Date of Investment: 
August 2013
Deal type: 
Buy-Out and Expansion capital

MFinance is a financial services company in Zambia operating in the micro-finance segment of the market.  It is licensed as a deposit taking institution by the Bank of Zambia ranking amongst the market leaders; it is part of the MFS Group, one of the leading diversified financial services groups in Zambia, listed on the Lusaka Stock Exchange.  MFinance has two business units notably providing credit to salaried employees of public and private sector enterprises, through the salary-deduction mechanism, and to micro, small and medium sized enterprises (‘MSMEs’).  In both segments of the market, the credit is for relatively modest amounts and for relatively short periods thereby reducing the risk of non-payment. 

In line with the fast growth of the SME sector in Zambia, the company has initiated a process of diversification away from the salary-deduction business to focus on provision of credit to MSMEs and ambitions to turn into a fully-fledged SME bank; the first step in this process is to build up a deposit base while the number of outlets is being increased to have a countrywide presence thereby reaching out to the rapidly expanding market.

TKF’s investment in MFinance was structured in the form of ordinary and preference shares, which represented 60% of total value of investment. In October 2015, TKF successfully redeemed its preference shares. The Fund retains its ordinary share position in MFinance and continues to work closely with company management to execute its business plan.