Purple Group CEO Charles Savage said they are confident they will return more than 1,000% on their planned R150 million EasyEquities capital raise.
Savage said Purple Group would shortly announce details of their intention to raise R150 million of new capital to fund the growth strategy of the Easy Group of companies over the next three years.
Speaking on the Ghost Stories Podcast, Savage said the capital raise would most likely happen through a rights issue.
“Sanlam is 100% going to follow their rights at an EasyEquities level, and Purple Group wants to follow its rights,” he said.
“The best way to do that is to ensure that existing shareholders are presented with that opportunity,” Savage said.
“We want our existing shareholders to have the first right to the opportunities in the group. It is most likely that it will go to existing shareholders.”
The R150 million is intended for the Easy Group, which includes EasyEquities and its subsidiaries EasyEquities International, RISE, EasyProperties, EasyCrypto SA, and EasyEquities Australia.
The money will be spent in three areas.
- Spend 30% to increase the pace of growth on EasyEquities’ South African assets.
- Spend 30% on new products, like credit and insurance, to deliver to EasyEquities’ customers in South Africa to increase the average revenue per customer.
- Spend 30% to scale the group internationally, starting with the Philippines and moving into South-East Asia.
- Reserving 10% to have the capital to buy distressed assets when the opportunity arises.
Savage is upbeat on the prospects of providing shareholders with a good return on capital through the capital raise.
He cited the R100 million capital raise six years ago to fund EasyEquities when Purple Group’s market cap was R200 million.
“We raised R100 million, and we 10xed [providing a return to shareholders of 10 times, or 1,000%],” Savage said.
“We took R100 million and created more than a 10x – most likely 15x – return on that R100 million.”
He said that when the capital was raised, EasyEquities was tiny, with around 50,000 customers and only Satrix as a partner. “Despite all of that, we could still 10x it.”
Savage is even more bullish on the planned R150 million capital raise to further drive the Easy group’s growth. “What we will do is to more than 10x it,” he said.