Johannesburg, 17 Dec 2013 — Global Credit Ratings has today assigned Real People Investment Holdings Limited initial primary and special servicer ratings of SQ2(ZA) and SQ2+(ZA) respectively; with the outlook accorded as Stable.
Global Credit Ratings has accorded the above credit rating(s) on Real People Investment Holdings Limited based on the following key criteria:
Real People Investment Holdings Limited’s (“Real People” or “the group”) is one of the leading servicing companies in South Africa and is able to benefit from economic downturns through the purchase of distressed assets. Real People displays significant expertise in the domestic micro-lending and collections industries, backed by over 500 agents, the latest call centre technology and a wide debtor visitation network that reaches the length and breadth of South Africa. A strong shareholder profile is also reflected, with Old Mutual maintaining a sizeable stake. Several of the leading international development finance institutions also hold stakes in the group.
Real People displays strong corporate governance; with a high level of transparency, strong controls and systems, and a well-structured independent directorate. A stable and experienced senior management team is in place, with no major changes to the team during the review period. The group has a comprehensive training and development program in place, as well as voluntary access to medical/health and provident/retirement schemes (part of the group’s employee value proposition), an integral part to help attract and retain talent. The group possesses strong debtors management capabilities, augmented by robust ICT systems. A comprehensive collections methodology, successfully integrated into its ICT infrastructure, has enabled Real People to develop one of the leading collections track records in the country. The group uses industry standard servicing technology, accounting and reporting systems. Overall, the technology infrastructure is deemed flexible, secure, stable and reliable (strong data integrity).
Reflecting the impact of its refined strategic focus, the combined results of the group slowed, reversing the trend in capital and asset generation. By and large, while bottom line earnings closed below expectations (due to slower asset growth and significant investment in activities not currently generating revenue), the group’s long-term trend remained within acceptable norms; nonetheless, the performance must be seen in the context of a business undergoing a shift in its operations.
Positive movement/s: Further progress in the group’s market positioning, trading performance, financial profile and portfolio collections track record (and that across the entire product pool).
Negative movement/s: A sharp decline in profitability and deterioration in collection statistics, the profit impact of legislation and/or regulatory burdens and changes in the shareholder structure could exert downward pressure on the ratings.
|SERVICER QUALITY RATINGS HISTORY|
|Initial rating (June 2009)|
|Servicer quality (combined): SQ2(ZA)|
|Rating outlook: Stable|
|Last rating (December 2012)|
|Servicer quality (combined): SQ2+(ZA)|
|Rating outlook: Stable|
|+27 11 784 1771|
|Sector Head: Financial Institution Ratings|
|+27 11 784 1771|
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SALIENT FEATURES OF ACCORDED RATINGS
GCR affirms that a.) no part of the rating was influenced by any other business activities of the credit rating agency; b.) the rating was based solely on the merits of the rated entity, security or financial instrument being rated; and c.) such rating was an independent evaluation of the risks and merits of the rated entity, security or financial instrument; and d.) the validity of the rating is for 12 months, or as indicated by the applicable credit rating document.
The ratings above were solicited by, or on behalf of, the rated client, and therefore, GCR has been compensated for the provision of the ratings.
Real People Investment Holdings Limited participated in the rating process via face-to-face management meetings, teleconferences and other written correspondence.
The credit rating/s has been disclosed to Real People Investment Holdings Limited with no contestation of the rating.
The information received from Real People Investment Holdings Limited and other reliable third parties to accord the credit rating included the latest audited annual financial statements for March 2013 (plus three years of comparative numbers), most recent year to date management accounts to September 2013, and a break down of facilities available and related counterparties.