Credit Rating Reports

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Credit Rating Reports

Agri Harvest Investments (RF) Limited Transaction 1 (Jul 2022)

The Transaction is an asset-backed securitisation of agricultural loans that are advanced to commercial farmers in South Africa and forms part of a multi-issuer programme arranged by RMB. For this first transaction, the agricultural loans sold to the Issuer are originated by GWK, which operates as a primary and secondary agriculture financier.

The proceeds of the first tranche of Notes Issued have been used to purchase a portion of the proposed Initial Asset Pool. On the completion of the staged purchase of the Initial Pool of Participating Assets, the Transaction will continue as a revolving transaction and will amortise in the event that an unremedied Stop Purchase Trigger breach occurs.

To accord ratings, the cashflows are modelled as per the Pre-Enforcement Priority of Payments applicable in the Amortisation Period as per GCR’s Criteria for Rating Structured Finance Transactions. Interest and principal on all the Notes issued is to be paid quarterly on each Payment Date during the Revolving Period and Amortisation Period.
The Issuer will appoint GWK as its agent to fulfil the Servicer role and FirstRand Bank (“FRB”) to fulfil the Administrator role. RMB (a division of FRB) will be appointed in multiple roles including Account Bank and this appointment will be subject to it maintaining the Required Credit Rating.

The loans purchased by the Issuer are backed by many forms of security, including crop cessions, notarial bonds, suretyships and mortgage bonds. GCR was provided with historical default and recovery vintage data from July 2016 to January 2022 and used the data to formulate base case assumptions for defaults and recoveries.

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Octodec Investments Limited (Aug 2022)

JSE-listed Octodec Investments Limited (“Octodec” or “the REIT”) is a medium-scale fund comprising 254 properties across a range of commercial segments and residential assets. Its acquisition of the entire share capital of Premium Properties Limited (“Premium”) in 2014 saw the combination of three separate property holding entities (Octodec, Premium and IPS Investments Proprietary Limited) with common ownership and management. City Property Administration (Pty) Limited (“City Property”) is the REIT’s asset and property management company, with the relationship governed by renewable management agreements. City Property is owned by the Wapnick family, which along with the directors, holds a 37% interest in the REIT. Octodec is managed as a separate entity, operating at arm’s length in respect of contracts with related entities, whilst deriving competitive advantages from the expertise and specialised services developed by the group.

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Sterling Asset Management and Trustees Limited (Aug 2022)

Capital and leverage is favourably considered and a ratings positive, with GCR’s calculated leverage ratio at a stable and strong 20% at 1QFY22. We expect this metric to remain within a similar range going forward based on historical trends, and as management continues its conservative approach to capital and FUM growth. Funding and liquidity position is assessed at an intermediate level. SAMTL’s funding base comprises largely investment products targeted at high net-worth individuals, with maturities ranging between 30days – over 365 days, and can be rolled over at maturity.

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CapitalSage Limited (Aug 2022)

Cash flow and leverage is positively viewed given the low gearing level. While the Company issued about N3.5bn short term private notes in two tranches during FY21, under its N10bn debt issuance programme, to support business expansion, it demonstrated sound ability to repay its debt with net debt to EBITDA margin closing FY21 at 0.12x. As at end-May 2022, one of the series have been fully repaid, with more private notes (about N2.2bn) issued during the current year.

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RA International FZCO (UAE) (Jul 2022)

Founded in 2004, RA Int is one of Africa’s leading remote site service providers. The company offers construction, integrated facilities management (“IFM”) and supply chain services to clients operating in the world’s most challenging environments, having carried out projects in Afghanistan, Chad, South Sudan, Uganda, Somalia, Tanzania and many other countries. RA Int is headquartered in Dubai, UAE with an operational base in Kenya. In 2018, RA International Group PLC listed on the AIM Exchange in London, with its sole asset being its 100% shareholding in RA Int.

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eThekwini Municipality (Jul 2022)

eThekwini is a Category A municipality located on South Africa's east coast in KwaZulu-Natal (“KZN”). The Metro encompasses Durban, the third-largest city in the country, and is home to Africa's busiest port, giving key access to the rest of sub-Saharan Africa. Its land area is comparatively larger than that of other South African cities, with a population estimated at approximately 4 million. Durban is also one of the country’s' leading domestic tourist destinations.

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ICEA LION General Insurance Company Limited (Jul 2022)

ICEA LION Insurance Holdings Limited is an investment holding company established in 2020, with interests in insurance and asset management businesses in Kenya, Uganda and Tanzania. The group is owned by First Chartered Securities (“FCS”) with a majority stake of 75.9%. FCS is in turn wholly owned by the ultimate parent company, Asset Managers Limited. The remaining shareholding is held by Eastern Africa Holdings Limited, an entity incorporated in the United Kingdom and fully-owned by Leapfrog Strategic African Investments.

Subsidiaries housed and consolidated under the group include ICEA LION General (together with its subsidiary; ICEA LION General Insurance Company (Tanzania) Limited), ICEA LION Life Assurance Company Limited (encompassing Ugandan subsidiaries; ICEA LION Life Assurance Company (Uganda) Limited, ICEA LION General Insurance Company (Uganda) Limited, and ICEA LION Asset Management (Uganda) Limited), ICEA LION Asset Management Limited and ICEA LION Trust Company Limited.

ICEA LION Holdings is the majority shareholder (with an 80% stake) and nearest consolidating parent of ICEA LION General. The subgroup is considered a core entity of the group, accounting for 44% of gross written premiums in FY21, a contribution with potential improvement to c. 50% if the pending reorganisation involving the planned transfer of ICEA LION General Insurance Company (Uganda) Limited to the subgroup is successfully concluded. Considering the materiality of the subgroup’s contribution to the group’s top line, the analytical method followed for the purpose of determining ICEA LION General’s rating is a group approach, with the insurer’s credit strength equalised to that of ICEA LION Holdings.

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ICEA LION Life Assurance Company Limited (Jul 2022)

ICEA LION Holdings is an investment holding company established in 2020, with interests in insurance and asset management businesses in Kenya, Uganda and Tanzania. The group is owned by First Chartered Securities (“FCS”) with a majority stake of 75.9%. FCS is in turn wholly owned by the ultimate parent company, Asset Managers Limited. The remaining shareholding is held by Eastern Africa Holdings Limited, an entity incorporated in the United Kingdom and fully-owned by Leapfrog Strategic African Investments.

Subsidiaries housed and consolidated under the group include ICEA LION Life, encompassing its Ugandan subsidiaries (ICEA LION Life Assurance Company (Uganda) Limited, ICEA LION General Insurance Company (Uganda) Limited, and ICEA LION Asset Management (Uganda) Limited), ICEA LION General Insurance Company Limited, together with its subsidiary (ICEA LION General Insurance Company (Tanzania) Limited), ICEA LION Asset Management Limited and ICEA LION Trust Company Limited.

ICEA LION Life is a wholly owned subsidiary of ICEA LION Holdings which is also the underwriter’s nearest consolidating entity. Within the ICEA LION Holdings structure, the subgroup is a core contributor (above 50%) to group revenues, assets, liabilities and profitability, which are important factors shaping the credit profile of group. Considering the materiality of the subgroup’s contribution to the group’s credit fundamentals, the analytical method followed for the purpose of determining ICEA LION Life’s rating is a group approach, with the insurer’s credit strength equalised to that of ICEA LION Holdings group.

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Uganda Reinsurance Company Limited (Jul 2022)

Uganda Re was incorporated in November 2000 and commenced operations in 2013. The company is the only locally licenced reinsurer in Uganda and benefits from 15% mandatory cessions on all treaty reinsurance business in Uganda. The mandatory cessions are provided for by the Insurance Act of Uganda caption 213, the Insurance (Amendment) Act No. 13 of 2011 and Regulations of the Insurance Regulatory Authority. The company’s major shareholders are Zep Re (PTA Reinsurance Company) (21%), Kenya Reinsurance Corporation (11%), UAP Insurance Company Limited (9%), Uganda Insurers Association (8%), Continental Reinsurance Company Plc (5%). Overall, 49.1% of the company’s shareholding is held by local insurance players while 44% is held by regional (re)insurers and the balance by individuals (1.5%) and brokers (5.6%). Since Uganda Re is not part of a group, the credit profile is based on stand-alone fundamentals.

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Jubilee Allianz General Company Limited (Jul 2022)

Jubilee Allianz Uganda is a subsidiary of Allianz Africa Holding GmbH (“Allianz Africa”), an intermediate non-operating holding company of Germany headquartered Allianz SE (“Allianz” or “the group”) following the strategic transaction with Jubilee Holdings Limited that consummated in October 2021. Under the transaction, Allianz Africa acquired 66% of the company’s shareholding, with a 34% shareholding remaining under Jubilee Holdings Limited (“Jubilee group”) through The Jubilee Investment Company Limited. The continued shareholding by the Jubilee group is structured to ensure a long-term partnership between the transacting parties. In this respect, no material changes in business relationships and processes are expected from the change of ownership, with a transitional period of two years from the date of transaction having been cut out to ensure a well-managed integration into the Allianz ecosystem. However, this could take longer than planned due to high assimilation levels of the insurer to the Jubilee group.

Over the medium to longer term, we expect Jubilee Allianz Uganda to stabilise relationships within the vast business network and franchise built by the Jubilee group and its parent the Aga Khan Development Network in East Africa and combine these strengths with the global hegemony of Allianz in offering world class insurance solutions. Nonetheless, the transition period poses risk with regards to market repositioning in Uganda that could erode envisaged brand synergies.

Given that Allianz has gross premiums of EUR147bn, Jubilee Allianz Uganda is a small entity within the group, contributing less than 1% of gross premiums at a scale of less than EUR25m in FY21. We have, therefore, assessed the credit profile of the insurer on a stand-alone basis.

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