owned subsidiary of
Ecsponent, established for the purpose of conducting the business of Sanceda.
Sanceda Services has 1 000 no par value ordinary shares in issue, of which Ecsponent holds 100%.
Sanceda Services has been a subsidiary of Ecsponent since the acquisition thereof as a shelf
company on 24 October 2011.
Sanceda Services is a collections agency registered with the Council for Debt Collectors, which
provides for collections on behalf of companies. Collections are call centre based and Sanceda
Services has established the management and infrastructure to collect on a large volume of files
concurrently.
Sanceda Services’ collections expertise includes tracing of defaulters, repayment and contract
agreement, debit order and related collection management and legal pursuance of defaulters should
this become necessary.
Sanceda Services currently manages a distressed debt portfolio of around R700 million. The bulk of
the portfolio is debt books owned by Escalator Asset Management Proprietary Limited, which
company is owned by Ecsponent Capital.
The Ecsponent financial services strategy includes the collection of debt books and the realisation of
value through the efficient collection of the debt. The acquisition of the business of Sanceda provides
Sanceda Services with the skills and infrastructure to collect against its own debt books. In addition
the debt crisis in South Africa creates the opportunity to expand the collections of third party debt, not
only because the directors believe that distressed books have increased in quantum during the debt
crisis period, but also because of the difficulty faced by entities in collecting on these distressed
books, and therefore the services offered by Sanceda Services have become more valuable.
Director’s view of prospects
The systems infrastructure of Sanceda Services is currently completing a major upgrade which
includes a sophisticated analytics platform and predictive dialling facilities. These improvements are
anticipated to double the throughput of the call centre and substantially improve efficiency of the
operator.
Ecsponent Limited (Botswana) (“Ecsponent Botswana”)
(Formerly Escalator Investment Holdings Limited)
Ecsponent Botswana was incorporated as a private company on 24 August 2010 under the name
Loyn Proprietary Limited and remained dormant until it commenced operations in 2013 and has been
in operation for 1 year. On 26 April 2011, Ecsponent Botswana’s name was changed to Escalator
Investment Holdings (Pty) Limited. On 12 October 2012, Ecsponent Botswana passed a special
resolution to convert to a public company, which conversion was completed and registered on 21
November 2012. On 17 February 2014, Ecsponent Botswana’s name was changed to Ecsponent
Limited.
Ecsponent Botswana has 1 000 ordinary shares of R1 each in issue, of which Ecsponent holds 100%.
Ecsponent Botswana became a subsidiary of Ecsponent on 25 July 2014.
Ecsponent Botswana is a financial services company which raises capital through the issuance of
various classes of preference shares. Subscription is by means of a prospectus issued to qualifying
members of the public and institutions.
Ecsponent Botswana provides funding and/or secured credit to small, medium and micro enterprises
(SMMEs).
Ecsponent Botswana is anticipated to provide high growth and high net returns to stakeholders. The
acquisition of the company at a start-up phase provides the opportunity for high returns whilst also
providing a channel to market for Ecsponent products and services into Africa.
Director’s view of prospects
The directors anticipate substantial organic growth in respect of the existing business model. In
addition, the company’s research has identified opportunities in lucrative niche SMME markets. It is
the Ecsponent Botswana’s intention to leverage its vendor finance products to maximise these
opportunities.
Cryo-Save South Africa (Pty) Limited (“Cryo-Save SA”)
Experite NV and Ecsponent successfully established a venture in 2011 which provides for the
harvesting and banking of stem cells from both cord blood as well as cord tissue.
Experite NV’s Cryo-Save operation (“Cryo-Save”) is the leading international family stem cell bank
and already stores over 250 000 samples from cord blood and umbilical cord tissue for new-borns
and adipose tissue for adults. There are already several diseases that can be cured by the use of
stem cells, and the Directors believe the number of treatments will only increase. Driven by its
international business strategy, Cryo-Save is now represented in 40 countries on three continents,
with ultra-modern processing and storage facilities in Belgium, Germany, Dubai, India and France.
Cryo-Save SA combines Cryo-Save’s leading expertise in stem cell processing and storage with
Ecsponent’s local and African market expertise and offers customers the option of storing cord tissue
and stem cells from cord blood in South Africa or off shore in Belgium.
Cryo-Save SA has 200 no par value ordinary shares in issue, of which Ecsponent holds 50%. Cryo-
Save SA became a subsidiary of Ecsponent on 1 July 2011.
Director’s view of prospects
Cryo-Save SA continued to set new records during the 2013 financial year, signing up 1 492 new
clients (R20.2 million) during the 12 months ended 31 December 2013. This compares to
R18.5 million for the previous 15 month period. The growth of the company has resulted in a new
state of the art laboratory being commissioned in Pretoria in January 2013. The company entrenched
its leadership in the field of umbilical cord stem cell technology by launching a nationwide educational
campaign which was extremely well received by the medical fraternity. Cryo-Save also became the
first laboratory in Africa to provide authenticated viability testing on cord tissue prior to cryogenic
storage.
In the Directors’ view, the acceptance of the technology by leading medical aids will dramatically
increase the education and exposure of the business to the target market.
Salveo Swiss Biotechnology Limited (“Salveo”)
(Formerly Lazaron Biotechnologies (SA) Limited)
Salveo established its leadership in its field as the first company to store cord blood stem cells in
South Africa under the Lazaron branding and has been operating for 9 years. The company was
founded in 2004 as Lazaron Biotechnologies (SA) Limited after the development of its technology at
the Stellenbosch University by well-known stem cell researcher, Dr Daniel Barry, and his research
team.
Salveo has 369 970 339 no par value ordinary shares in issue, of which Ecsponent holds 50%.
Salveo initially became a subsidiary of Ecsponent on 24 February 2004, the company’s name was
changed to Salveo Swiss Biotechnology Limited in April 2014 and Experite NV took up a 50% stake in
the business on 31 May 2014.
Salveo entered into a collaborative venture with Experite NV and Salveo Biotechnology of Switzerland
for the rights to the Salveo Biotechnologies Products and Services in Southern Africa.
Director’s view of prospects
The acquisition provides the group with a second stem cell harvesting and storage business to further
entrench its dominance in the field of family stem cell banking. The nature of the Swiss protocols and
technology reduces the costs associated with the processing and storage of the umbilical stem cells
resulting in a saving to the client. The development allows the group to provide a more cost effective
processing and storage solution to the stem cell market.
Ecsponent Credit Services (Pty) Limited (“Ecsponent CS”)
(Formerly JDH Credit Services (Pty) Ltd)
Ecsponent CS has 100 no par value ordinary shares in issue. Ecsponent CS became a subsidiary of
Ecsponent on 1 July 2011, after the acquisition by Ecsponent of 100% of the shares in, and claims
against, Ecsponent CS for a cash consideration of R100.
Ecsponent CS provides financial services to third party company employees and has been in
operation for 4 years. Ecsponent CS was the first acquisition by Ecsponent in its new Financial
Services Division. Ecsponent CS’ core business remains the provision of employee benefit advances
through selected employers, however it has diversified its operations and acquired a debtors’ book for
a consideration of 10% of the projected future collectable amounts. The company expanded further by
entering the SME market, granting secured loans to medium size growth organisations.
Director’s view of prospects
Ecsponent CS has shown strong growth since its incorporation. The company currently has an
employee benefit advance book of R34.6 million and the combined employee base to over 70 000 as
a result of the Group’s on-going acquisition strategy.
The potential of the Ecsponent CS client base is largely under exploited and the Group intends to
facilitate further strong growth through the provision of increased funding.
Ecsponent CS intends to also deploy funds to develop the lucrative vendor finance and SME markets.
The robust business model which the Group has fully tested mitigates the risks associated with these
sectors of the market, whilst the small overhead base provides for maximised returns.
Vinguard Limited (“Vinguard”)
Vinguard is a public company with over 300 shareholders and has been in operation for 12 years.
Vinguard has 98 512 287 no par value ordinary shares in issue, of which Ecsponent holds 75.87%.
Vinguard became a subsidiary of Ecsponent on 29 October 2002.
Director’s view of prospects
2
The directors decided to dispose of the unprofitable Dual Release S0 gas sheet manufacturing
assets resulting in a section 112 disposal, for a consideration of R6.3 million, which was approved by
Vingaurd shareholders on 24 January 2014. The Vinguard business will retain currently profitable
assets and may acquire aligned businesses in the future.
The company’s remaining assets perform well providing a profitable return and the directors continue
to evaluate aligned business opportunities to provide further growth for Vinguard.
SUMMARISED FINANCIAL INFORMATION
The table below sets out the historical financial information of the group for the previous three
financial years:
Consolidated financial results of Ecsponent
12 Months 15 Months 15 Months
Figures in Rand 31 Dec 2013 31 Dec 2012 30 Sept 2011
(Audited) (Audited) (Restated Audited)
Revenue 37 317 199 29 793 507 6 463 609
Profit / (loss) before tax from 6 153 616 3 321 515 (7 155 936)
continuing operations
Profit after tax from 4 428 133 1 462 104 N/a
continuing operations
Loss after tax from (3 394 667) (953 879) N/a
discontinued operations
Total profit after tax 1 033 466 508 225 279 388
The performances of subsidiaries acquired post year-end and not included in the consolidated
performance are indicated below:
Ecsponent Financial Services
12 Months 12 Months 10 Months 29 Feb
Figures in Rand 31 Dec 2013 31 Dec 2012 2012
(Audited) (Audited) (Audited)
Revenue 7 974 210 4 991 690 5 666 594
Profit before tax 553 231 944 608 142 465
Profit after tax 310 074 623 958 18 698
Ecsponent Botswana
12 Months ended 12 Months ended
Figures in Rand 31 Dec 2013 31 Dec 2012
(Audited) (Audited)
Revenue 200 010 -
Loss before tax (1 353 832) (9 891)
Loss after tax (1 053 813) (9 891)
Sanceda Services is a subsidiary recently established for the purpose of conducting the business
acquired from Sanceda and therefore, as a separate legal entity, has no history of financial results.
The financial results achieved by Sanceda are shown below.
12 Months ended 12 Months ended
Figures in Rand 31 Dec 2013 31 Dec 2012
(Audited) (Audited)
Revenue 7 639 150 2 442 024
Loss before tax (5 823 846) (1 597 682)
Loss after tax (4 193 168) (1 150 331)
Other subsidiaries acquired or incorporated post year end are not considered to be material to the
group and accordingly their financial performance has not been set out above.
PURPOSES OF THE OFFER AND THE LISTING
Ecsponent has made, and is in the process of making, numerous business acquisitions with the
intention of directing the core focus of the Company towards financial services.
In view of promoting this path, Ecsponent has created and intends marketing listed products to both
retail and institutional investors. The directors believe the listing of these products will substantially
improve market acceptance of a similar (but unlisted) product range which is currently on offer by
Ecsponent Capital. It is also the Company’s intention to further expand the product range thereby
bolstering the future prospects of the Company.
Ecsponent‘s business model requires continuous funding for, inter alia, its financial services
businesses and preference shares are considered an optimal source of funding for these on-going
business needs.
The proceeds of Preference Shares issued will be used by Ecsponent to fund the future growth of the
Company on an ongoing basis and for general corporate purposes. Funding will be raised through the
issue of Preference Shares as and when needed and there is no minimum subscription amount.
SALIENT DATES AND TIMES
2014
Abridged version of the Prospectus released on SENS on 29 September 2014
Offer opens at 09:00 on 29 September 2014
Offer closes at 12:00 on 1 October
Results of the Offer released on SENS on 2 October
Accounts at CSDP or broker updated and debited in respect of 6 October
dematerialised Preference Shareholders
Listing of the Offer Preference Shares commences on 6 October
Notes
1. All references to dates and times are to local dates and times in South Africa. These dates and
times are subject to amendment. Any such amendment will be released on SENS and published in
the press.
2. Investors must advise their CSDP or broker of their acceptance of the Offer in the manner and cut-
off time stipulated by their CSDP or broker.
3. Delivery will be affected through an allotment of Offer Preference Shares subscribed for, and not
on a delivery versus payment basis.
PARTICULARS OF THE OFFER AND THE OFFER PREFERENCE SHARES
The Offer comprises of an offer for subscription to the public for:
• 10 000 Class A Preference Shares at R100 each;
• 10 000 Class B Preference Shares at R100 each; and
• 10 000 Class C Preference Shares at R100 each
The Offer Preference Shares will be allotted subject to the provisions of the Memorandum of
Incorporation of Ecsponent and will rank pari passu amongst each other in all respects, including
distributions, but in priority to the ordinary shares of the Company, which are also listed on the JSE
under share code ECS.
Applicants who wish to subscribe for Class A Preference Shares and Class B Preference Shares
must subscribe for a minimum amount of R10 000 per applicant in order for the application to be
successful (i.e. for a minimum of 100 Class A or Class B Preference Shares, respectively). Class C
Preference Shares are subject to a minimum subscription amount of R100 000 per applicant (i.e. a
minimum of 1 000 Class C Preference Shares must be subscribed for per applicant).
Entitlement to dividends
Class A Preference Shares
Class A Preference Shares are entitled to cumulative dividends calculated equal to a fixed rate of
10% per annum (not compounded) on the issue price of the Class A Preference Share.
Class B Preference Shares
Class B Preference Shares are not entitled to a dividend, however they are redeemable at a price
equal to 170% of the issue price of the Class B Preference Share, providing the Class B Preference
Shareholders with an effective yield of 10.66% per annum.
Class C Preference Shares
Class C Preference Shares are entitled to cumulative dividends calculated at a variable rate equal to
the Prime Rate plus 4% per annum (not compounded) on the issue price of a Class C Preference
Share.
Redemption of Offer Preference Shares
All classes of Offer Preference Shares are automatically redeemable on the fifth anniversary of their
initial issue date, at a price equal to:
* 100% of the issue price for Class A Preference Shares
* 170% of the issue price for Class B Preference Shares
* 100% of the issue price for Class C Preference Shares.
Should the redemption amounts remain outstanding for a period of three months, the conversion
provisions below will come into effect.
Conversion of Offer Preference Shares
If the Company fails to rectify a default event in respect of a class of Offer Preference Shares within 3
(three) months of the default event, a default event being:
* non-payment of the redemption amount; or
* non-payment of 3 (three) consecutive dividend amounts on Class A and Class C Preference
Shares,
the Offer Preference Shares of that class shall become convertible into ordinary shares.
Save in the event of non-rectification of a default event as set out above, the Offer Preference Shares
are not convertible.
General
No fractions of Offer Preference Shares will be offered in terms of the Offer.
The Offer is open the general public. The following parties may however not participate in the Offer:
* any person who may not lawfully participate in the Offer; and/or
* any person acting on behalf of a minor or deceased estate; and/or
* any related party or non-public shareholder of the Company, given that the Offer Preference
Shares are (by virtue of their potential convertibility) being offered in terms of the Company’s
general authority to issue shares for cash.
DIRECTORS
Names Business address Capacity
RJ Connellan Acacia House Independent Non-
Green Hill Village Office Park Executive Chairman
Cnr of Nentabos and Botterklapper Street
The Willows
Pretoria East, 0181
KA Rayner Acacia House Independent Non-
Green Hill Village Office Park Executive
Cnr of Nentabos and Botterklapper Street
The Willows
Pretoria East, 0181
BR Topham Acacia House Independent Non-
Green Hill Village Office Park Executive
Cnr of Nentabos and Botterklapper Street
The Willows
Pretoria East, 0181
TP Gregory Acacia House Chief Executive
Green Hill Village Office Park Officer
Cnr of Nentabos and Botterklapper Street
The Willows
Pretoria East, 0181
DP van der Merwe Acacia House Group Financial
Green Hill Village Office Park Director
Cnr of Nentabos and Botterklapper Street
The Willows
Pretoria East, 0181
E Engelbrecht Acacia House Non-executive
Green Hill Village Office Park director
Cnr of Nentabos and Botterklapper Street
The Willows
Pretoria East, 0181
AVAILABILITY OF THE PROSPECTUS
The Prospectus is available in English only. Copies of the Prospectus may be obtained and certified
copies of the supporting documents may be inspected between 08:30 and 17:00 on business days
from Monday, 29 September 2014 to Friday, 17 October 2014 at the following addresses:
Ecsponent Link Market Services
Acacia House Link Market Services South Africa (Pty) Ltd,
Green Hill Village Office Park (Registration number: 2000/007239/07)
Cnr of Nentabos and Botterklapper Street 13 Floor Rennie House,
The Willows 19 Ameshoff Street,
Pretoria East, 0181 Braamfontein, 2001
Debt Sponsor and Corporate Advisor Legal and Tax Advisors
Questco (Pty) Ltd Webber Wentzel
Auditors
AM Smith and Company Inc.
Date: 29/09/2014 05:46:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
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