NovaBank SA — Investment Proposition & Use of Funds
The investment proposition, the ZAR 3.5 billion capital structure, the detailed use of funds, and the projected returns to investors.
Section 17 · Business Plan
Investment Proposition & Use of Funds
The investment proposition, the ZAR 3.5 billion capital structure, the detailed use of funds, and the projected returns to investors.
NovaBank seeks to raise ZAR 3.5 billion in two tranches. The first
tranche of ZAR 1.5 billion is required at signing of subscription
agreements, ahead of the SARB Section 13 application; the second tranche
of ZAR 2.0 billion is drawn at Month 22 to fund the public commercial
launch and Phase 1 branch roll-out.
17.1 Use of Funds
| Use of Funds Category | ZAR Million | % of Total |
|---|---|---|
| Regulatory Capital (CET1 buffer above SARB minima) | 1,470 | 42.0% |
| Core Banking Technology Platform & Infrastructure | 630 | 18.0% |
| Branch & Agent Network Build-out | 420 | 12.0% |
| Marketing & Customer Acquisition (Years 1–3) | 385 | 11.0% |
| Working Capital & Liquidity Buffer | 350 | 10.0% |
| Compliance, Risk Frameworks & Talent | 245 | 7.0% |
| TOTAL CAPITAL RAISE | 3,500 | 100.0% |
17.2 Capital Structure
| Instrument | ZAR Million | Tenor | Indicative Pricing |
|---|---|---|---|
| Tier 1 Equity (Tranche 1) | 1,500 | Permanent | Common equity, no fixed return |
| Tier 1 Equity (Tranche 2) | 1,300 | Permanent | Common equity, no fixed return |
| Tier 2 Subordinated Debt | 700 | 10NC5 | JIBAR + 425 bps |
| TOTAL | 3,500 |
17.3 Investor Return Profile
| Return Metric | Base Case | Bull Case |
|---|---|---|
| Equity IRR (5-Year) | 28% | 39% |
| Cash-on-Cash Multiple (Year 5) | 2.7x | 4.4x |
| Year-5 P/E Multiple Used | 9.0x | 11.0x |
| Year-5 Implied Equity Valuation | ZAR 21.5bn | ZAR 33.0bn |
| Year-5 P/B Implied | 3.5x | 5.3x |
| Total Cash Distributions (Yr 1–5) | Nil | Nil |
| Liquidity Mechanism | JSE Listing / Trade Sale | JSE Listing |
Table 17.1 — Expected investor returns by scenario.
Confidential — this business plan is provided to prospective investors and lenders for evaluation purposes only and may not be reproduced or distributed without the written consent of NovaBank SA (Pty) Ltd.